ITSMA E-ZINE	January 2004

Editor's Notebook: CAN-SPAM, PowerPoint, and...Fun

Hmm. It's a bit odd to begin a new year trying to decipher the meaning of CAN-SPAM. As marketing gurus (or so we like to think), we're more inclined to think "can't spam." But the new U.S. legislation that both legitimizes and discourages junk email raises as many questions as it answers. Viewed optimistically, I like the fact that the law pushes us all to look closer at our communications programs, policies, and systems. I'm not expecting any sudden void in my in-box. Spammers will no doubt continue to spam, and probably in more devious ways. For the rest of us, though, I look forward to some meaningful efforts to improve the quality, value, and relationship-building aspects of our e-marketing efforts.

And speaking of communication, is 2004 also the year to can PowerPoint? When infographic guru Edward Tufte says, "Power corrupts. PowerPoint corrupts absolutely," as he did a few months ago in Wired Magazine, it may be time to think harder about presentation styles as well. Tools are obviously what you make of them, and I've certainly seen some great PowerPoint presentations (although the ratio of great to deadly dull is rather low). But if 2004 is to be a year of marketing revival in technology, with marketers leading the charge to greater growth and profitability (as we all hope it will be), we may well need to take more drastic action on the creativity front. For all our focus on marketing efficiency, metrics, and now even legal compliance, we still need to have some fun, right?

What impact is CAN-SPAM having on your plans and operations? How much of a burden is compliance? Are you overhauling e-marketing, or just making a few tweaks here and there? And what's your take on the corruption/creativity conundrum with PowerPoint?

—Rob Leavitt

What's Hot: Making Lead Generation Count: Wipro's Web-Based Program

Facing enormous pressure to produce qualified leads for the sales force, marketers are rethinking their lead-generation strategies and programs. What new tactics will boost response rates? Which types of campaigns can bring the greatest return?

The reality is that although different tactics and marketing vehicles do matter, it is the overall system and execution that drive the most successful lead-generation activities.

The integrated lead-generation program at Wipro Technologies is a great case in point. Since its beginning three years ago, Wipro's program has created a 350% increase in leads and now directly accounts for more than 40% of company revenue, compared with a negligible amount prior to 2000. Given that Wipro has grown substantially as one of India's top IT services firms during that time, the lead-generation program has played a critical role in supporting company success.

The power of Wipro's program lies in the combination of sophisticated, mostly Web-based tactics with a fully integrated campaign management system.

Many firms talk of a single view of the customer, yet just as many are saddled with disparate databases and uncoordinated marketing and sales activities. The common result is that some prospects are bombarded with conflicting messages through different channels while others simply fall through the cracks.

Wipro faced exactly that challenge several years ago and invested in the creation of a single prospect intelligence database that provides a complete view of all marketing and sales interactions with prospect companies as well as extensive profile information. The database now includes detailed data on multiple contacts from almost every company in the Fortune 1,000 and more than 17,500 senior management contacts in all. The database is so effective that Wipro no longer buys lists of any kind to support its marketing efforts.

As for tactics, Wipro focuses largely on "pull" marketing initiatives, targeting prospective clients while they are searching for relevant IT information. Mostly this means Web-based marketing with four key components:

• Search engine promotion
• Thought leadership content on leading IT portals and directories
• Web seminars and events
• Website content

Wipro's own Website is the fulcrum of the entire lead-generation program. The marketing team has invested heavily in creating a wide range of material to showcase company capabilities and successes, demonstrate thought leadership, and provide interactive opportunities for prospective clients to sample Wipro's wares.

Wipro uses special offers and more than 400 case studies to get visitors to demonstrate and register their specific interests. Comprehensive Web monitoring provides regular analysis of what is and is not working and what role the Web is playing in lead generation and relationship development.

Building on the "pull" elements, Wipro uses permission marketing to strengthen relationships and move prospects along the sales cycle. Specific initiatives include telesales, direct mail, and industry-based newsletters. In all cases, the marketing team relies on the prospect database to create carefully targeted lists based on incoming traffic, client profiles, and ongoing Web activity. This helps create the greatest possible impact from the limited "push" activities. Typical marketing campaigns today target as few as 30 to 50 accounts.

