Editor's Notebook: Oscar Time for Services Marketing

April marks the beginning of the award season for ITSMA. We've just announced our 2003 Services Marketing Excellence Awards program (our very own Academy Awards) and we've increased the number of categories this year to six, so there's no excuse for not participating! Surely you've got at least one Oscar-worthy program that you're anxious for the world to recognize. This year's categories are:

• Developing New Solutions
• Enhancing Brand and Reputation
• Marketing with Partners
• Strengthening Customer Loyalty
• Increasing Sales Effectiveness
• Measuring Marketing Results

So document those success stories and start working on your nominations. The deadline for award submissions is June 30, 2003, and we'll unveil the winners at our MarketingServices/2003 conference in Berkeley, CA, on October 20-22.

For all the details on the 2003 Services Marketing Excellence Awards, visit http://www.itsma.com/press/sme.htm.

Oh yes, and please do read on for this month's stories on generating new sources of growth, joining the utility computing movement, marketing solutions, succeeding with partners, and more.

-Rob Leavitt, editor

What's Hot: Generating Growth in a No-Growth Environment: Highlights from ITSMA's Executive Roundtable

It wasn't all gloom and doom at ITSMA's March 20 Executive Roundtable in Boston, but the senior marketers in attendance did acknowledge the continuing challenge of finding sources of near-term growth for services.

"There are generally two sources of growth for services," one of the participants noted, "using new technologies to create demand for related services, and capturing services that previously were done internally by customers. There are no major new technologies creating demand right now, and lots of the outsourcing opportunities have already been realized."

Nevertheless, participants from companies such as BearingPoint, Brooks Automation, Dimension Data, EMC, Hewlett-Packard, IBM, Lucent, PTC, Spherion, Unisys, VFA, and Xerox suggested six types of initiatives that can contribute to growth right now:

• Sharpen focus on key segments. Several participants stressed the importance of increasing competencies and expertise in key vertical markets as well as putting more energy into careful segmentation strategies. Some also emphasized the "focus" element of this point. "We're trying to do fewer solutions, better," said one. "We have to know which are the big bets to invest in."
• Dig into the mid-market. A number of participants also highlighted efforts to reach deeper into the medium-sized business market, given generally higher growth rates among these businesses than the Fortune 1000. (See this month's Tech Poll for more on this point.) Doing this successfully often requires new initiatives with channels and educating the market about expanded offerings.
• Underline the value of solutions. "Unless you have a rock-solid, CFO-certifiable business case, customers are content to wait on purchases," said one participant. Other participants highlighted the educational aspect of the value question. "Especially with price-sensitive customers," said one, "we need to educate them that 'good enough' systems and services often are not actually good enough."
• Help the sales force sell solutions. Pushing and supporting the sales force to sell "the whole company" and to sell higher-value services and solutions is a critical objective for most participants. As one participant put it, "knowledge transfer to sales to help them be successful" is the number-one marketing priority.
• Develop innovative new services. "Customers are looking for more knowledge and more creative services and methodologies," one participant explained. Especially with the rise of offshore services firms, the chances for growth in more traditional support services are fast disappearing. Higher-value services like utility computing, new types of application integration, and new approaches to business process outsourcing are the way to go.
• Migrate the brand. A number of participants from product-heritage companies discussed the importance of continuing the transition to becoming services-led and educating the market and their own employees and partners about that transition.

Knowing what to do and getting it done are two different things, of course, and marketing leaders do not always have enough influence or authority to direct all aspects of a growth strategy. Yet desperate times often call for desperate measures, as one participant noted. With more and more corporate executives looking to services as the most promising source of growth in today's market, services marketers in many companies are gaining newfound respect and credibility as growth leaders.

—Rob Leavitt

ITSMA's Chief Marketers' Conference on May 14-15 in Cambridge, MA, will dig much more deeply into the topic of generating growth in a no-growth economy. Industry gurus, marketing leaders, and ITSMA experts will facilitate a wide-ranging exploration of new ideas, best practices, and customer perspectives. For more information, see the event description below or visit http://www.itsma.com/Events/event_desc/03MC05N07.htm.

Research Desk

Quality Over Quantity: Dimension Data Maximizes Results from Alliance Marketing

During the 1990s, the alliance strategy of many IT firms could be summed up as "the more the merrier." Without much concern for results, IT companies inked partnership arrangements with as many firms as possible to demonstrate market appeal and marketing prowess.

Today, bottom-line priorities are forcing companies to revamp this catchall approach to partnering. Partnerships are becoming significantly more important to marketing, sales, and delivery. Marketers are therefore dedicating substantial energy to building focused and results-oriented partnership programs.

