ITSMA E-ZINE	April 2004

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Editor's Notebook: A Search for the Stars

Got a great marketing-led growth story? ITSMA is searching for marketing leadership stars to showcase at our Chief Marketers' Conference next month in Washington, DC. If your team has triumphed with a major initiative to generate new business, accelerate growth in new markets, or reposition the company for new opportunities, we're ready to trumpet your success. Send us a brief review and we'll talk. Or check out the details here: http://www.itsma.com/stars.

As long as I'm asking, we're also looking for volunteers to help out with a rethink of our E-ZINE. Yes, dear readers, it's time to stand back and figure out how to make the world's greatest services marketing newsletter even greater. Like having a real name, for instance! There's no heavy lifting required, but if you're willing to share a few ideas and suggestions, please let me know.

Oh yes, and please do read this month's stories on communicating solutions, the new buyer reality, competitive positioning in the telecom service provider market, and more.

—Rob Leavitt

What's Hot: Communicating Solutions: Four Steps to Success

The shift from promoting discrete products and services to more integrated solutions is bringing all sorts of concern to marketing communicators. If potential buyers are already skeptical about the promise of most IT investments, the promotion of "solutions" brings perhaps the toughest reactions of all. As one CIO recently told ITSMA, "My gut reaction when someone offers a solution is: That's great, but do you know what the problem is?"

Buyers do want integrated solutions. It's just that marketers and sellers have trouble demonstrating that they understand their customers' problems and that they have credible offers that will deliver measurable business results.

Internal divisions exacerbate the challenge. Indeed, during a briefing on this topic last month, participants identified the most difficult problem in communicating solutions: Communicating solutions by business unit/division and not collaborating across "enemy lines." It's hard to bring compelling messages to prospective customers if you can't even get your own organization in line.

Building an effective communications program for solutions requires emphasis on four critical steps:

1. Internal alignment. The first step is getting everyone on the same page, both across organizational lines and from top to bottom. You can't have the hardware division calling their new box a solution while the consulting group ignores hardware altogether. Customization for different markets is certainly important but there must be common definitions of solutions, ways to present them to customers, and templates and platforms to utilize for communication campaigns.

More than likely, creating alignment internally will require a combination of top-down initiative (e.g., an executive-level solutions council that cuts across business units) and bottom-up collaboration and support (e.g., peer sharing of successful models, templates, and campaign plans).

2. Thought leadership. The reality of a buyers' market means that customers find you these days more often than you find them. Traditional push marketing is decreasingly effective. Customers have their own agenda. They ignore the majority of marketing communications and do their own research to find appropriate solutions and potential providers. Winning in this context requires building awareness and interest from executive-level buyers through in-depth research and innovative approaches to critical business challenges.

Successful thought leadership marketing requires, first, honest-to-goodness innovative thought. Technical white papers and run-of-the-mill commentary do not generate much interest or credibility. Assuming you have developed legitimate expertise in solving important business problems, you need to showcase it on the Web, with media and industry analysts, at user groups and other events, and in other arenas capable of pulling prospective customers in your direction. Use thought leadership to sustain pull marketing programs that bring in the right kind of leads.

3. Micromarketing. Once you have generated initial interest in your solutions offers, you need to focus communications on very specific markets, segments, and individual prospects to keep the conversation alive. Relevance is everything. Customers want to know very quickly if you understand their industry, business, and individual needs.

Micromarketing requires deep research, sophisticated segmentation, and careful customization of communications activities to speak directly to the smallest possible groups of prospects. For example, don't just target "retail." Look at the various sub-segments within retail, then consider whether drugstore chains with more than 100 stores are a useful target. Explore ways to get your message into narrowly focused trade media, seminars, and user groups. Go regional and local as much as national and global. Demonstrate knowledge of micro issues and problems and their solutions.

4. Reference management. Finally, give your top prospects the confidence they need to sign on the dotted line. Buyers have obviously gotten much tougher in scrutinizing offers and negotiating deals; strong references often bridge the gap between serious interest and closing the deal. In the words of one CIO, "We need to know where they've done work, what they've done, and who we can talk to for references."

Effective reference management programs, though, are deceivingly complex. Good programs go far beyond simply asking clients for references after the fact and then having a list on hand when prospects ask. At the high end, ITSMA has identified almost 100 key issues that companies need to resolve and up to 30 communications vehicles they need to develop. (See, for example, "Client References: Thinking Through All the Issues" in last month's ITSMA E-ZINE.) Even more modest programs require dedicated staff; well-defined criteria and processes for collecting, maintaining, and using reference data; targeted use of references internally and externally; and constant updating of existing and new reference accounts.