Results from Wipro's integrated lead-generation program have greatly exceeded expectations and created an extremely high return on marketing investment. Along with a surge in qualified leads has come a greatly accelerated sales cycle. The typical six- to nine-month sales cycle has been shortened to 30 days in some cases. Leads are converted to sales far more quickly because the targeted approach is more personalized and focused.

The particular tactics at the heart of Wipro's program are well known, if not always well developed. No doubt Wipro has done a great job in improving its Website, developing newsletter and Web events, and targeting the right prospects. And it is certainly helped by being in a growing market. Yet the great power and the most important lessons of the program lie in its integrated nature and its disciplined execution.

—Naomi Steinberg, nsteinberg@itsma.com

This article is excerpted and adapted from Wipro Technologies: The Art and Science of Effective Lead Generation, which is available at no charge to members and for sale to all others. For more information on the full report, visit http://www.itsma.com/research/abstracts/cs0007.htm.

Features

Confronting the Offshore Challenge: Alternate Scenarios and Urgent Questions

Make way for the offshore advisors? As more companies explore the potential advantages of moving IT and other business services to low-cost offshore operations, a number of consulting firms are trying to position themselves as independent intermediaries and advisors.

Firms including DiamondCluster, NeoIT, and TPI help clients determine which services are ripe for moving offshore, which offshore firms to use, whether it makes sense to build your own offshore capabilities, and how best to manage offshore relationships. Some of the intermediaries will take a hands-on role as well, brokering deals and managing contracts with offshore providers. Amid the confusion surrounding the costs, benefits, and risks of going offshore, the intermediaries would seem to have a profitable future.

According to consulting industry expert Tom Rodenhauser, however, the prospects for the intermediaries depend heavily on how the broader offshore trend plays out over the next few years. Indeed, he says, the intermediary role is only likely to take off in one of four potential scenarios for the offshore future.

In an intriguing new report, Offshore Consulting: Benchmarking Future Success, Rodenhauser and Fiona Czerniawska outline the following four scenarios:

1. Constant confrontation. The offshore market continues to grow rapidly, but price-centric clients dominate the market, intensifying competition between onshore and offshore providers and pushing client/supplier relations to an all-time low.
2. Profitable distrust. Wariness over the stability of low-cost economies limits offshore growth to the largest and most risk-taking clients, placing intermediary firms in a strong position to navigate between traditional onshore firms and the most credible offshore challengers.
3. Onshore returns. Economic growth weakens cost-cutting pressures to move offshore, and clients reopen their wallets for higher-priced onshore firms.
4. Offshore rules. Growing confidence in the value of offshore, combined with continuing cost pressures, supports continued rapid growth for the offshore firms, which move higher up the value chain and build stronger direct client relationships.

Winners and losers obviously can vary greatly across the different scenarios. But the divergent implications of each scenario make it extremely difficult to set strategy, no matter which side of the IT or consulting industry you're on.

Step one, according to Rodenhauser, is to understand the factors that will most affect the client movement toward offshore services. Among the most important factors, he says, are the perceived risk of moving offshore, the willingness of clients to sacrifice face-to-face contact with suppliers to reduce costs, the relative emphasis on cost control versus revenue generation, and the changing definitions of what services are believed to be "offshorable."

Step two is to determine where your competitive advantages lie today within the larger constellation of the onshore/offshore dynamic and how viable those advantages might be under the different scenarios of offshore development. Virtually all IT and consulting firms need to create a more optimal mix of onshore and offshore capabilities for marketing, sales, delivery, and managing relationships. Getting from here to there, of course, may require substantial organizational change.

Step three is to align the organization around the new vision and begin to reposition the company for the emerging future. Today, Rodenhauser notes, "Everybody is racing away from what they are, but it's hard to change the market view of what you are when you really haven't determined who you want to be."

