ITSMA E-ZINE	February 2004

Editor's Notebook: If Growth Keeps Happening, Why Aren't We Happier?

A funny thing is happening on the way to better times: life doesn't seem to be getting any easier. As growth in technology continues to solidify, it's hard to find people moving far beyond nervous business as usual. Sure, marketing budgets are loosening up a bit and organizations are paying more attention to some of the strategic programs for longer-term success, rather than just living in daily survival mode. But the general mood around the industry doesn't seem to be much better.

Part of the problem is that we're all just working too hard. Business might be improving but we're not exactly racing out to add staff so we can cut back to doing three jobs instead of five. There is also the sobering sense that the economic and tech industry recoveries are still quite fragile. The shaky geopolitical situation worldwide doesn't inspire much confidence in ongoing stability for growth.

And maybe people really do take seriously the Super Bowl curse: years in which teams from the American Football Conference win are bad for business. As a long-suffering fan of this year's AFC-based champion New England Patriots, however, I refuse to add that worry to my list. (Don't get me started on the Celtics or the Red Sox, though.)

Still, things are looking a lot brighter today than a year or two ago. A few more quarters of decent results and we ought at least be able to knock off early on a Friday now and again.

Is this just me stuck in some cold February doldrums? What's making you smile these days?

—Rob Leavitt

What's Hot: Selling Tech Services Getting Harder and Easier

Selling technology services and solutions these days is a study in contrasts. Even as the market has picked up, the actual selling process remains difficult. Buyers continue to go slow, escalate demands, and bring in procurement specialists and financial officers to negotiate every purchase. Offshore competition is growing fast. And internal sales support is spread extremely thin.

On the brighter side, however, marketing and sales leaders have begun to reinvest in the types of programs most needed to increase productivity and effectiveness. Improvements in sales tools, training, and compensation all bode well for selling services and solutions in 2004.

A closer look at eight core aspects of sales performance illustrates the challenging dynamics that characterize the selling process today.

Is the glass half empty…

Measuring performance. Many firms today take a narrow approach to measuring services sales performance, stressing the basic measures of revenue, quota attainment, and the sales pipeline. As firms emphasize consultative selling and customer loyalty, however, they need to take a broader approach. Metrics in such areas as customer satisfaction, team selling, cross-selling, and customer referenceability are as important as traditional financial measures.

Utilizing multiple sales channels. ITSMA research suggests that the highest-performing firms rely on multiple channels to sell services, including field sales, telesales, channel partners, and delivery teams. Yet most firms only utilize one or two of these channels. Better leveraging additional channels can go a long way to improving overall sales performance.

Maximizing recurring revenue. Multiyear contracts and automatically renewing agreements are the cash cows of the services business. Over the last few years, however, recurring revenue has dropped dramatically as a percentage of total services revenue within many technology firms. Even when customers renew services contracts today, it is often at lower levels. This puts great strain on the sales force to find new sources of services revenue, which typically means longer sales cycles.

Aligning marketing and sales. The age-old conflicts between marketing and sales are less tolerated in theory these days but practice has a long way to go. Marketing still tends to operate at arms length from sales in the all-important areas of account planning, business development, and even sales support. Aligning marketing and sales more effectively around strategic and tactical priorities for growth is essential in 2004.

…Or half full?

Investing in the right tools. Notwithstanding the continued gap between marketing and sales, more firms are producing the sophisticated support tools that sales teams need to sell higher-value services and solutions. Healthy majorities of firms, for example, are now using or developing tools to help sales design custom solutions, generate solutions proposals, provide cost-benefit analyses, and analyze return on investment.

Providing the right compensation. The best plans, support systems, and tools mean little if compensation programs do not adequately reward selling the most important types of services and solutions. Fortunately, there are signs that technology firms are finally getting comp plans in line with strategic priorities. More and more firms now provide incentives for selling as part of a team, selling integrated solutions that cross organizational boundaries, and selling solutions with partners.

Improving account management. Sophisticated account management becomes increasingly important in competitive and maturing markets. Although daily practice remains uneven within and across technology firms, the foundation is being laid to improve performance in this critical area. Some three-quarters of all firms in ITSMA's recent sales performance study report having globally consistent processes for account management—a substantial increase from several years ago.

Investing in sales training. Training took a huge hit after 2001 as companies cut back on all activities not perceived to contribute immediately to revenue. As the market began to improve last year, however, firms wisely reinvested in sales training while also searching for the most effective training mix to support evolving needs for skills and knowledge. Sales training expenditures for 2003 were almost back to pre-crash levels, according to the recent ITSMA study.

The picture is far from clear, and whether the sales glass is half empty or half full depends on your perspective. If firms continue to invest in improving the selling process, however, they should well positioned to take advantage of the general pick-up in spending for technology services and solutions.

