IT Trends into 2017 – or the delusions of Ian Waring

Bowling Ball and Pins

My perception is as follows. I’m also happy to be told I’m mad, or delusional, or both – but here goes. Most reflect changes well past the industry move from CapEx led investments to Opex subscriptions of several years past, and indeed the wholesale growth in use of Open Source Software across the industry over the last 10 years. Your own Mileage, or that of your Organisation, May Vary:

  1. if anyone says the words “private cloud”, run for the hills. Or make them watch https://youtu.be/URvWSsAgtJE. There is also an equivalent showing how to build a toaster for $15,000. The economics of being in the business of building your own datacentre infrastructure is now an economic fallacy. My last months Amazon AWS bill (where I’ve been developing code – and have a one page site saying what the result will look like) was for 3p. My Digital Ocean server instance (that runs a network of WordPress sites) with 30GB flash storage and more bandwidth than I can shake a stick at, plus backups, is $24/month. Apart from that, all I have is subscriptions to Microsoft, Github and Google for various point services.
  2. Most large IT vendors have approached cloud vendors as “sell to”, and sacrificed their own future by not mapping customer landscapes properly. That’s why OpenStack is painting itself into a small corner of the future market – aimed at enterprises that run their own data centres and pay support costs on a per software instance basis. That’s Banking, Finance and Telco land. Everyone else is on (or headed to) the public cloud, for both economic reasons and “where the experts to manage infrastructure and it’s security live” at scale.
  3. The War stage of Infrastructure cloud is over. Network effects are consolidating around a small number of large players (AWS, Google Cloud Platform, Microsoft Azure) and more niche players with scale (Digital Ocean among SME developers, Softlayer in IBM customers of old, Heroku with Salesforce, probably a few hosting providers).
  4. Industry move to scale out open source, NoSQL (key:value document orientated) databases, and components folks can wire together. Having been brought up on MySQL, it was surprisingly easy to set up a MongoDB cluster with shards (to spread the read load, scaled out based on index key ranges) and to have slave replicas backing data up on the fly across a wide area network. For wiring up discrete cloud services, the ground is still rough in places (I spent a couple of months trying to get an authentication/login workflow working between a single page JavaScript web app, Amazon Cognito and IAM). As is the case across the cloud industry, the documentation struggles to keep up with the speed of change; developers have to be happy to routinely dip into Github to see how to make things work.
  5. There is a lot of focus on using Containers as a delivery mechanism for scale out infrastructure, and management tools to orchestrate their environment. Go, Chef, Jenkins, Kubernetes, none of which I have operational experience with (as I’m building new apps have less dependencies on legacy code and data than most). Continuous Integration and DevOps often cited in environments were custom code needs to be deployed, with Slack as the ultimate communications tool to warn of regular incoming updates. Having been at one startup for a while, it often reminded me of the sort of military infantry call of “incoming!” from the DevOps team.
  6. There are some laudable efforts to abstract code to be able to run on multiple cloud providers. FOG in the Ruby ecosystem. CloudFoundry (termed BlueMix in IBM) is executing particularly well in large Enterprises with investments in Java code. Amazon are trying pretty hard to make their partners use functionality only available on AWS, in traditional lock-in strategy (to avoid their services becoming a price led commodity).
  7. The bleeding edge is currently “Function as a Service”, “Backend as a Service” or “Serverless apps” typified with Amazon Lambda. There are actually two different entities in the mix; one to provide code and to pay per invocation against external events, the other to be able to scale (or contract) a service in real time as demand flexes. You abstract all knowledge of the environment  away.
  8. Google, Azure and to a lesser extent AWS are packaging up API calls for various core services and machine learning facilities. Eg: I can call Google’s Vision API with a JPEG image file, and it can give me the location of every face (top of nose) on the picture, face bounds, whether each is smiling or not). Another that can describe what’s in the picture. There’s also a link into machine learning training to say “does this picture show a cookie” or “extract the invoice number off this image of a picture of an invoice”. There is an excellent 35 minute discussion on the evolving API landscape (including the 8 stages of API lifecycle, the need for honeypots to offset an emergent security threat and an insight to one impressive Uber API) on a recent edition of the Google Cloud Platform Podcast: see http://feedproxy.google.com/~r/GcpPodcast/~3/LiXCEub0LFo/
  9. Microsoft and Google (with PowerApps and App Maker respectively) trying to remove the queue of IT requests for small custom business apps based on company data. Though so far, only on internal intranet type apps, not exposed outside the organisation). This is also an antithesis of the desire for “big data”, which is really the domain of folks with massive data sets and the emergent “Internet of Things” sensor networks – where cloud vendor efforts on machine learning APIs can provide real business value. But for a lot of commercial organisations, getting data consolidated into a “single version of the truth” and accessible to the folks who need it day to day is where PowerApps and AppMaker can really help.
  10. Mobile apps are currently dogged by “winner take all” app stores, with a typical user using 5 apps for almost all of their mobile activity. With new enhancements added by all the major browser manufacturers, web components will finally come to the fore for mobile app delivery (not least as they have all the benefits of the web and all of those of mobile apps – off a single code base). Look to hear a lot more about Polymer in the coming months (which I’m using for my own app in conjunction with Google Firebase – to develop a compelling Progressive Web app). For an introduction, see: https://www.youtube.com/watch?v=VBbejeKHrjg
  11. Overall, the thing most large vendors and SIs have missed is to map their customer needs against available project components. To map user needs against axes of product life cycle and value chains – and to suss the likely movement of components (which also tells you where to apply six sigma and where agile techniques within the same organisation). But more eloquently explained by Simon Wardley: https://youtu.be/Ty6pOVEc3bA