Dimension Data, a $2.2 billion, South Africa-based technology services firm, provides a great example of this more effective approach to partnering. By focusing on a relatively small number of strategic partners and building results-oriented systems and processes to manage them, Dimension Data has been able to meet or exceed revenue goals with most of its strategic relationships. Key partners include such companies as Cisco, Hewlett-Packard, IBM, Microsoft, and Sun.

At first glance, Dimension Data’s alliance program looks like a dozen others: different tiers for regional and global partners, emphasis on recruiting partners that bring brand equity and leading technologies, and clear rules of engagement to guide specific deals. But two critical aspects of Dimension Data’s program make it stand apart from most others in technology services: the degree to which the company requires in-depth business planning for each relationship and the extent to which those plans involve sophisticated, targeted, and comprehensive marketing activities.

To facilitate success, Dimension Data's alliance business plans address at least the following components:

• Investment budgets
• Measurement criteria
• Revenue forecasts
• Sales and marketing plans (internal and external)
• Training requirements for sales and delivery
• Support agreements

If the partner is willing to put the required effort into this level of planning, there is a far greater chance of generating results from the relationship.

Similarly, the marketing plans detail activities in a wide range of areas, including:

• Media relations
• Analyst relations
• Direct marketing
• Sales support and education
• Sales follow-through

By investing upfront marketing resources to clearly identify targets, develop specialized marketing content, prepare the sales and field organizations on each side, and then carefully managing integrated launch and campaign activities, Dimension Data is able to maximize the chances that each partnership delivers the planned results. Equally important, the detailed planning process includes concrete metrics that monitor partnership effectiveness at every stage. With more and more companies relying on partners and alliances to go to market and deliver value to customers, Dimension Data’s alliance program points the way forward and reminds us that quality often counts much more than quantity.

—Julie Schwartz, jschwartz@itsma.com

ITSMA’s new Case Study, Dimension Data: Investing in Alliance Marketing and Management, takes an in-depth look at how Dimension Data has built and managed its alliance program. The Case Study is available without charge for ITSMA members and for sale to nonmembers. For more information or to download the report, visit http://www.itsma.com/research/abstracts/CS0005.htm.

The "Softer" Side of Solutions Marketing: Seven Principles for Organizational Change

The more we look at solutions marketing at ITSMA, the more complicated it gets. As outlined in ITSMA’s Solutions Roadmap, mastering the solutions challenge requires substantial changes in the roles and responsibilities of the entire marketing function.

Marketing must become more strategic, taking on greater leadership responsibilities within the firm. Marketing must work more closely with virtually all other departments, as well as with business partners. Marketing must get more directly involved with customers, from the development of specialized solutions through solutions delivery and into the measurement of business results. This is far from a simple to do list. It's no wonder that marketer stress levels are reaching an all-time high!

At the heart of these functional changes, however, lie a set of common principles. These seven principles, which might be described as the softer side of solutions marketing, appear to be crucial to any successful transformation of marketing from stovepipe products and services to more integrated solutions.

• Greater customer intimacy. Continuously increase efforts to understand customer needs and priorities, strengthen customer relationships, share customer information and insight, and engage customers at every level of the organization and in every step of the solutions development process.
• Sharper business focus. Keep business issues and priorities front and center at all times in marketing strategy, solutions development, communications, and all other aspects of marketing operations.
• Enhanced collaboration. Emphasize constant collaboration across the organization (e.g., with research and development, delivery and sales), with key partners, and with customers to ensure creative solutions development, organizational alignment, and successful delivery.
• Aggressive thought leadership. Invest more substantially in developing business, technology, and process knowledge and intellectual capital to increase credibility as a solutions leader in target industries and markets.
• Increased offering innovation. Think outside the box (figuratively and literally) to generate more creative and flexible responses to customer challenges that might incorporate not only technology but also business processes, finance, and other aspects of the customers’ operations.
• Improved communications clarity. Keep all communications (internal and external) clearly focused on core issues, information, and priorities, especially for the higher-level business executives who typically make or influence solutions development and purchasing decisions.
• Greater speed. Do all of these things faster, despite the inevitable pressures from across the organization to slow down in order to research, collaborate, align internally, and so on.

Many organizations already emphasize some of these principles. But few do them all well. And if companies could succeed in the past without excelling at all of them, those days are gone.

As marketers continue tackling all the functional and programmatic changes necessary to become solutions-savvy, the seven principles offer a set of guidelines to help evaluate progress along the way. Are we gaining more intimate understanding of our customers? Is that knowledge working its way through the entire organization? And so on.

Services marketers know better than anyone that it is usually the "softer" issues that make or break successful technology transformations. The same would appear to hold true for transitions in marketing itself.