—Rob Leavitt

ITSMA's latest Sales Performance Study, Turning the Corner: Selling Technology Services in a Recovering Market, provides detailed data, analysis, and best practices in eight critical areas, including sales coverage models, sales force productivity, sales costs and compensation, and more. For more information and to download a summary of the report, visit http://www.itsma.com/research/abstracts/s004.htm.

Features

Unisys Marketing Dashboard Exemplifies Metrics Sophistication

Executive pressure to demonstrate return on marketing investment has pushed many technology and services marketing organizations to create more sophisticated measurement systems during the past few years. These systems, often built around Web-based "dashboards," are designed to help companies better understand which marketing initiatives are most effective and how best to allocate marketing resources.

Building a system that truly measures marketing value, however, is a daunting task. The most common challenges, according to ITSMA research, include the following:

• Aligning marketing goals and activities across the organization with corporate strategy to ensure that measurement systems are properly focused
• Identifying and measuring both tactical and strategic marketing initiatives
• Creating quantifiable metrics
• Incorporating hard-to-measure objectives such as brand equity into the system
• Building and maintaining a system that provides action-oriented data to support improved marketing decisions and results
• Managing the organizational and cultural changes that are required to run a metrics-based marketing organization

The Unisys Marketing Dashboard is one of the best examples of a system that successfully addresses each of these challenges. As a global program, the Unisys dashboard provides measurement data on marketing activities across multiple business units and geographies in real time. The dashboard enables Unisys marketing executives to analyze program results, increase organizational accountability, improve decision making, and provide clear documentation of marketing's strategic value to the business.

Making it happen at Unisys required a yeoman effort in program design and organizational alignment.

At Unisys, marketing coverage spans more than 100 countries across multiple business units and services lines. Prior to the dashboard project, marketing collaboration rarely penetrated beyond the Marketing Executive Council (MEC), which brings together marketing leaders from the different business units and functions to address strategic, company-wide concerns.

Building support for the dashboard across these different marketing constituencies required a balanced approach that emphasized the collective benefits of an integrated measurement system while assuring the leaders of each group that they would continue to maintain adequate autonomy within their groups.

Crucially, the design effort came from the top, with direct leadership from the chief marketing officer and the MEC. Working collaboratively, the members of the MEC developed consensus around seven operating parameters for a new Unisys Marketing Dashboard:

1. Simple and implementable. The system must be easily understood and not overly difficult to implement.
2. Broad support. All key players involved in marketing must participate in the system.
3. Quantitative metrics. The dashboard should emphasize quantitative metrics, although some qualitative metrics may be included.
4. Portability. The system should be designed such that it could easily be integrated into a future marketing automation system.
5. Alignment. The dashboard design must ensure that all important goals, objectives, activities, and metrics are aligned.
6. Best practice. The dashboard should incorporate best practices based on research and consulting engagements on measurement systems within other IT companies.
7. Tailored. The system should reflect the unique Unisys organization structure and strategic direction.

Working with these parameters and seeking constant feedback from key stakeholders across the company, the dashboard design team was able to construct a system that combined individual dashboards for each of six major units with a central dashboard that aggregated all key metrics from those units. The multi-tiered system ensured consistent and integrated measurement for the entire company while continuing to support the decentralized marketing model that fits the Unisys strategy and structure.

Within a matter of months, the dashboard has already delivered concrete value and results to the marketing organization and Unisys at large. Most important, the dashboard has provided the marketing executive team with the data to support fact-based decisions concerning resource allocation based on what is or is not working.

The dashboard has also greatly assisted in the communication of marketing objectives and results across the entire organization—ensuring that the different marketing teams are working in sync. Further, marketing management is now able to provide senior business executives with consistent, relevant data on progress toward key objectives.

—Naomi Steinberg, nsteinberg@itsma.com

This article is excerpted and adapted from ITSMA's forthcoming case study, Assessing Marketing's Strategic Value: The Unisys Marketing Dashboard.

ITSMA Survey Highlights Marketers' Top Challenges

Services marketing leaders are more optimistic as they settle into 2004, but they are still contending with a series of difficult organizational challenges, according to ITSMA's latest budgets and trends survey. In particular, the ITSMA survey highlights five key challenges that characterize services marketing today:

• Doing more with less. Rare is the marketing organization that has avoided cutbacks in budget and head count. Marketing organizations have consolidated, centralized, and realigned to optimize performance. Most marketing leaders have had to cut programs, reduce research investments, minimize training, and hold the line on any and all discretionary spending. Looking ahead, after several years of hovering around 2% of services revenue, services marketing budgets in 2004 appear to be closer to 1.7% of services revenue. Because services revenue is increasing, however, the picture is not all grim. In absolute terms, 40% of ITSMA members expect increases in the size of their marketing budgets in 2004. Another 40% expect the budget to remain the same. Only 20% expect further budget cuts.