There are quite a range of “end of 2016” of surveys I’ve seen that reflect quite a few of these trends, albeit from different perspectives (even one that mentioned the end of Java as a legacy language). You can also add overlays with security challenges and trends. But – what have I missed, or what have I got wrong? I’d love to know your views.

Crossing the Chasm on One Page of A4 … and Wardley Maps

Crossing the Chasm Diagram

Crossing the Chasm – on one sheet of A4

The core essence of most management books I read can be boiled down to occupy a sheet of A4. There have also been a few big mistakes along the way, such as what were considered at the time to be seminal works, like Tom Peter’s “In Search of Excellence” — that in retrospect was an example summarised as “even the most successful companies possess DNA that also breed the seeds of their own destruction”.

I have much simpler business dynamics mapped out that I can explain to fast track employees — and demonstrate — inside an hour; there are usually four graphs that, once drawn, will betray the dynamics (or points of failure) afflicting any business. A very useful lesson I learnt from Microsoft when I used to distribute their software. But I digress.

Among my many Business books, I thought the insights in Geoffrey Moores Book “Crossing the Chasm” were brilliant — and useful for helping grow some of the product businesses i’ve run. The only gotcha is that I found myself keeping on cross referencing different parts of the book when trying to build a go-to-market plan for DEC Alpha AXP Servers (my first use of his work) back in the mid-1990’s — the time I worked for one of DEC’s Distributors.

So, suitably bored when my wife was watching J.R. Ewing being mischievous in the first UK run of “Dallas” on TV, I sat on the living room floor and penned this one page summary of the books major points. Just click it to download the PDF with my compliments. Or watch the author himself describe the model in under 14 minutes at an O’Reilly Strata Conference here. Or alternatively, go buy the latest edition of his book: Crossing the Chasm

My PA (when I ran Marketing Services at Demon Internet) redrew my hand-drawn sheet of A4 into the Microsoft Publisher document that output the one page PDF, and that i’ve referred to ever since. If you want a copy of the source file, please let me know — drop a request to: ian.waring@software-enabled.com.

That said, i’ve been far more inspired by the recent work of Simon Wardley. He effectively breaks a service into its individual components and positions each on a 2D map;  x-axis dictates the stage of the components evolution as it does through a Chasm-style lifecycle; the y-axis symbolises the value chain from raw materials to end user experience. You then place all the individual components and their linkages as part of an end-to-end service on the result. Having seen the landscape in this map form, then to assess how each component evolves/moves from custom build to commodity status over time. Even newest components evolve from chaotic genesis (where standards are not defined and/or features incomplete) to becoming well understood utilities in time.

The result highlights which service components need Agile, fast iterating discovery and which are becoming industrialised, six-sigma commodities. And once you see your map, you can focus teams and their measures on the important changes needed without breeding any contradictory or conflict-ridden behaviours. You end up with a well understood map and – once you overlay competitive offerings – can also assess the positions of other organisations that you may be competing with.

