ITSMA E-ZINE	March 2004

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Editor's Notebook: Onward and Upward

The first quarter looks pretty good, spring is around the corner (at least in the Northern hemisphere) and baseball spring training is already underway. Of course the economy is not exactly roaring along, terrorism has again reared its ugly head, and the new politics of outsourcing are roiling industry waters, so it's not all great news. Still, we're thinking onward and upward here in Lexington. Onward with marketing's s-l-o-w but seemingly steady return from the depths of recent despair, and upward with some more ambitious visions of marketing's emerging leadership role in services and solutions.

I'm testing the onward and upward theme with a "marketing must lead" piece on the move to solutions, and look forward to your feedback on that. The theme continues with how-to pieces on reference management and proposal writing as well as a new tool to help you evaluate your Website from a solutions perspective. And while we're prescribing, two more notes:

• Register by March 15 for early bird pricing on our great Growing Your Solutions Business workshop (see below)
• Start planning now for your Services Marketing Excellence Award submission: details to follow in the April E-ZINE.

—Rob Leavitt

What's Hot: When Moving to Solutions, Marketing Must Lead the Way

Sometimes where there's smoke there really is fire. "Solutions" has become quite the cliché in technology over the last few years. Everyone says they are selling solutions and buyer skepticism runs rampant. Beneath the hype, though, many companies are legitimately making progress in shifting from a product- to a customer-driven approach. Rather than touting servers, software, and services, companies are beginning to develop integrated offers that provide measurable business value.

The transition is far from easy. Moving to solutions affects virtually every aspect of the company, from R&D and product development to marketing, sales, and HR. Even finance is involved; traditional product-based accounting systems provide no easy way to track revenue from integrated solutions.

Most commentators emphasize the importance of top-down executive commitment to the solutions transformation. Clearly that is critical for any major change. Yet marketing has to play a leading role as well. Only marketing can create the necessary connections among customers, partners, and dispersed company resources to create solutions success.

Where are our best opportunities? Marketing has to generate the market and customer insight that provides a basis for solutions development, promotion, and sales. Marketing is the right place to aggregate and analyze the information coming from its own research, customers, sales and delivery organizations, partners, and external sources.

Which capabilities should we bring to bear? Marketing is best suited to lead the offer development process, which should involve customers, partners, and multiple internal organizations to shape the right offers for the right target segments. As solutions become more central to the business, marketing should take a stronger role in product and services development, too, to help ensure the creation of the right solutions components.

How do we build awareness and interest for new solutions? Obviously this is marketing's job, but the challenge is to refine the program mix. Promoting solutions requires deeper business insight, higher-level prospects, and narrower segments to target. Promotion activities must follow suit with greater emphasis on communicating to business executives, developing thought leadership, influencing the influencers, and making the business case in specific industry environments.

How can we move sales to solutions selling? The transition from box pushing to consultative selling is never easy, but marketing can play a key role by paving the way with qualified leads and providing the right kinds of information and tools to move the discussion along the sales cycle.

What is required to ensure quality delivery? Marketing doesn't play much (or any) role in delivery, but it can certainly influence the process. For example, customer references and success stories are critical to building your solutions business. Building a robust reference program gives marketing a powerful tool to track delivery success and enhance accountability for results.

How can we measure solutions success? Revenue is always the first measure and this can be a struggle, depending on existing financial systems. Marketing should push ahead with add-on and experimental tracking initiatives to get the accounting ball rolling toward solutions. Equally important is tracking key account development, competitive positioning, new market penetration, and other strategic metrics.

How do we get the whole company on board? Marketing should be front and center in developing the vision and programs that generate excitement about the transition. This means sharing insight on the changing market reality and the growing solutions opportunity as well as highlighting strategic wins and competitive differentiation.

Customers and collaboration lie at the heart of the move to solutions. Becoming a true solutions provider means turning your company inside out and putting customers' business problems at the center of the organization. This is only possible with a substantial commitment to collaboration, first of all with customers and second across all parts of your own organization. Both of these, in turn, require a yeoman effort from marketing to lead the way. The CEO can mandate the change. Only marketing can make it happen.

Is marketing up to the task? Is this even the right vision? Or is it too aggressive and self-serving? What do you think?

