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[TOP OF PAGE] Editor's Notebook: Innovation Forever My first draft of this month's "What's Hot" began as follows: "Innovation continues to reign supreme in today's maturing IT market." The line raised a few eyebrows around the office, as you might imagine. After all, world-changing technology is so 1990s. Everyone's focus now is on controlling costs, improving efficiencies, and wringing more growth out of fewer opportunities. I rewrote the draft. But I stand by the idea, and here's why. Even though buyers are questioning the value of many new technologies, they are looking even harder for creative new solutions to business problems. Innovation still reigns supreme, but the focus has shifted from technical to business invention. Look around: today's winners in the technology sector are the firms rolling out innovative business solutions in areas such as utility computing, shared services, financial management, business process outsourcing, and supply chain management. If anything, inventing new business solutions is even tougher than advancing technology. This month's E-ZINE includes several takes on the innovation issue. Our lead article looks at how Cap Gemini Ernst & Young has greatly improved their system for developing and launching new services and solutions. In the first of a two-part article, we also look at the potential impact of the utility computing movement. As usual, we include a mix of research notes, upcoming events, and marketing tips, as well. How are you dealing with the innovation challenge? [TOP OF PAGE] What's Hot: The Challenge of New Services Development: Cap Gemini Ernst & Young Gets It Right One of the greatest challenges in developing new services and solutions is that windows of opportunity close quickly in a copycat environment. Long a problem in products, the rapid appearance of "me-too" challengers is increasingly a problem with services and solutions as well. Even in professional services, Cap Gemini Ernst & Young estimates that it needs to generate at least one-third of revenue each year from new offers. New ideas are generally not a problem. Most technology services organizations are bubbling with ideas about new products and services. The problem is picking the right ideas in which to invest, mobilizing the right resources to develop and package them appropriately for specific target markets, and organizing the right marketing and sales activities to maximize buyer response. Making all of this happen quickly and efficiently is especially a problem given the common reality of inconsistent internal processes for developing new services. Product organizations typically have a systematic research and development program; services organizations often do not. Cap Gemini Ernst & Young’s New Service Offer Launch Process provides a great example of creating an effective, systematic program to bring new global services offers quickly to market. The process greatly increases the chances of creating successful new offers by emphasizing four key objectives:
Like many firms, Cap Gemini Ernst & Young had suffered from a fragmented offer development process, which resulted in long development cycles, unknown costs, and relatively uncoordinated deployments. With the new process, a global core team helps ensure that the right ideas get the right investments to create sales-ready offers in a much more timely manner. As a result, the firm has dramatically reduced time to market for new global offers, increased the global coordination of offer development and launches, improved the efficiency and accountability of investment in new offers, and won a series of marquee new deals. The process continues to evolve, according to Joseph Gutierez, director of global service line marketing at Cap Gemini Ernst & Young. Already, though, it has brought great discipline and benefit to a cornerstone of growth in today’s economy. As Gutierez notes, "You need a consistent flow of new offers to really grow in this market. But you can’t invest in 1,000 new ideas. This helps us invest only in those that are likely to generate the best returns and then build support across the entire organization to roll them out quickly and effectively." [TOP OF PAGE] Research Desk On-Demand Computing and the IT Industry Inversion, Part I The recent success of IBM’s eBusiness On-Demand Computing services, HP's On Demand Solutions, and a growing number of similar offerings from large and small utility computing providers (UCPs) could represent the dawn of a new era in the IT industry. If this trend continues, we could experience a true industry inversion that will have far-reaching implications for IT companies in general and services marketing professionals in particular. Given the reality that services have generally taken a back seat to products within technology companies, it is not surprising that many services marketers gaze enviously at IBM’s bold $1 billion R&D commitment to the on-demand initiative. Beyond these raw emotions lies a real opportunity for service marketers to reverse common industry thinking about the relationship between technology products and services. Rather than services as an adjunct to technology products, on-demand utility computing forces IT companies to look at technology as just one component of services-based business solutions. Despite the limited success of most standalone application and managed services provider businesses, the underlying concept has been adopted and expanded upon by IBM, EDS, Hewlett-Packard, Oracle, SAP, Sun, and others at the high end of the market as well as a growing number of regional service providers targeting small and midsize enterprises. These companies are finding greater user receptivity to their on-demand or utility computing service offerings for three important reasons. First, the economy is forcing enterprises to entertain any viable option to reduce ongoing IT costs. Second, many large and small utility computing providers now entering the market are established companies with substantial customer bases that give them greater credibility and sales advantages than their predecessors. Third, they are offering more comprehensive and better integrated hardware, software, and services solutions. Assuming these trends continue, more and more IT and networking companies
will likely explore the potential of becoming utility technology providers.