The only gotcha in all of this approach is that Simon hasn’t written the book yet. However, I notice he’s just provided a summary of his work on his Bits n Pieces Blog yesterday. See: Wardley Maps – set of useful Posts. That will keep anyone out of mischief for a very long time, but the end result is a well articulated, compelling strategy and the basis for a well thought out, go to market plan.

In the meantime, the basics on what is and isn’t working, and sussing out the important things to focus on, are core skills I can bring to bear for any software, channel-based or internet related business. I’m also technically literate enough to drag the supporting data out of IT systems for you where needed. Whether your business is an Internet-based startup or an established B2C or B2B Enterprise focussed IT business, i’d be delighted to assist.

Politicians and the NHS: the missing question

 

The inevitable electioneering has begun, with all the political soundbites simplified into headline spend on the NHS. That is probably the most gross injustice of all.

This is an industry lined up for the most fundamental seeds of change. Genomics, Microbiomes, ubiquitous connected sensors and quite a realisation that the human body is already the most sophisticated of survival machines. There is also the realisation that weight and overeating are a root cause of downstream problems, with a food industry getting a free ride to pump unsuitable chemicals into the food chain without suffering financial consequences for the damage caused. Especially at the “low cost” end of the dietary spectrum.

Politicians, pharma and food lobbyists are not our friends. In the final analysis, we’re all being handed a disservice because those leading us are not asking the fundamental question about health service delivery, and to work back from there.

That question is: “What business are we in?”.

As a starter for 10, I recommend this excellent post on Medium: here.

The simplest leading indicators of future performance

Crystal Ball Future

I saw a note from one of my ex-colleagues from my 17 years at DEC in a long line of the mutual hatred of who became known as “GQ Bob”, aka Bob Palmer. Palmer presided over losses in 5 years that exceeded the total profits of the company in the preceding 35 years, before selling what was left to Compaq, who in turn sold out to HP. The note struck a chord with me:

I worked for a number of years in “The Mill”, the ancestral home of Digital Equipment Corporation. Each day, I’d walk up the hill from the lower Thompson Street parking lot and into the Thompson Street lobby, past the very-near-to-the-door visitor parking area (“Blue Pass Required!”). Each day, I’d see a white Porsche 911 parked in visitor parking. After months of this, my interest had been piqued, so I asked Security who was the visitor that parked their Porsche here day after day. “Oh, that’s no visitor; that’s Bob Palmer’s car. He’s VP of manufacturing. “Isn’t that *VISITORS ONLY* parking?” I asked?” I just got a shrug back. So I figured out where his office was in the Mill and took a walk down there. “Palatial” is the word that came to my mind; with huge office areas and practically no people. I formed my opinion of Bob Palmer that day, and it never changed the rest of the years I was at Digital.

When I was in the UK PC Dealer team back in 83-84, one of our account managers (David Bedding) visiting prospective resellers always did one piece of due diligence, and would walk away from anyone who violated it. He would measure the distance from the nearest visitor car parking space to the front door, and the nearest space reserved for employees (and especially so a Director) to that same door. If the visitor spot wasn’t closer, he wouldn’t sign them up on principle. He’d just report back that he was “underwhelmed” at the prospect of recruiting them and declined to waste his time doing so.

It was simply the best leading indicator of attitude to customers that no business plan could mask.

With hindsight, the other leading (negative) indicator was the owner having a goal to be bought out and to drive the business with that objective above all other considerations; the road was littered with the remains of those outfits.

Meanwhile, the ones that obsessed over their service to their customers, above all else, did far better. But that’s obvious, isn’t it?

Nadella: Heard what he said, knew what he meant

Satya Nadella

That’s a variation of an old “Two Ronnies” song in the guise of “Jehosaphat & Jones” entitled “I heard what she said, but knew what she meant” (words or three minutes into this video). Having read Satya Nadella’s Open Letter to employees issued at the start of Microsoft’s new fiscal year, I did think it was long. However, the real delight was reading Jean-Louis Gassee – previously the CTO of Apple – not only pulling it apart, but then having a crack at showing how it should have been written:

Team,

This is the beginning of our new FY 2015 – and of a new era at Microsoft. I have good news and bad news.The bad news is the old Devices and Services mantra won’t work. For example: I’ve determined we’ll never make money in tablets or smartphones.

So, do we continue to pretend we’re “all in” or do we face reality and make the painful decision to pull out so we can use our resources – including our integrity – to fight winnable battles? With the support of the Microsoft Board, I’ve chosen the latter.