—Rob Leavitt

Three upcoming events dig deeper into the solutions challenge: "Communicating Solutions: Why Is It So Difficult?" (Online Briefing), "Growing Your Solutions Business: Developing, Marketing, and Selling Integrated Solutions" (Workshop), and "Marketing-Led Growth: Building a New Vision" (Chief Marketers' Conference) all highlight different aspects of moving to solutions. See below for more information.

Features

Client References: Thinking Through All the Issues

You're half-listening to voicemail and suddenly hear this: "...and they're really interested in the new solutions package we presented. They picked right up on our business impact pitch and want more info on successful implementations. Do we have case studies on how we've done this in their industry? And we need at least two client references. I said I'd send all this by the end of tomorrow."

No problem, right? Or are you like most companies and your reference management program doesn't quite provide easy lookup across a broad range of clients, services, and solutions?

In today's highly competitive environment, selling complex services and solutions depends heavily on your ability to provide proof points in multiple formats, and to meet that goal a robust reference program is more important than ever. Most companies consider a collection of brief case studies to be a "reference program." In fact, having success stories is only one piece of a much larger set of reference-related materials that marketing should maintain to support business development and sales. As many as 30 different types of reference materials may be required to support a comprehensive program.

Take a good look at your reference system. How quickly and effectively could you respond to the voice-mail message? The following nine issues and related questions provide a quick guide to help you evaluate the strength of your program:

1. Program definitions. Do you have a common definition of "references" that is understood across the company? Is there a clear understanding of the program itself?

2. Program objectives. Do you have a clear set of objectives for using references—and not using them? How important are references within the larger marketing program? When do you use them within the sales cycle?

3. Reference identification. How do you identify and classify potential references? Are there clear criteria and thresholds to help determine when a client could potentially become a reference? Is there a standard template for reference information? What classification scheme is most useful for segmenting references?

4. Data collection. Which people and organizations are responsible for gathering reference information? How does the reference collection system relate to other information systems (e.g., the CRM system)? Have you ensured collection of consistent and usable information? Do you include discussions of references while negotiating new engagements or in contracts themselves?

5. Data management. How and where do you store the information and with what types of access? Who is responsible for data integrity? What types of data manipulation and analysis are possible?

6. Communication vehicles. How do you communicate references internally and externally? What communication vehicles are most effective with different audiences inside and outside the company? How often do you use the same references? How do you match the right communication vehicles (e.g., case studies, print advertisements, emails, presentations, etc.) to the right audience?

7. Program policies. What types of policies exist to support the program? Who is allowed to use each type of reference information? How often do you check in with existing references to make sure they are still enthusiastic? How do you ensure client confidentiality when it is desired?

8. Program incentives. How do you use incentives, if at all? Do you provide incentives internally for people to help recruit reference accounts and gather reference data? Do you provide any incentives for clients to become references? If you do, are there clear policies to ensure the integrity of the program?

9. Program management. Who has what roles and responsibilities for developing and managing the program? Is there adequate top-level support? Do you have sufficient resources to manage the program? Are there metrics to evaluate progress and success?

Putting the time and money into constantly supporting and improving your reference management program may sometimes seem more trouble than it is worth. But the benefits are substantial: more effective marketing communications, high-impact tools for the sales force, and, ultimately, more credible proposals to win and keep business.

Equally important, the mere existence of a high-priority program sends a powerful message to delivery teams about the importance of conducting the type of work that will yield enthusiastic references to sustain the system.

Finally, if the benefits don't convince you, just consider the downside of stalled proposals or, worse yet, salespeople directing hot prospects to past clients that no longer want to serve as references.

—Steve Hurley, shurley@itsma.com

ITSMA members with online access can download ITSMA's Reference Management Guide from the Marketing Tools section of our site: http://www.itsma.com/aspfiles/Research/rs_sbd.asp?ID=Tool.

Creating Winning Proposals: Practical Guidelines for Boosting Win Rates

Throughout the sales process, your team invests a great deal of time and energy in meetings, site visits, and relationship building with prospective clients. If all goes well, you get to the proposal stage. And no matter how well the discussion has gone to this point, proposals almost always require a substantial and specialized effort to gain approval.