—Rob Leavitt

ITSMA's recent presentation, Developing and Marketing New Solutions, takes a detailed look at how companies are responding to the solutions marketing challenge. The presentation highlights ITSMA's Solutions Roadmap along with specific examples of solutions marketing initiatives from top firms across the industry. The presentation is available without charge for ITSMA members and for sale to nonmembers. For more information or to download the report, visit http://www.itsma.com/research/abstracts/OLB032703.htm.

On-Demand Computing and the IT Industry Inversion, Part II: How Services Marketers Can Lead the Way

Last month, I suggested that the rise of on-demand, utility computing represents a potential inversion point for the IT industry that could spark a wave of technology development aimed at driving new services rather than services simply supporting technology.

Because utility computing is fundamentally a service business, growth of this market could force traditional hardware and software vendors to significantly change the way they package, price, sell, and deliver their products and solutions.

Such growth could also represent an historic turning point that redefines the role of services marketing professionals. With services taking center stage for utility computing providers (UCPs), services marketers will need to play a more pivotal role in defining solutions and developing go-to-market strategies and tactics.

In the past, most IT companies kept hardware, software, and services development and marketing separate from each other—and kept services and services marketing pretty much on the margins of the business. But utility computing combines standardized hardware platforms, electronic software distribution, remote management capabilities, and on-site support into a set of packaged services aimed at satisfying customers’ end-to-end computing requirements.

Ideally, companies moving into utility computing would put services marketers in charge of integrating the multiple capabilities required for creating a utility computing business. As the experts in understanding and meeting customers’ day-to-day needs, services marketers are well situated to guide their companies’ transformation process, from executive-level strategic issues to go-to-market tactical challenges.

Realistically, it is more likely that services marketers will increase their role and responsibility incrementally as they prove their value in their companies’ transformation efforts on a task-by-task basis.

For services marketers not fortunate enough to be tapped from on high as the new corporate leaders, the key will be to find and leverage points of entry where they can wield influence by capitalizing on their current responsibilities.

Here are five suggestions:

Use customer data to help develop new utility solutions. Initiate new research and harvest existing data from pre- and post-sales support activity logs to determine how customers have utilized hardware and software products historically in their environments. Bring this data to product managers and the research and development department to explore new product designs that can be more easily deployed electronically or managed remotely.

Help reshape corporate value propositions, marketing messages, and communications programs. Work with product marketing counterparts to construct business-oriented value propositions that promote the multidimensional benefits of utility computing solutions rather than the technology-centric marketing messages they created in the past.

Help realign sales and delivery teams to support new solutions. Assist your sales and delivery teams in their efforts to increase skills and knowledge required for selling and delivering utility computing solutions. This step can include developing new sales tools, providing market and industry intelligence in easy-to-use formats, helping assess solution selling and delivery skills, and perhaps even recruiting new sales reps and service engineers and restructuring sales and service compensation programs.

Target partners to fill technology and service gaps. Work with business development teams to identify technology, service delivery, and management gaps that require third-party solutions. Help define criteria for selecting and managing partners that emphasize customer service, transparency, and measurement of joint performance.

Develop new customer loyalty programs. Help develop new loyalty programs aimed at continuously improving the quality of your utility computing solutions and increasing the market penetration of these solutions.

Utility computing could be a catalyst for renewed growth in the IT industry. This trend could also raise the visibility and value of services marketing professionals. By aggressively participating in the kinds of initiatives suggested here, services marketers can ensure that they and their companies are well positioned to capitalize on the potential IT industry inversion.

—Jeff Kaplan, jkaplan@thinkstrategies.com.

Jeff Kaplan, a veteran services marketer and analyst, is managing director of THINKstrategies, a consultancy in Wellesley, MA. Read Part I of Jeff's article in the March ITSMA E-ZINE.

Tech Poll: Small Business CIOs Lead Modest Increase in Spending Plans

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 during the runup to the Iraq war on March 13-20, 2003, shows a slight uptick in optimism about IT spending for the next 12 months but continued uncertainty within the largest companies.

Key findings:

• CIOs plan to increase overall IT spending 6.1% over the next 12 months, up notably from a 5.1% projection in February and the highest projection since March 2002.
• Small businesses with fewer than 100 employees lead the way with plans to increase spending by 16.2%. Firms with more than 1,000 employees plan increases of only 1.5%.
• Almost half of the survey respondents do not see a spending pickup until at least the second half of 2003, with some 26.3% projecting no pickup until 2004.
• Security software led all other product categories in planned spending increases for the 15th straight month, with more than 50% of CIOs planning increased spending in that category. Planned spending for storage systems and computer hardware remained in second and third places, respectively, among eight specific IT categories. The biggest change from the February survey came in infrastructure software, for which 34.3% cited plans for increased spending, up from 29.8% citing increases last month.
• Almost 37% of respondents expect to increase spending on IT consulting, while less than 27% expect to cut back. The remaining 35% project no change.
• Less than 20% of respondents plan increased spending on business process outsourcing, but only 17% expect to cut back. More than half project no change, while another 10% are not sure.