Even with growing market interest, however, making a successful transformation
will require three services-centered changes:
In all these ways, utility computing will pose both serious challenges
to traditional technology companies and substantial opportunities for
services marketing professionals. Only by bringing the most sophisticated
services marketing leaders and skills to the forefront can companies
successfully invert the traditional technology-centered paradigm that
has dominated the industry for so long. —Jeff Kaplan, jkaplan@thinkstrategies.com. Jeff Kaplan, a veteran services marketer and analyst, is managing director of THINKstrategies, a consultancy in Wellesley, MA. Look for Part II of Jeff's article: "How to Play a Pivotal Role in the IT Industry Inversion," in the April ITSMA E-ZINE. Marketing to VITO "It always seems to be the year of VITO [very important top officials] but it's actually getting worse," says sales guru Anthony Parinello, author of Selling to VITO. Technology marketers say they want to focus on business decision makers, but they remain bogged down in making their cases to mid-level product evaluators. Parinello, a one-time sales representative for Hewlett-Packard, spends most of his time helping technology and other firms retool their sales forces to speak more effectively with top business executives. But he thinks technology marketers are just as guilty as their sales colleagues in missing the business mark. In a recent discussion with ITSMA, Parinello stressed three priorities for marketers today. First, segment your audiences according to levels of influence and authority. Parinello highlights four levels:
Marketers need different sets of talking points to speak effectively to each level, according to Parinello. Second, begin at the top. Technology marketers tend to focus especially on the "intellect" level, says Parinello, "but the intellect's job is to evaluate, not decide." Orienting marketing programs and materials to this level generally means focusing much too much on features and functions and too little on business benefits. Efforts to reach the director level are a step in the right direction but not enough. For example, Parinello argues that most return-on-investment (ROI) tools and similar business-value initiatives are just more elaborate versions of data sheets."Directors and intellects might look at them; leaders will not," he says. For Parinello, connecting with leaders is as much about emotion as it is about fact. "The higher you go in the organization, the more nebulous it becomes." Marketers need to speak to the uncertainties, visions, and doubts that motivate leaders along with the hard and soft business benefits that their solutions may bring. Once you've got the right story for the leaders, work down the levels from there. Third, get to the point. Parinello is a firm believer that leaders have even shorter attention spans than young children. "You've got eight seconds to make an impression, or thirty words, or perhaps three slides on a presentation—as long as they have no more than six words on a slide," he states. "Begin with the punch line, which is the business result your solution can provide. Then get into how it can be done. Then you can talk about who will do the work." With more and more buying decisions landing in the corner office, marketing to VITO has become a top priority. The basic concept is certainly not new. Many firms already dedicate special marketing resources to the senior-most executives within their target markets. The challenge now, according to Parinello, is to review the entire program to ensure that VITOs are truly front and center in the marketing mix. What's your take on marketing to VITO? Are marketers guilty of aiming
too low in the organization? How does your team reach out to top executives? For more information on Anthony Parinello, visit www.sellingtovito.com. Tech Poll: CIOs Project Modest Spending Growth; Large Firms Lag Behind CIO Magazine's 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 February 6-13, 2003, shows continued plans for modest increases in IT spending for 2003.* Key Findings:
February Tech Poll figures are based on 303 survey responses, with 93% from North America. CIOs made up 89% of the total respondents. The respondents represent a wide range of industries, including technology services, manufacturing, finance, state and local government, health-care, and wholesale and retail distribution. For complete survey results, visit http://www.cio.com/info/releases/022403_techpoll.html. * By way of comparison, a recent IDC survey of nearly 1,000 CEOs and CIOs in 12 countries showed similar projections. According to IDC, some 85% of companies expect to increase or maintain IT spending levels in 2003, compared with about 78% of CIOs in the Tech Poll survey. CEOs were more optimistic than CIOs in the IDC survey. Both groups remain uneasy about business confidence and the overall economic climate. Interestingly, the survey also showed that almost one third of IT spending now originates outside the traditional IT department. For more information on the IDC survey, visit http://www.idc.com. Call for Sponsors: 2003 Market Positioning Studies: Storage Solutions, Outsourcing/Managed Services How effective are your marketing messages with target markets? How do buyers perceive your brand compared with those of your competitors? ITSMA Market Positioning Studies help study sponsors understand customer perceptions, competitive positioning of market leaders, critical sources of influence, and key buying criteria. Learn more about the benefits of study sponsorship for these upcoming studies:
[TOP OF PAGE] EuroNotes: Alcatel Partnerships Flesh Out New Strategy A series of recent partnership announcements puts meat on the bones of Alcatel's December 2002 strategic reorganisation. Unlike its competitors Lucent and Nortel, Alcatel has chosen to pursue its future in both the enterprise and service provider segments of a converging IT and telecom marketplace. Suffering from a revenue decline of more than 30% in 2002, the global telecom firm needed to take drastic action. The December reorganisation into three lines of communications business—fixed, mobile, and private—was step one. Announcements in February of strategic partnerships with IPWireless, a leading solutions provider in wireless broadband technology, Oracle, and IBM comprised step two.
[TOP OF PAGE] Toolbox: Services Sales Readiness Rating Guide Each month ITSMA highlights a tip sheet, checklist, guide, or other type of tool that marketers can use immediately to strengthen their programs and organizations. Developing successful new services rests heavily on marketing managers' abilities to address the needs of the sales force, conform to the sales system, and fit with the personality of sales leaders. New services need to target client needs, of course, but without enthusiastic and effective buy-in from the sales force, clients will never get the chance to try out these services. ITSMA's Services Sales Readiness Rating Guide provides 10 simple questions that gauge potential sales success. Visit
http://www.itsma.com/research/toolkit/readiness_guide2.htm
to read and download the tool. [TOP OF PAGE] Upcoming Events March 12-13 Workshop: Creating Winning
Value Propositions, with Dr. Lynn Phillips (San Francisco) For more information or to register online, visit http://www.itsma.com/events/event_desc/03WS03N03.htm or contact Lore Griffith at +1-781-862-8500, ext. 19, or lgriffith@itsma.com. March 14 Online Briefing: Marketing Priorities
in Europe: 2003 Annual European Update (free to European members) For more information or to register online, visit http://www.itsma.com/Events/event_desc/03OB02E01.htm. March 19 Online Briefing: Developing
and Marketing New Solutions (free to members) For more information or to register online, visit http://www.itsma.com/Events/event_desc/03OB03N04.htm. Other Upcoming Events
Complete 2003 Events Calendar Event Sponsorship Opportunities Ask ITSMA! Do you have a services marketing question? (c) Copyright 2003, ITSMA Please forward this newsletter, but only in its entirety. Public citation or publication of any information herein is encouraged but subject to U.S. and international copyright law and conventions. Any citation must include full attribution to ITSMA. Individual graphics or paragraphs can be published without permission as long as attribution to ITSMA is included. Publication of longer selections or complete articles requires ITSMA permission. For permission or more information, contact pr@itsma.com. Subscription Information Subscriptions are available in text and HTML versions. To SUBSCRIBE or to change the format of your subscription, visit http://www.itsma.com/aspfiles/press/ezine.asp. To UNSUBSCRIBE, please e-mail us at unsubscribe@itsma.com. Back issues of ITSMA E-ZINE are available at http://www.itsma.com/press/press_ezine.htm. |
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