• Realigning priorities. Budget allocations provide valuable insight into marketing priorities. In 2004, we see budgets giving relatively more support to product marketing or offering development and management as well as sales support and management. In comparison, last year's budgets showed a greater emphasis on marketing communications. More generally, many organizations have centralized program planning to ensure alignment around top priorities and continued to shift resources from offline to online activities.

• Reorienting demand generation. The requirement to help sales generate revenue has pushed marketing toward demand generation for several years. But many of the traditional demand generation techniques are not generating results. For that reason, many companies are creatively applying market intelligence, segmentation, and targeting to create highly tailored and compelling value propositions. They are supplementing traditional push techniques with pull activities that afford buyers with the power and control they crave. And they are investing more time and technology to track and measure campaign results.

• Reinvesting in brand differentiation. Branding was put on hold somewhat in recent years as companies focused on activities that were more visibly connected to survival, such as lead generation and sales support. Branding is now making a comeback but in a new, more practical form. There is more emphasis on communicating the brand through lower-cost channels and on marketing internally to ensure brand consistency. Rather than use advertising and printed collateral, marketers are leveraging industry influencers with a broad reach such as the media and industry analysts. They are also investing in developing and delivering thought leadership or branded content to attract more sophisticated buyers. The goal is much more differentiation than simple awareness.

• Increasing measurement and accountability. Many more IT services providers have implemented and begun using marketing measurement systems on an ongoing basis during the past year. Initially a response of self-preservation as budgets were slashed and senior executives demanded results, the growing emphasis on measurement is beginning to have a profound effect on marketing strategy and tactics. Not only are marketers becoming more financially accountable, they are now able to fine-tune activities in response to direct feedback.

Succeeding in 2004 will require sharp focus and first-class execution on the core challenges outlined above. ITSMA's latest survey suggests that many marketers are up to the task.

—Julie Schwartz, jschwartz@itsma.com

A more extensive look at ITSMA's recent budgets and trends survey, along with expanded analysis of marketing's top issues for 2004, is available in Marketing's Next Priorities: ITSMA's 2004 State of the Profession Address. This presentation, originally delivered on January 27, is available without charge to ITSMA members and for sale to all others. For more information, visit http://www.itsma.com/research/abstracts/olb012704.htm.

Research Desk

IBM Leads Awareness and Favorability in Managed Services

IBM has a substantial edge in brand awareness and favorability as a provider of managed services for IT infrastructure and network operations, according to ITSMA's first ever Brand Tracking Study for managed services. The study, based on interviews with 300 U.S.-based IT executives, shows that IBM has a strong lead over competing firms in unaided and "first-name-mentioned" awareness among buyers. With no prompting, more than half the study participants named IBM as a provider of IT infrastructure or network operations managed services. Other firms receiving numerous mentions include EDS, HP, AT&T, and Cisco.

Similarly, IBM receives top marks from study participants rating their overall impressions of different firms, although HP and Cisco also stand apart from the rest of the pack with high ratings. Favorability in this instance correlates strongly with familiarity. Study participants also consider themselves much more familiar with IBM, HP, and Cisco than with other firms highlighted in the study, including EDS, AT&T, Verizon, Sprint, Nortel, Avaya, and others.

Further, IBM is strongly positioned in all the categories of managed services tested in the study, with the exception of voice network management. The other categories include on-demand or utility computing, data center management, data network management, security management, and application management or hosting.

Managed services continues to be a top area for investment by technology buyers, as most enterprises continue to look for ways to limit their ongoing technology operating costs. As more and more IT, networking, and professional services firms race into this market to address growing demand, however, buyer confusion tends to favor the strongest brand-name providers.

But the study also suggests that the market remains highly competitive and wide open to new and existing challengers. Many study respondents failed to name any managed services providers when asked which firm they might call; many others named small or local firms. At the same time, respondents are very clear on their top priorities when considering managed services: cost control, security, collaboration, and delivery on promises. Managed services providers that can make a compelling case on these four issues stand the greatest chance of winning with a great majority of potential customers.

—Lori Weiner, lweiner@itsma.com

ITSMA's forthcoming report, Striving for Identity in Managed Services: 2004 Brand Tracking Study, provides detailed data and analysis on how enterprise buyers perceive leading providers of managed services for IT infrastructure and network operations. The report includes data on brand awareness, favorability, market positioning, preferred attributes, and market drivers. The report will be available for purchase at member and nonmember prices in March 2004.

CIOs Most Optimistic Since March 2001 (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 January 8-15, 2004, shows CIOs making the highest forecast for IT spending since the beginning of the downturn in early 2001.