March Tech Poll figures are based on 252 survey responses, with 93% from North America. CIOs made up 90% 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/040103_techpoll.html.

Call for Sponsors: 2003 Market Positioning Studies: CRM, Storage, and 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:

• CRM Solutions: 2003 Market Positioning Study
  http://www.itsma.com/Research/prospectus/mk0370_crm03.htm
  
• Storage Solutions: 2003 Market Positioning Study—Last Call: Study to Launch in April
  http://www.itsma.com/research/prospectus/mk0367_strg03.htm
  
• Managed Services: 2003 Market Positioning Study
  http://www.itsma.com/Research/prospectus/mk0317_ms02.htm

Call for Sponsors: CIO Survey on IT Solutions

ITSMA has spent the last two years researching the transition from products and services to solutions and developing models and tools to help member companies make the transition. But what do buyers think? ITSMA's new research project with Babson College, IT Solutions: The Clients' Turn to Speak, will survey CIOs from major US-based companies to gain their perspectives on solutions and solutions providers.

To ensure maximum value for members, ITSMA is now recruiting a limited number of project sponsors to help design the survey guide and contribute to the analysis. Sponsorship is free of charge for ITSMA members.

For more information about study sponsorship, visit http://www.itsma.com/Research/prospectus/mk0369_sol03.htm or contact Adnelly Reyes at +1-781-862-8500, ext. 14, or at areyes@itsma.com.

EuroNotes: Reevaluating Internal Marketing

Recent spending cutbacks in internal marketing are understandable, according to marketing leaders in Europe, but the continued importance of this aspect of marketing suggests that a close look at the most effective approaches should be a priority.

The impact of reduced spending on internal marketing can be substantial, and the problem is often exacerbated by reliance on techniques such as Webcasts and conference calls. Do people really listen to Webcasts and conference calls, or are they reading email or messaging at the same time?

The way forward, according to senior marketers at ITSMA's recent Inner Circle Member Dinner, is to put more emphasis on segmenting and profiling the internal audience in terms of their potential impact on the firm and on the ways in which they prefer to communicate.

Read the whole story!

More EuroNotes

Upcoming Events

May 12-13 Workshop: Managing Brands and Building Reputations (Dublin, Ireland)
Brand strength is critical in today's business environment, as cautious customers turn first to tried-and-true market leaders. Building a strong services brand, however, requires comprehensive and sustained action within and across companies. Join Bev Burgess, Sara Sheppard, and other senior practitioners to explore the practical steps marketers can take to increase brand awareness, develop a positive reputation, and build a powerful services brand.

For more information or to register online, visit http://www.itsma.com/Events/event_desc/03WS04E03.htm.

May 20 Online Briefing: Best Practices in Customer Segmentation (free to members)
Segmentation is critical to success in today's skeptical technology market, yet effective approaches are often quite different from those traditionally used in consumer product marketing. Join Julie Schwartz, ITSMA's vice president of research, for a review of the latest thinking and best practices in segmentation for marketing technology services.

For more information or to register online, visit http://www.itsma.com/events/event_desc/03OB05N08.htm.

June 18-19 European Forum: Winning in a Solutions World (London, UK)
ITSMA Europe's Annual Forum will explore how to win in a solutions world by marketing, selling and delivering client value. With presentations from leading practitioners and academics in Europe plus working sessions and networking opportunities to encourage peer learning, the forum is a must for marketers looking for practical techniques and new concepts to improve their company's return on marketing investment.

For more information or to register online, visit http://www.itsma.com/Events/event_desc/03AF06E05.htm.

June 25-27 Client-Centric Marketing Course: Accelerating Services Growth (Boston)
ITSMA's signature MBA-level course provides an intensive, hands-on learning experience focused on the core client-relationship issues that services marketers need to master in order to succeed. The course is led by Steve Hurley, ITSMA's vice president of learning, and Philip Dover, faculty director for Babson College's School of Executive Education.

For more information or to register online, visit http://www.itsma.com/Events/event_desc/03ME06N09.htm or contact Lore Griffith at +1-781-862-8500, ext. 19, or lgriffith@itsma.com.

Complete 2003 Events Calendar
http://www.itsma.com/aspfiles/Events/calendar.asp

Event Sponsorship Opportunities
http://www.itsma.com/Events/other_desc/sponsorprg.htm

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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.