Even if it is not a competitive situation, the increased scrutiny that meets any IT proposal these days puts tremendous pressure on proposal writers. Winning proposals must translate everything you know about the company's service requirements into a high-impact document that persuasively demonstrates that your firm offers:

• The most qualified professionals
• The most relevant industry and technical credentials
• The most creative and effective solution
• The most responsive client service
• The best business value

The following 10 guidelines for winning proposals reflect the authors' experience in writing and supporting hundreds of successful proposals to Fortune 500 companies for IT, professional, and outsourcing services over the last 20 years:

1. Proposal planning. Organize a proposal team with clear roles and responsibilities, including proposal strategy, value proposition, positioning, competitive differentiators, content, formats, and other elements. Design a work plan with adequate time for research, writing, editing, reviews, approvals, and production.

2. Transmittal letter. Communicate high-level messages to the prospect's senior officers about your firm's value proposition, positioning theme, shared goals/values, expected benefits/results, and resources/commitments.

3. Executive summary. Use this opening section as your central sales pitch. Give executive decision makers 10 to 15 persuasive reasons, key selling points, and distinguishing factors for selecting your firm.

4. Value proposition. Present a compelling value proposition that clearly spells out the strategic, operational, technology, and cost-reduction benefits for the client. Discuss exactly how you will deliver these expected benefits/results as well as their estimated business and financial value.

5. Company's service requirements. Demonstrate your in-depth knowledge of the client's business objectives, goals, and plans as well as trends impacting the company's future. Highlight your understanding of the company's service requirements, including executives' special needs, interests, and priorities.

6. Engagement team. Emphasize top management commitment to the client and project. Introduce the engagement team leaders, directors, managers, and staff in a personalized way, including their roles, responsibilities, and relevant experience. Photographs of the team members, along with personal quotes, can make a big difference.

7. Responsive service plan. Describe your detailed and comprehensive client service plan and show how it is tailored to meet the company's special requirements, needs, and interests.

8. Responses to RFP questions. Create a separate section with clear, concise, and responsive answers to each question.

9. Firm experience and credentials. Demonstrate your firm's leadership, resources, capabilities, and expertise in key industries, service lines, technical specialties, and subject matter, including client lists, engagement summaries, and business results.

10. References/influencers. Use favorable research and analyst reports to showcase third-party validation of your firm's leadership, capabilities, and reputation. Include quotes from satisfied clients as well.

In sum, winning proposals must present compelling value propositions in terms that address top management decision makers, their primary reasons for buying your firm's service or solution, and their criteria for ranking and selecting a provider. They must convey the image of a firm that delivers superior quality and excellence. They must be written in a clear, concise, and readable style. And they must be tailored to individual prospective clients with no boilerplate.

—Joseph Vales and Gilbert Parker

Joseph Vales is founder and senior partner of Vales Consulting Group, and former managing director of global marketing for business process outsourcing at PricewaterhouseCoopers. Gilbert Parker, director at Vales Consulting Group and a veteran proposal writer, leads the firm's Sales Proposal Process Reviews. They can be reached at 1-914-967-3200 or jvales@valesconsulting.com.

Research Desk

Jostling for Advantage in Managed Services

With almost 40% of large enterprise buyers planning a significant change in their IT infrastructures in the next year, according to recent ITSMA research, it is clear why so many top technology vendors are targeting managed services and outsourcing as critical growth opportunities. And with cost control the number-one business driver of IT infrastructure change, the outsourcing argument is playing extremely well.

Yet the market remains quite immature. Providers of network managed services and IT outsourcing have substantial work ahead of them in creating strong market positions, clear differentiation from competitors, and persuasive credibility around key buyer concerns.

Data from ITSMA's new report, Striving for Identity in Managed Services, highlight the challenge to providers. The report is based on interviews with 300 U.S.-based IT executives from large firms ($200 million and up) across a range of vertical markets. Some key findings:

1. As noted in last month's ITSMA E-ZINE, IBM Global Services is the only firm that a majority of buyers cited when asked if they could name a provider of IT managed services (see "IBM Leads Awareness and Favorability in Managed Services" in the February ITSMA E-ZINE). Only a few respondents named most of the leading providers. Almost a quarter of respondents could not name a single firm.
2. Buyers ranked a vendor's ability to secure networks as one of the top criteria for selecting a managed services provider. Few firms scored well on this buyer criterion, and the gap between perceived importance and perceived performance on security was one of the largest in the study.
3. The gap between importance and performance is substantial for all of the most important vendor attributes—not just security but also delivery on promises, collaborative work style, problem-solving expertise, and flexible and scalable solutions. The only attribute for which buyers perceive over-delivery is for companies that have a strong global presence, and that attribute is not widely considered very important.
4. Buyers rely much more heavily on independent information sources than on vendor sources to identify potential providers. Survey respondents look to colleagues, peers, and third-party experts, journalists, and analysts far more than they look to vendor sales representatives, marketing collateral, and Websites.