From a marketing perspective, Rodenhauser's analysis raises at least four urgent questions for onshore and offshore firms alike:

• To what extent are you examining the implications of different scenarios for the continued development of offshore consulting and IT services?
• How well do you understand your own customers' perspectives on offshore alternatives? What types of services do they consider to be offshorable? How do they weigh cost/benefit/risk tradeoffs for onshore and offshore providers?
• How do customers, prospects, and market influencers view your firm's value propositions vis a vis those of key onshore and offshore competitors?
• What offshore and/or onshore capabilities and offers are most critical to expand for your most strategic clients and prospects?

Overall, Rodenhauser is confident that the IT services, outsourcing, and consulting industries stand to gain from the continued growth of offshore services. For individual firms, however, the margin of error in succeeding in the emerging environment is quite slim indeed.

—Rob Leavitt

Through special arrangement with the publishers, ITSMA is able to offer copies of Offshore Consulting: Benchmarking Future Success to ITSMA E-ZINE readers at a 10% discount. For more information on the report, visit http://www.consultinginfo.com.

Leveraging Customer Success: Six Tips for Competitive Advantage

It should go without saying that customer success stories are a critical component of an effective marketing program for technology services and solutions. Potential buyers remain skeptical of company claims and look most of all for proof points that companies can deliver concrete business results. Success stories provide exactly the kind of memorable information that business buyers need to remember your firm, gain confidence in your capabilities, and overcome skepticism about the effectiveness of your solutions.

Unfortunately, few technology firms appear to have cracked the code for producing compelling success stories that further the sales process. Indeed, a recent survey by Lee Communications suggests that most firms leave out some or all of the critical information needed to advance the prospect's decision to buy. According to this survey of success stories published by 25 large and/or up-and-coming technology firms:

• Seventy-six percent of the stories failed to demonstrate competitive differentiation or otherwise explain why the customer's need was difficult to meet.
• Sixty-four percent provided no quantified results.
• Sixty percent did not include a concise summary highlighting the essential elements of the story (e.g., customer title, industry, business need, solution, benefits, and results).
• Forty-eight percent neglected to describe any business implications of the customer's technology need or needs.
• Forty percent failed to explain why the solution led to the stated results.
• Thirty-two percent included no mention at all of business results (quantified or not).
• Twenty percent did not even describe specific customer needs, mentioning only generic needs such as "improving productivity" or "integrating systems."

Weak success stories not only fail to influence prospective buyers and outside analysts and journalists; they also leave a critical gap in the necessary support system for the sales force. Inexperienced salespeople, in particular, who rely on collateral to prepare for sales calls, are working "unarmed." The good news, of course, is that producing compelling success stories can provide an important competitive advantage in an environment where so many others fall short. Most important, great success stories can immediately pique the interest of rushed and skeptical buyers while simultaneously giving harried sales people a valuable tool for preparation and collateral handouts.

Six Tips for Competitive Advantage

Do your success stories fall short, like most of the others? Or do they stand out as effective marketing and sales tools? Here are six tips to help evaluate the impact of your stories:

1. Clearly define the customer's need in business terms. What did the customer need to accomplish and what were the business implications of doing so—and of not doing so?
2. Emphasize the barriers to meeting the customer's need. Make it clear that achieving the goal wasn't easy; that's why they needed you. This might be stated as, "We got to the point where we had to find a way to 'X'," or "What made it difficult was 'Y'."
3. Identify in business terms the solution you provided. This is not a collection of product features or service capabilities (although it is okay to mention those), but the overarching solution that overcame the customer's barriers and achieved the necessary results.
4. Specify the concrete results accomplished with your solution, quantified as much as possible. Be sure to tie these results back to the stated goals.
5. Demonstrate how your firm stood out from the competition in the customer's mind. You can do this without mentioning competitors by name, if desired.
6. Provide a brief summary with all the essential information right at the beginning of the story. Your prospective customers and your own sales people should be able to capture the essence and key details of the story at a single glance.

Technology marketers are not generally responsible for actually delivering the business results that are worth promoting as examples to the next prospective customers. Yet they too often fail to take full advantage of their firm's hard-won successes. Following the six tips outlined above can help ensure that your stories indeed stand out from the crowd.

