"You're not going to like this, but..." Speaking at ITSMA's marketing course last week, the CIO of a large manufacturing firm provided a sobering reminder of the client-level reality of a tough market. Here's a sample: "There are way too many vendors; I'm deluged every day by cold calls and I delete them all without listening." "I'm not paying $2-3,000 a day on consultants, especially after having several really bad experiences in the past. The days of spending millions with high-priced consultants are gone." "We're ramping up our skills in-house and working with several off-shore firms for backup support. Their quality has been extremely high."

Well, no one said prospering in a maturing market would be easy. Fortunately, there are some brighter signs ahead, and we're generally optimistic at ITSMA. And if you run out of ideas for new initiatives, there's always "advergaming," the subject of this month's interview with Keith Ferrazzi. As always, let us know what's on your mind these days and how we can help. Meanwhile, have a great holiday season!

-Rob Leavitt, editor

What's Hot: Advergaming! An Interview with YaYa's Keith Ferrazzi

Keith Ferrazzi, president and CEO of the interactive gaming company YaYa, is on a mission to haul marketers into the 22nd century with "advergaming." Advergaming is YaYa's term for Internet-based games that support direct and mass-marketing campaigns. YaYa clients include technology firms such as IBM, Siemens, and Roundarch as well as consumer giants General Motors, PepsiCo, and Burger King. ITSMA recently spoke with Ferrazzi about the potential benefits of advergaming for IT services marketing. The following is an excerpt from Ferrazzi's remarks.

Traditionally, marketing dollars follow leisure time. That is why sports marketing has grown over the past 10 to 15 years to what it is today. You as marketers want to be able to get to your clients where they are not necessarily braced and expecting your message. You want to penetrate other aspects of their lives. If you are selling to IT professionals, what do you think they are doing at 5:30 p.m. or 6:00 p.m. when they get off work? They are turning on their computers and playing games. Games are a massive part of their leisure time.

I see four major benefits to games-based marketing. First, it is a more efficient marketing spend. If you compare the cost per time engaged for TV, radios, and games, you see that the costs are significantly lower for games. In addition, games can exploit the favorable economics of viral marketing. Also, in the course of playing the games, your customers give you a lot of information. This is an extremely cost-effective way to collect information about your customers and prospects to enable more complete profiling and targeting.

The second benefit is higher customer retention. We see advergaming and edutainment as effective across the entire customer life cycle to build loyalty. The applications engage customers through great content and establish an ongoing dialogue.

Reduced customer support costs are another benefit. Web-based training solutions are an ideal application for the technology B-to-B market. Companies can use games-based training to train their customers and their customer support personnel. We see this medium as particularly effective for training help desk employees.

Finally, interactive media and games, as data collection tools, have powerful market research capabilities. I can use these applications to collect information on behavior, usage, likes, dislikes, wants, and needs. As a result, I can improve my product and services development process very efficiently.

Read the complete interview: The new ITSMA Viewpoint, Combining Interactive Media and Marketing to Redefine Customer Dialogues, is available free to members with online access and for sale to nonmembers. For more information, visit http://www.itsma.com/research/abstracts/V0019.htm.

Research Desk

Storage Solutions: Buyers Demand Reliability, Security, and Value
After years of rapid growth, the slowdown in the storage market has led to intense competition for customers, market share, and differentiation. Storage providers have responded by emphasizing high-value solutions to buyers' most urgent needs. Buyer skepticism is widespread, however, and crafting marketing campaigns that inspire credibility and consideration has become extremely difficult. In stark contrast to the worries about keeping up with demand a few years ago, marketers' top concerns today all revolve around demand generation.

The slowdown does not mean that substantial opportunities for storage providers have disappeared. In fact, at least half of large enterprise buyers are still planning to make significant changes to their data storage systems and networks in the coming year, according to a recent ITSMA survey of 300 buyers in seven major industries. Enterprise buyers remain extremely concerned with growing volumes of data, data security issues, and higher-availability requirements for data. In that context, their priorities for action include expanding storage capacity; consolidating storage onto fewer, larger servers or systems; and shifting to storage area networks (SANs).