Communicating solutions will never be easy. Successful programs require deep understanding of customers' business needs, deft balancing between globally consistent messages and carefully adapted initiatives for individual prospects and segments, and powerful demonstrations of credibility through expertise and past performance. But these four steps provide an essential framework for building effective campaigns. Focusing resources on these areas will go a long way toward meeting the challenge.

How effectively are you communicating solutions? What are the keys to your success?

—Rob Leavitt

ITSMA's new briefing, Communicating Solutions: Why Is It So Difficult?, provides examples from Accenture, Wipro, EDS, Hewlett-Packard, Unisys, and other firms to illustrate successful approaches for each of the four steps. The briefing, originally delivered March 16, is available at no charge to members and for sale to all others. For more information, visit http://www.itsma.com/research/abstracts/olb031604.htm.

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Features

Marketing to the New Buyer Reality

After three years of slow or no growth, technology and consulting companies are beginning to see a period of stronger technology spending. This does not, however, signal a return to business as usual. Indeed, significant changes in the way customers evaluate, select, and purchase technology services and solutions have created a new buyer reality that marketers must address if they are to take advantage of the increased spending.

Some of the changes have come from economic necessity; others are just good business sense. Taken together, though, they add up to a fundamental shift in the balance of power from sellers to buyers, and this change is likely to persist far beyond the immediate economic upturn.

The six changes are as follows.

• Customers are highly skeptical. Customers today are even more skeptical of vendor capabilities and claims. In one recent ITSMA study, chief information officers (CIOs) ranted about their dissatisfaction with services and solution providers who failed to live up to their expectations. Another study documented a substantial gap between buyer expectations and their confidence in vendors’ abilities to deliver on promises.

• Customers are less loyal to incumbent vendors. For many years, ITSMA research showed that past experience with a services firm was the number-one factor influencing future buying behavior. More recently, though, such loyalty appears to be waning. The latest research does not imply that customers don’t value long-term relationships; clearly, they still do. But services providers have to prove themselves with each and every interaction throughout the entire customer experience.

• Buyers and influencers have changed; customers are involving more influencers and decision makers within their organizations. CIOs are becoming more business-savvy and business executives are becoming more technology-savvy—and they are working together to drive technology investments. More generally, buyers are involving more people from multiple roles and departments in purchase decisions. Just selling at the CXO level is not enough; neither is just selling to the IT managers.

• Customers proactively buy, they aren’t sold. CIOs and business executives are inundated with cold calls and unsolicited emails, and they pay little attention. When they recognize a need for technology and services, they research the market themselves, ask analysts for advice, and seek referrals from peers and colleagues. They are not waiting around for salespeople to find them; if you have what they need, they'll find you—provided you have done a good enough job building visibility and credibility with the appropriate third-party sources.

• Customers are demanding new approaches and options for buying technology and services. Customers are looking beyond the conventional perpetual licenses, time and materials, and fixed-price contracts in favor of new options for buying technology and associated services. They are actively exploring utility computing, business process outsourcing, software as a service, adaptive enterprise, and other alternatives to technology as usual.

• Customers are asserting control over engagements and driving technology adoption. Technology services and solution buyers are increasingly sophisticated and confident and increasingly risk averse and cost conscious. Their experience and expertise, combined with the uncertainties of the current environment, make CIOs extremely wary of ceding control to external vendors, regardless of the confidence they might have even in a long-term, close partner. CIOs want to remain intimately involved in all technology solution implementations.

The new buyer reality means that traditional sales-based lead-generation tactics will be less effective. In addition, the environment demands that sales and marketing professionals work together and pay closer attention to how their prospects think, behave, and make buying decisions. It is the creative application of technology to buyers’ specific business issues that will get and keep their attention.

Further, with the customer in control and driving technology adoption, marketers need to collaborate with customers in developing new offerings. Finally, customers and prospects will respond best to sales and marketing approaches that minimize risk and maximize the sense of control. Customers want proof of past success and assurance for future achievement.

—Julie Schwartz, jschwartz@itsma.com

This article is excerpted and adapted from The New Buyer Reality: Implications for Sales and Marketing. This ITSMA Update is available at no charge to members and for sale to all others. For more information, visit http://www.itsma.com/research/abstracts/u0045.htm.

*Julie will present data, analysis, and recommendations about the new buyer reality at ITSMA's upcoming Chief Marketers' Conference, May 11-12 in Washington, DC. Visit http://www.itsma.com/cmo for conference information.

Cisco Scores Highest, But Other Firms Also Well Positioned for Telecom Turnaround

The gradual upturn in the telecommunications industry has improved prospects for a host of companies selling services such as network consulting, rollout, and support. Cisco, Lucent, Nortel, and other players in this market have worked hard over the last several years to position themselves as services vendors of choice while hardware sales to the telecom sector plummeted. Their efforts are beginning to bear fruit.