—Bill Lee, bill@lee-communications.com

Bill Lee, president of Lee Communications, is an ITSMA Associate who specializes in supporting customer reference programs for technology companies. For additional stories on improving customer reference programs, including an expanded article on "Saucers Stories: The Top Five Mistakes," visit http://www.lee-communications.com. Contact Bill if you would be interested in an evaluation of one of your published success stories.

Research Desk

Selling Services Online—Not

Can IT services make it on the Web? Will buyers actually buy them online? Judging by the participants in ITSMA's 2003 Sales Performance Study, it's not happening yet.

ITSMA's recently completed study surveyed 34 companies from across the technology, networking, and professional services industries, and only a small minority of them are even trying to sell services directly via the Internet.

In all, only 13% of the companies include a direct Internet channel in their bag of tricks. By comparison, almost all use a field sales force, and almost half use telesales and channel partners as well. These numbers hold true across the sectors, including systems vendors, software firms, professional services firms, and others. Neither was there any real difference between larger and smaller firms.

More dramatic still, actual sales via the Internet accounted for only a fraction of 1% of total services revenue. Of course, many of the services we're selling are complicated, but less than 1%? For an industry that is supposed to be building the new economy, this seems rather on the low side, don't you think?

Are we missing something here? Is your firm breaking the mold and selling up a storm online? Are IT services ripe for online sales? Let me know what you think—and what you're doing to lead the way. I'd love to cite your stories to show how it can be done in a future E-ZINE edition.

—Rob Leavitt

ITSMA's 2003 Sales Performance Study will be available for purchase at member and nonmember prices in late January 2004.

CIOs Plan Modest Spending Increases in 2004 (Tech Poll)

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 December 4-11, 2003, suggests that CIOs project modest spending growth on technology in 2004.

Key findings:

• CIOs plan to increase technology spending 6% over the next 12 months, up from a 4.2% projection in November but in line with similar projections of around 6% for the three months before November. This represents the highest December projection in three years.
• Almost two-thirds of respondents project either a modest or more substantial pickup in spending over the next three months, compared with only about one-third who see either no pickup at all or even worse.
• Spending plans are driven at least in part by substantial application backlogs. Some 45% of respondents report having a "significant" application backlog; the number is even higher (55%) at firms with more than 5,000 employees.
• Similar to last month's projections, security software, storage systems, and computer hardware showed the greatest strength among eight specific technology segments, while eBusiness applications, telecom equipment, and outsourced IT services showed the weakest projections.
• This month's Tech Poll introduces a "New Economy Buildout" index which combines the percentage of purchases the average company plans to make on the Internet in the coming year with the percentage of sales to be derived from the Internet during that same period. For December, the index was 35.1, with respondents projecting 24.7% of purchases and 9.4% of sales on the Internet over the next 12 months. Because the index could theoretically reach 200, this suggests that much of the new economy buildout remains in the future.

December Tech Poll figures are based on 185 survey responses, with 94% from North America. CIOs made up 83% of the total respondents. Large firms with more than 5,000 employees represent 15% of the results. 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/techpoll.

ITSMA Brand Tracking—Network Services: Buyer Preferences in the Enterprise Market

Over 75% of enterprise buyers in ITSMA's 2003 network services study stated that their spending on network services will either stay the same or increase over the coming year. As the market slowly returns, services will be a crucial differentiator for firms looking to again expand their revenue base in networking.

But how have buying priorities changed? Who are the perceived leaders in the market? Most important, what are enterprise buyers looking for when they buy network services and solutions?

ITSMA's upcoming 2004 study, Network Services: Buyer Preferences in the Enterprise Market, will provide a detailed analysis of how both network and business executives in the Fortune 1000 market assess the leading vendors of networking services and solutions as well as the market as a whole. Participation will give study sponsors the data they need to validate internal assumptions, better understand vertical nuances, improve marketing strategies and tactics, and create more effective brand differentiation.