Taking advantage of these opportunities requires careful attention to the ways in which buyers view the market. Four important points emerge from the ITSMA study.

• Buyers recognize only a few market leaders. Generally speaking, buyers are knowledgeable only about a few storage solutions firms, such as EMC, IBM, and Hewlett-Packard. Firms in a second group, including Dell, Hitachi Data Systems, Network Appliance, and Sun, hold some awareness and familiarity for buyers, but other challengers have made little headway. Even technology giants like Cisco and Microsoft, with almost universal brand awareness, are not well known yet as providers of storage solutions, despite their recent efforts to attain that status.

• Investment protection attributes rank highest. Buyers of storage solutions need confidence that their vendors can provide excellent technical support and will live up to their contractual promises. Attributes that rate highly in other IT markets, such as working collaboratively and transferring knowledge, are important, but less so than the ultimate confidence that vendors will provide solid protection of buyers' storage investments. Other attributes that some storage providers promote, including technical innovation, global presence, and capacity to provide broader infrastructure support, are even less important to today's storage solutions buyers.

• Best-of-breed edges out all-in-one. Buyers show a modest but clear preference for bringing together best-of-breed players over relying on single firms that can provide one-stop shopping for all storage products and services. Asked directly, more than half of the ITSMA survey respondents preferred a best-of-breed approach, compared with about 40% who preferred to work with a single firm. The preference held with buyers in each of the seven industry segments that ITSMA surveyed. Similarly, buyers ranked full infrastructure support as one of the least important attributes in considering storage solutions providers.

• Storage providers are underperforming in key areas. Rating storage solutions providers as a group, buyers do not provide great marks. Perceived performance across a number of attributes averages only 3.6 on a 1 to 5 scale, where 1 = extremely low and 5 = extremely high. More important, buyers perceive some of the largest performance gaps in precisely those areas they consider most important, such as excellent technical support and follow-through on promises and commitments.

To respond successfully to extremely demanding buyers, marketers should evaluate all programs to make sure they address current buyer preferences and perceptions. The ITSMA data suggest four general marketing priorities:

• Strengthen market position by investing in brand awareness and knowledge campaigns targeted toward top-priority segments.
• Gear marketing messages and campaigns toward risk-averse buyers with demonstrable evidence of technical excellence and business reliability.
• Assess the relative merits of emphasizing best-of-breed versus all-in-one characteristics, given the modest overall preference for best-of-breed.
• Emphasize past successes and track records of superior performance.

-Lori Weiner, lweiner@itsma.com

ITSMA's new report, Storage Solutions: 2002 Market Positioning and Brand Awareness Study, includes detailed data and analysis on buyer perceptions of leading storage solutions providers based on a survey of 300 IT executives from seven industries. The report covers unaided and aided awareness, familiarity and favorability, relative market positioning, preferred company attributes, and vendor selection influences. For more information, visit http://www.itsma.com/Research/abstracts/bst001.htm.

Communicating Business Value
It's no secret that technology and professional services firms are jumping through more hoops these days to persuade prospective clients of the superior value of their offers. But how best to convince skeptical buyers? Participants at ITSMA's recent Executive Roundtable in San Francisco offered a number of approaches:

• Activity-based costing. Using financial analysts to build a stronger business case by comparing the costs of performing a service in-house versus hiring an outside provider.
• Online knowledge base. Developing an online knowledge base that provides content expertise and benchmarking data to sales and other customer-facing employees.
• Service-level agreements. Providing risk-averse customers with contracts that minimize perceived risk.
• Customer testimonials. Strengthening efforts to recruit, manage, and promote customer testimonials and references.
• Self-service ROI tools. Collecting credible data from multiple sources and packaging the data into easy-to-use tools for prospects and the sales force.
• New business value concepts. Promoting ambitious new concepts such as the agile or real-time enterprise to raise customer discussions to a higher level of value.