According to ITSMA’s new brand tracking study, Telecom Turnaround: Positioning Services in the Service Provider Market, Cisco, Lucent, and Nortel are indeed leading the pack when it comes to overall brand awareness, familiarity, and preference. Buyers think of these firms first when considering services purchases, and they generally think well of them.

But important distinctions must be made when you dig more deeply into customer perceptions, and a number of other firms have succeeded in carving out leadership positions in different segments of the market.

ITSMA’s study, based on interviews with 300 U.S.-based IT and business executives from the regional Bell operating companies, local and long distance providers, and wireless and cable firms, tested customer perceptions of 12 different firms in seven specific market positions:

• World-class services company
• Leader in solution integration services
• Leader in managing your network
• Provider of advanced software solutions
• Voice networking expert
• Data networking expert
• Networking consultant with strong design and optimization capabilities

Viewed this way, Cisco emerges as the most strongly positioned firm, with top ratings in three of the seven categories (world-class services company, data networking, and networking consultant) and a number-two rating in another (solution integration services).

IBM Global services also fares very well, gaining top ratings in two categories (solution integration services and advanced software solutions) and high ratings in two others (world-class services company and data networking).

Lucent and Nortel, not surprisingly, score best as voice networking experts. Ericsson and Siemens rate highly in the world-class services category. And Juniper Networks scores well for data networking expertise.

Cisco also rises to the top in another important test of telecom customer perceptions. When asked about the relative importance of a dozen different attributes in a service firm, the customers in ITSMA's study ranked two at the very top: guarantees service levels/delivers what is promised and provides good value for the price. Other highly ranked attributes include the following:

• Has highly skilled professionals
• Provides comprehensive support
• Understands customers' business needs
• Works collaboratively with customers
• Has experience with the customers' technology

Cisco scores highly all of the most important attribute categories, and in 11 of the 12 categories overall. Other firms that scored well on at least two of the most important attributes include ADC, IBM Global Services, Nortel, Telcordia Technologies, and Tellabs.

Assuming that the long-awaited telecom turnaround is finally in sight, firms' ability to provide standout services will go a long way in determining their ultimate success. As ITSMA's new study suggests, Cisco clearly stands out in customers' minds, but a number of firms are also well positioned to respond to the increased spending. Focusing clearly on perceived strengths and weaknesses and emphasizing their ability to deliver services in ways most important to buyers, will help services vendors turn their current potential into real advantage.

—Rob Leavitt

ITSMA's new report, Telecom Turnaround: Positioning Services in the Service Provider Market—2004 Brand Tracking Study, provides detailed data and analysis on how telecom service providers (regional Bell companies, wireless and cable firms, etc.) perceive leading suppliers of network services. 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/bnw003.htm.

Research Desk

The Return of Internal Marketing: How Much Is Enough?

Investment in internal marketing is back, according to ITSMA's new report, Services Marketing Budgets and Benchmarks: 2004 Budget Allocations and Trends. Spending on internal marketing was one of the major casualties of the recent marketing budget cuts, with firms slashing away at programs perceived as not directly contributing to revenue generation. With the economic recovery beginning to take shape, however, services marketers once again recognize it is their people who carry their brand to customers, prospects, and influencers, and internal marketing is too important to leave up to chance.

The share of the marketing communications budget allocated to internal marketing for 2004 averages 9.3%, according to the ITSMA report—up substantially from 3.4% last year. But even this year's allocation is much lower than the 16% seen in previous ITSMA studies.

Is 9.3% sufficient? Given the pace of change in business and marketing priorities, it might not be. If employees are not keeping up with new strategies, new offers, and new organizational schemes, they may well underperform. And as more companies emphasize cross-divisional "solutions," such shortcomings can substantially undercut business results.

Further, despite the general increase, a great disparity remains in the commitment of different firms to internal marketing programs. Although many firms have specifically dedicated portions of their marketing communications budgets for internal communications, many others have not. Larger companies are more likely to have formal internal marketing budgets administered by the marketing organization. The smaller companies tend to manage internal marketing via another organization (such as human resources) or approach it on an ad hoc basis.

The return of internal marketing is clearly good news. Yet many firms may still have a long way to go.

—Julie Schwartz, jschwartz@itsma.com

ITSMA's new report, Services Marketing Budgets and Benchmarks: 2004 Budget Allocations and Trends, provides detailed benchmark data on services marketing budgets, allocations, trends, and key challenges. The report is available for purchase at member and nonmember prices and at no charge to companies that participated in the survey. For more information, visit: http://www.itsma.com/research/abstracts/b014.htm.