Learn more about the value of participation:
http://www.itsma.com/research/prospectus/mk0410_ent04.htm

Visit ITSMA's Online Research Library for a complete listing of publications on moving from products and services to solutions, strengthening brand differentiation, empowering the sales system, leveraging partners, improving customer loyalty, justifying marketing investment, and other critical marketing and sales topics: http://www.itsma.com/onlinelib.asp.

EuroNotes: ITSMA Europe Defines 2004 Agenda

Heading into the fast-changing economic landscape across Europe, marketers face a clear set of challenges in stimulating results for their businesses. Buyers remain cautious and sceptical about IT investments; economic conditions vary widely across the continent; and marketing organisations themselves continue to operate with limited resources and conflicting pressures. Perhaps most important, the European Union is set to grow substantially with the addition of around 200 million people from 10 new member countries. This will stretch the range of economic performance even further and could dramatically alter the nature and scale of demand for (and supply of) IT services and solutions.

In this context, ITSMA Europe is focusing its 2004 agenda on five main priorities to support marketing leadership and success:

1. Driving growth through marketing-led business strategy
2. Demonstrating brand differentiation
3. Optimising the portfolio and designing innovative offers and value propositions
4. Building account-based, relationship development programmes
5. Continuing to demonstrate the value of marketing

Read the full story

More EuroNotes

Marketing Toolbox: Marketing Metrics Health Check (Interactive Assessment)

Measuring marketing performance is all the rage these days, and for good reason. No longer do marketers have the luxury of operating on instinct, "good ideas," and anecdotal feedback.

No doubt your organization has stepped up efforts to create marketing metrics and measure results of marketing campaigns and initiatives. But how robust is your system? Have you thought through all the elements required to create, maintain, and take advantage of a measurement system?

Jointly developed by ITSMA and Venture Communications, the Marketing Metrics Health Check provides a quick self-assessment of the effectiveness of your company or organizational system for measuring marketing performance.

Take me to the Health Check

More Marketing Tools (membership online access required)

Upcoming Events

Marketing's Next Priorities: ITSMA's 2004 State of the Profession Address
January 27 Online Briefing (No charge for members)
http://www.itsma.com/events/event_desc/04OB01N01.htm

Succeeding in the coming months will require more sophisticated strategies, more creative campaigns, increased sales productivity, and continuous improvement of marketing performance. Join Dave Munn and Julie Schwartz for their annual review of the most important trends in services marketing and the top priorities for success in 2004.

ITSMA Executive Roundtable
February 3 (Santa Clara, CA—Invitation-only for members)
http://www.itsma.com/Events/event_desc/04RT02N02.htm

ITSMA's invitation-only, half-day executive roundtables provide senior marketing executives a great opportunity to discuss current challenges with peers from other member companies. Facilitated by Dave Munn and Steve Hurley, this roundtable concentrates on marketing's role in driving sales and accelerating the sales cycle.

Selling IT Services: Critical Benchmarks, Trends, and Priorities
February 5 Breakfast Briefing (Santa Clara, CA—No charge for members)
http://www.itsma.com/events/event_desc/04BB02N03.htm

Boosting sales performance and productivity for services remains a critical goal for many IT firms, and ITSMA has a wealth of new data and examples to share from its forthcoming 2003 Sales Performance Study. Join Dave Munn and Steve Hurley for a review of the latest benchmarks, trends, and priorities for selling IT services.

Building Professional Services: Implementing a Services Strategy
February 12 Workshop (Columbus, Ohio—Cosponsored with Fisher College of Business)
http://www.itsma.com/events/event_desc/04WS02N04.htm

With product sales slow, many technology companies are working hard to build a profitable professional services business. But succeeding in the face of numerous organizational, marketing, sales, and delivery challenges is extremely difficult. This customized workshop for senior services executives provides an intensive, hands-on program on the strategies and tactics necessary to incubate and grow a professional services business at product-centric companies.

Complete 2004 Events Calendar

Event Sponsorship Opportunities

Do you have a services marketing question?
Visit Ask ITSMA to access our experience, insight, and research results.

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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.