Key findings:

• CIOs plan to increase technology spending 8.2% over the next 12 months, up significantly from a 6% projection in December. When the projection is adjusted to give added weight to larger firms (those with more than 1,000 employees), the projection rises even higher, to 8.8%.
• Many more firms plan to increase spending over the next 12 months than plan either to keep spending flat or cut back.
• More than half of all firms plan to increase spending on computer hardware, up noticeably from about 42% planning increases in December. Only about 14% of firms plan to reduce such spending.
• CIOs in business services, financial, retail, telecom, travel/entertainment, and utilities all plan to increase spending more than the average. CIOs in federal and state government, higher education, and manufacturing expect to increase spending less than the average.

January Tech Poll figures are based on 380 survey responses. 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 to Launch New Software and Services Study

As buyers increase investments in business applications and services, the market has become more competitive than ever. The major software providers continue to expand their offerings and build their services capabilities while mergers and acquisitions, rebranding initiatives, and the rise of software-as-service are fast changing the buying calculus for enterprise customers.

ITSMA's 2004 Software and Services Brand Tracking Study will provide application providers and consulting companies with insight into how decision-makers in Fortune 1000 companies view the market and perceive leading brands. The study will cover such areas as:

• Purchasing plans and priorities for software and related services
• Brand awareness, knowledge, and favorability for leading application and implementation providers
• Competitive positioning in different application markets
• Relative importance of different provider attributes
• Preference for different providers by type of application (ERP, SCM, CRM, HR, Financials, etc.)
• Preference for different purchasing alternatives (e.g., purchase, monthly fee, or on-demand)
• Influence of different types of sales, marketing, advertising, and analyst recommendations

Based on the highly successful formula utilized in ITSMA brand tracking studies in other markets, this multiclient study will provide the data and insight that participating companies need to strengthen marketing initiatives, shape market perceptions, and track marketing effectiveness.

For more information on the upcoming study, contact Lori Weiner at +1-781-862-8500, ext. 42 or lweiner@itsma.com.

EuroNotes: Breaking the Vicious Circle to Build the Marketing Future

We all know that marketing teams across Europe lived with tremendous pressure during the last few years. Budget cuts, staff reductions, and constant demands to demonstrate greater return on marketing investments have taken a serious toll. Few marketers have been able to avoid the personal and professional impact of losing colleagues, losing budget, and facing increased pressure to prove that their efforts really matter.

The simple reality is that a great many marketers are now overworked and overstretched as a result of picking up the workload from colleagues who have been let go and from doing more work in-house since budgets have been cut for external agency support

So, how can we dig ourselves and our teams out of this situation? How can we build the creativity and ingenuity back into marketing to drive better business results while accepting that resource constraints and the pressure to demonstrate value are most likely here to stay?

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

Focus on Effectiveness: 2004 Priorities for European Marketers
February 19 Online Briefing (No charge for ITSMA Europe members)
http://www.itsma.com/Events/event_desc/04OB02E01.htm

Following only modest growth in 2003, IT services marketers in Europe are looking toward stronger and more broad-based success across a wider range of markets in 2004. Join Bev Burgess and Philip Oliver for a review of the most important trends in services marketing and the top priorities for European success during the year ahead.

Communicating Solutions: Why Is It So Difficult?
March 16 Online Briefing (No charge for members)
http://www.itsma.com/Events/event_desc/04OB03N05.htm

For all the rhetoric that has taken over vendor Websites, collateral, and PR, prospective buyers remain skeptical and confused when hearing about so-called solutions. Join Steve Hurley, ITSMA's vice president of learning and performance excellence, to cut through the confusion with a discussion of the four key challenges in communicating solutions.

Growing Your Solutions Business: Developing, Marketing, and Selling Integrated Solutions
April 13-14 Workshop (San Francisco, CA)
http://www.itsma.com/Events/event_desc/04WS04N19.htm

Technology and professional services firms have moved aggressively over the last few years to become solutions providers. Yet the transition is proving difficult as firms realize that change is required at virtually every level of the organization. This workshop provides participants with tools, models, and best-practice examples to support their efforts in seven key elements of the solutions transformation.

Complete 2004 Events Calendar

Event Sponsorship Opportunities

ITSMA in the News: ITSMA Expands Consulting and Research Capabilities

ITSMA has recently made three strategic additions to its growing team of consulting and research experts.

• Philip Oliver, former vice president of worldwide strategy for IBM Global Services, is lead ITSMA's work in marketing strategy and portfolio management.
• Allison Dillen, former vice president for custom research at Gartner, is now leading ITSMA's custom research in such areas as growth opportunities, brand and competitive positioning, and customer satisfaction.
• Pamela Morgan, former vice president for Gartner Consulting, is expanding ITSMA's strategic consulting initiatives in areas including new business development, partner strategies, solutions marketing, and sales enablement.

ITSMA also recently announced the promotion of Julie Schwartz to the newly created position of senior vice president and chief research officer.

Read the full story

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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.