Tech Spending Recovery Remains on Track (Tech Poll)

CIO Magazine's March Tech Poll showed strong growth projections for IT spending for the third month in a row. With an average 7.3% planned increase in spending over the next 12 months, CIOs across the U.S. economy appear to have settled into a more confident position. Indeed, according to CIO publisher Gary Beach, "This completes the best quarter in three years. It's the first quarter since the beginning of 2001 to average projections of more than 7% growth. And projections back then were going the wrong way."

Key findings include:

• Some 72% of CIOs plan to increase tech investments over the next 12 months. More than five firms plan to increase spending for every one firm planning cutbacks.
• CIOs from the largest firms have become notably more optimistic; those from firms with more than 5,000 employees expect to increase IT spending 5.3% over the next 12 months compared with projections in February of only 3.2% increased spending.
• CIOs from business services, finance and banking, travel and entertainment, health care, and telecom are especially bullish on spending increases over the next year. Those from higher education, state government, energy, and manufacturing are relatively less optimistic.
• Security software, computer hardware, and storage systems remain the top categories for projected spending out of eight technology categories. More than half the respondents plan to increase spending in each of these three areas, with only small numbers of respondents planning to decrease spending.

In all, says Gary Beach, "The foundation is in place for steady growth."

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 March 11-18, 2004, included 277 respondents. Large firms with more than 5,000 employees represent 17% 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.

Sponsorship Opportunity: Software and Services Brand Study

The reinvention of the business software market requires vendors, integrators, and consultants to rethink the way they develop offers and work with customers. Customer demands for flexible approaches to buying or using applications, along with the need for rapid delivery of quantifiable business results, have called into question many of the traditional ways of doing business. Mergers and acquisitions across the industry have added to the turmoil and created new openings for challengers of historical market leaders.

ITSMA's new study, Customer Priorities, Competitive Positioning, and Brand Preferences for Software Applications and Services, will provide critical insight into the emerging buying reality for the market generally and for specific applications. The study, based on interviews with 500 senior decision makers at large and medium-sized companies, government agencies, and other large institutions, will give sponsoring companies detailed data, analysis, and recommendations surrounding the buying process, competitive positioning across different market segments, and the most effective marketing investments.

Ultimately, the study will help sponsors better market and position themselves in specific application categories such as supply chain management, enterprise resource planning, customer relationship management, financial planning, human capital management, customer service/contact center, and/or business intelligence/analytics.

To learn more sponsorship opportunities for the new study, visit: http://www.itsma.com/research/prospectus/mk0448_sw04.htm.

EuroNotes: The Midmarket Elephants Who Never Forget

The midmarket in Europe represents one of the key areas of growing demand for technology-based services in the short term. But marketing and selling effectively to midmarket firms may require important changes in the way enterprise-oriented services organizations do business.

A recent ITSMA roundtable in Frankfurt, Germany, hosted by BearingPoint, highlighted some of the challenges of reaching the midmarket. Compared with larger enterprises, firms in the midmarket often share characteristics that services marketers need to take into account. Most important, midmarket firms tend to have a much longer institutional memory. Because many technology suppliers went through a similar push into the midmarket 10 years ago and then backed away when more lucrative enterprise deals appeared, the memory factor has created even more skepticism and resistance in this segment than among larger customers.

Read the full story

More EuroNotes

Marketing Toolbox: Maximizing Return on Speaker Placement

As part of a broader marketing mix, placing speakers at the right industry events can bring greater visibility, an enhanced reputation for expertise, and new sales opportunities. Even with existing clients and prospects, the right speaking activities can strengthen relationships, move people along the sales cycle, and advance loyalty and trust.

Managing an effective speaker placement program, however, requires careful attention to a number of issues, including targeting the right events, working with the most compelling speakers, and coordinating speaking opportunities with other marketing activities. ITSMA's new tool, Building a More Effective Speaker Placement Program, outlines six guidelines to help you maximize the return on your speaking initiatives.

Take me to the Tool

More Marketing Tools (membership online access required)

Upcoming Events

Go-to-Market Strategies with New Services and Solutions
April 28 Lunch Briefing (New York City, no charge for members)
http://www.itsma.com/events/event_desc/04BB04N06.htm

How can marketing teams maximize their return from new marketing and sales campaigns? Join ITSMA's Dave Munn and Steve Hurley to discuss the most important elements in developing successful go-to-market strategies and tactics.

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

Account planning has traditionally been owned by sales teams or consultants, but more marketing organizations are stepping into the mix. Join ITSMA's Sara Sheppard to learn more about best practices in account-based marketing.

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's Role in Strategy, Planning, and Intelligence
May 25 Online Briefing (No charge for members)
http://www.itsma.com/Events/event_desc/04OB05N09.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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(c) Copyright 2004, 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.