Taking advantage of the growing opportunity in managed services and outsourcing requires a strong focus on building brand recognition and credibility, addressing the most important buying criteria, and organizing marketing and sales programs that influence the influencers and ensure first-class service delivery.

—Matt Leary, mleary@itsma.com

ITSMA's new 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 is available for purchase at member and nonmember prices. For more information, visit: http://www.itsma.com/research/abstracts/bms001.htm.

Tech Spending Outlook Remains Strong (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 February 5-12, 2004, shows CIOs projecting strong growth in IT spending for the second month in a row.

Key findings:

• CIOs plan to increase technology spending 7.2% over the next 12 months, down from an 8.2% projection in January but still much stronger than any projection made in 2003. 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%.
• More than 37% of CIOs plan to increase tech spending by more than 10% over the next 12 months; only 13% plan to decrease spending.
• Security software, computer hardware, and storage systems are the top categories for projected spending out of eight technology categories. About half the respondents plan to increase spending in each of these three areas, with only small numbers of respondents planning to decrease spending.
• Almost 32% of CIOs plan to increase spending on outsourced IT services, whereas almost half plan to maintain the same spending level. Only about 19% plan to cut spending on outsourced IT services.

February Tech Poll figures are based on 301 survey responses. CIOs made up 89% of the total respondents. Large firms with more than 5,000 employees represent 14% 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.

EuroNotes: Partnering Today: A Dance or a Marriage?

The continuing shift in the technology industry toward providing high-value solutions puts a premium on successful partnerships. Even the largest companies need to rely more on partners to drive business growth, facilitate change, and provide access to new capabilities, clients, and geographies.

The problem is that a great number of partnerships fail—as many as half according to the consulting firm McKinsey. Most marketers know intuitively that partnerships are more often talk than action, but this is not the year to be wasting 50% of your resources on doomed ventures.

Three challenges stand out...

Read the full story

More EuroNotes

Marketing Toolbox: Marketing Solutions on the Web: Ten Steps to Success

Paradox reigns when it comes to marketing complex, integrated solutions on your company's Website. As companies increase their focus on marketing and selling high-end solutions, they typically move away from mass marketing techniques toward more highly targeted, micro-initiatives. Yet www.yourcompany.com remains every firm's most accessible face to the world. Web customization for different audiences is desirable, of course, but you still need to grapple with the basic show and tell of solutions for a mass, undifferentiated audience.

Success is possible. Beyond the basics of good Web design, making your corporate Website work for solutions requires careful attention to 10 critical issues. ITSMA's new tool outlines the issues and provides a series of questions to evaluate your site and develop a plan for improvement.

Take me to the Tool

More Marketing Tools (membership online access required)

Upcoming Events

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)—March 15 deadline for early bird pricing
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.

Show Me the Money: Capturing and Keeping Valuable Clients
May 18-19 Annual European Forum (London)
http://www.itsma.com/events/event_desc/04AF05E05.htm

ITSMA's annual gathering of top European services marketers highlights five priorities for marketing success in Europe, including strategic alignment, brand differentiation, improving client communications, partner management, and marketing accountability. Featured speakers from companies such as IBM, HP, BT, AMS, Wipro, and PwC lead a rich program of presentations, breakout groups, and peer networking.

Marketing Effectively to the Mid-market
March 25 Services Marketing Roundtable (Frankfurt, Germany)
http://www.itsma.com/Events/event_desc/04RT03E03.htm

Go-to-Market Strategies with New Services and Solutions
April 28 Lunch Briefing (New York City, no charge for members)

Account-Based Marketing: Making an Impact
April 30 Online Briefing (No charge for ITSMA Europe members)
http://www.itsma.com/Events/event_desc/04OB04E04.htm

Accelerating Growth for Services and Solutions
June 23-25 Client-Centric Marketing Course (San Francisco)
http://www.itsma.com/Events/event_desc/04ME06N10.htm

Complete 2004 Events Calendar

Event Sponsorship Opportunities

Ask ITSMA!

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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.