Not all of these approaches will be appropriate or useful for every company or in every situation, but organizing marketing communications around clear and compelling value messages is certainly essential. Given the likelihood of continued slow-growth in most technology markets in 2003, communicating the value of IT solutions will become even more important in the coming year.

Do you have new value-oriented communications programs or tools? What's working best for your organization in persuading clients of the value of your solutions?

-Julie Schwartz, jschwartz@itsma.com

Tech Poll: CIOs Project Modest IT Spending Increases in 2003
The CIO Magazine Tech Poll provides a monthly assessment of technology buying trends from a broad cross-section of chief information officers (CIOs), mostly from North America. The latest survey, conducted November 7-14, 2002, shows modest hopes for increased IT spending for 2003. The November survey's key findings include:

• CIOs plan to increase overall IT spending 5.1% over the next 12 months, compared with a 0.5% decline over the previous 12 months.
• Less than 25% of CIOs expect IT spending in the fourth quarter of 2002 to be higher than in the third quarter. Almost 30% expect IT spending to be lower in the fourth quarter, and the remaining 45% expect no change.
• Weak corporate profits continue to be the most important drag on IT spending, with 41.2% of respondents citing that factor. Other important constraints include tighter financial controls and sufficient capacity.
• Security software remains the strongest IT sector in the poll, with 55.9% of respondents planning to increase spending and only 6.4% planning to decrease spending. Other relatively strong sectors include storage systems, with 40.2% planning increases (although this is down from 47.3% who were planning increases in October), and computer hardware, with 39.3% planning increases (up slightly from 38.3% who were planning increases in October).

November Tech Poll figures were based on 301 survey responses, with 95.7% from North America. CIOs made up 91% of the total respondents. The respondents represent a wide range of industries, including technology services, manufacturing, finance, state and local government, healthcare, and wholesale and retail distribution.

For complete survey results, visit http://www.cio.com/info/releases/120202_techpoll.pdf.

ITSMA Market Positioning Studies: Sign Up Now!
Take the pulse of today's market and get actionable data to improve your market position. ITSMA Market Positioning and Brand Awareness Studies provide participants with valuable insight on such critical issues as awareness and positioning of market leaders, favorability and preference ratings, key sources of influence, and purchase evaluation criteria.

Upcoming studies include the following:

• Enterprise Network Solutions—Only one slot remains open; study to launch this month
  http://www.itsma.com/research/prospectus/mk0310_ent02.htm
• Outsourcing and Managed Services
  http://www.itsma.com/research/prospectus/mk0317_ms02.htm

EuroNotes: New Technologies and Services Marketing in 2003

Senior services marketers meeting last week at an ITSMA Inner Circle Dinner held at Cranfield University School of Management explored the potential impact of major technology trends on technology services marketing in 2003. Most important, according to participants, is the absence of one defining technology or dominant buying trend that will drive the market in 2003. Instead, a range of technologies offer suppliers the chance to deliver new value to existing clients, attract new clients, or reinforce their brand. These technologies include wireless, storage networking, utility computing, and Web services.

Clients will likely remain circumspect about new systems or solutions in all of these areas, however, due to their perception of being burned in past years while trying to adopt the latest technologies. More than ever, technology marketers in Europe must convince clients of the strategic value of any offer built on new technology and clearly demonstrate quantifiable return on investment (ROI) to the client's business.

Participants at the ITSMA dinner showed little hope that new technologies in themselves would drive substantial business opportunities in 2003. Much more important will be the ability to integrate new technologies with more proven systems in the process of developing unique, value-based solutions for individual clients.

From a marketing perspective, there are three critical questions about new technologies:

• What new technologies should we leverage in 2003 to strengthen our solutions portfolio?
• How will we train our staff to deliver on new technology promises?
• How can we use new technologies in our own business to drive competitive advantage?

Naturally, the answers will differ from company to company. Essential decision criteria include the importance of technical innovation in the company's brand positioning, the portfolio of existing clients and their positions along the "diffusion of innovation curve," and the opportunity to use new technology as a hook to win new clients.

Given client scepticism about new technologies these days, marketers attempting to benefit from technology-led opportunities should always focus on the ways in which new technologies support business-oriented value propositions. Do the new technologies:

• Lower the client's perceived risk?
• Increase the strategic importance of the project by driving new revenue, higher profitability, or other competitive advantages?
• Demonstrate quick, hard returns on the investment?

—Bev Burgess, info@itsma.com

Get the full story: The new ITSMA Europe presentation, Technology Trends as a Driver of Service Opportunities and Threats, is available free to all ITSMA Europe members and for sale to others. For more information or to download or purchase this presentation, visit http://www.itsma.com/Research/abstracts/olbeu121002.htm.

More EuroNotes

Toolbox: Six Steps to Building a Competitive Intelligence Database

Each month ITSMA highlights a new idea, application, or other type of tool that marketers can use immediately to strengthen their programs and organizations.

Too often, organizations rely on fragmented, ad hoc approaches to collecting and utilizing competitive information. The rapid pace of market change, however, puts a premium on tracking competitors and getting that information into the right hands at the right time. Incomplete or inefficient competitive intelligence leads to missed opportunities, misallocation of resources, and less effective sales efforts.

The cornerstone of effective competitive intelligence is a central database managed by skilled associates who can gather and format data from disparate sources, analyze the data for strategic and tactical purposes, and package the data in useful ways for others in the organization. ITSMA's six-step plan highlights the key processes necessary to build and manage a successful competitive intelligence database.

Visit http://www.itsma.com/research/toolkit_free/6steps_db.htm to read and download the tool.

View more ITSMA Tools

Upcoming Events

December 17 Online Briefing: Making Collaboration Work: Best Practices in Marketing with Partners (free to members)

In a time of extreme competitive pressure, creating win/win marketing strategies with partners has become both extremely important and increasingly difficult. Join Julie Schwartz, ITSMA's vice president of research, for an analysis of the results from ITSMA's latest member survey on partner and alliance programs and a review of best practices and recommended initiatives.

For more information or to register online, visit http://www.itsma.com/events/event_desc/e11190200.htm or contact Lore Griffith at +1-781-862-8500, ext. 19, or lgriffith@itsma.com.

January 30 Online Briefing: Marketing's New Fundamentals: 2003 Annual State of the Profession Address (free to members)

After two years on the hot seat, marketers are defining a new set of fundamentals for success in a slow-growth economy. Join ITSMA's Dave Munn, president and CEO, and Julie Schwartz, vice president of research, for their annual review of the most important trends in services marketing, the latest data on marketing budgets and programs, and the top priorities for success in the year ahead.

For more information or to register online, visit http://www.itsma.com/Events/event_desc/03OB01N01.htm or contact Lore Griffith at +1-781-862-8500, ext. 19, or lgriffith@itsma.com.

Plan Your ITSMA Schedule for 2003: Check Out ITSMA's 2003 Calendar!
http://www.itsma.com/aspfiles/Events/calendar.asp

ITSMA in the News

• Child Support: On Location, Children's Hospital Boston (Network Computing)

More ITSMA in the News

Do you have a services marketing question?
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About ITSMA
ITSMA specializes in helping companies market and sell services and solutions more effectively. As a membership organization, we provide research, consulting, and training to the world's leading technology, communications, and professional services providers to generate increased demand, strengthen customer relationships, and improve brand differentiation. ITSMA is based near Boston, and has offices in London and Tokyo. Learn more at www.itsma.com.