We’ll do our utmost to minimize the pain that will naturally arise from this change. Specifically, we’ll offer generous transitions arrangements in and out of the company to concerned Microsoftians and former Nokians.

The good news is we have immense resources to be a major player in the new world of Cloud services and Native Apps for mobile devices.

We let the first innings of that game go by, but the sting energizes us. An example of such commitment is the rapid spread of Office applications – and related Cloud services – on any and all mobile devices. All Microsoft Enterprise and Consumer products/services will follow, including Xbox properties.

I realize this will disrupt the status quo and apologize for the pain to come. We have a choice: change or be changed.

Stay tuned.

Satya.

Jean-Louis Gassee’s  full take-home on the original is provided here. Satya Nadella should hire him.

Why did Digital Equipment Corporation Fail?

Digital Equipment Corp Logo

I answered that question on Quora, but thought i’d put a copy of my (long) answer here. Just one ex-employees perception from prisoner badge #50734!

I managed the UK Software Products Group in my last two years at DEC and had a 17 year term there (1976-1993). There are a wide variety of components that contributed to the final state, though failing to understand industry trends across the company was not among them. The below is a personal view, and happy for any ex colleagues to chip in with their own perspectives.

The original growth 1957 through to Jan 1983 has based on discrete, industry based product lines. In combination, they placed demand on central engineering, manufacturing and sales to support their own business objectives, and generally ran the show to dominate their own industry segments. For example, Laboratory Data Products, Graphic Arts (Newspapers!), Commercial OEM, Tech OEM, MDC (Manufacturing, Distribution and Control), ESG (Engineering Systems Group), Medical Systems and so forth.

The finance function ran as a separate reporting entity with management controls that went top to bottom with little ability for product lines to unduly behave in any way except for the overall corporate good.

The whole lot started to develop into a chaotic internal economy, albeit one that meshed together well and covered any cracks. The product lines were removed in Jan 1983, followed by a first ever stall in a hitherto unblemished Stock Market Performance. The company became much more centrally planned, and one built around a one company, one strategy, one architecture focus (the cynics in the company paraphrased this as one company, one egg, one basket). All focus on getting VAX widely deployed, given it’s then unique ability to run exactly the same binaries from board products all the way up to high end, close to mainframe class processors.

The most senior leadership started to go past it’s sell by date in the late 1980s. While the semiconductor teams were, as expected, pumping out impressive $300 VAX silicon, the elements of the leadership became fixated on the date on which DEC would finally overtake IBM in size. They made some poor technology investment calls in trying to extend VAX into IBM 3090 scale territory, seemingly oblivious to being nibbled from underneath on the low end.

Areas of the company were being frustrated at the high end focus and the inability for the Executive to give clear guidance on the next generation processor requirements. They kept on being flip-flopped between 32-bit and 64-bit designs, and brought out MIPS based workstations in a vain attempt to at least stay competitive performance wise until the new architecture was ready to ship.

Bob Palmer came to prominence by stopping the flip-flopping and had the semiconductor team ship a 64 bit design that completely outperformed every other chip in the industry by 50-100% (which ended up being the case for nearly 10 years). He then got put in charge of worldwide manufacturing, increasing the productivity by 4x in 2 years.

The company needed to increase its volume radically or reduce headcount to align competitively with the market as it went horizontally orientated (previously, IBM, DEC and the BUNCH – Burroughs, Univac, NCR, CDC and Honeywell were all vertically orientated).

Ken Olsen got deposed by the board around 1992, and they took the rather unusual step of reaching out to Bob Palmer, who was then a direct report of SVP Jack Smith, to lead the company.

While there was some early promise, the company focussed around a small number of areas (PCs, Components & Peripherals, Systems, Consumer Process Manufacturing, Discrete Manufacturing and Defence, and I think Health). The operating practice was that any leaders who missed their targets two quarters in a row were fired, and the salesforce given commission targets for the first time.

The whole thing degenerated from there, such that the company made equivalent losses in Palmers reign greater than the retained profits made under Olsen 1957-1982. He sued Intel for patent infringement, which ended up with Intel settling including the purchase of semiconductor operations in Hudson. He likewise sued Microsoft, which ended up with Microsoft lending DEC money to get its field force trained up on Microsoft products (impressive ju-jitsu on their part). Then sold the whole company to Compaq.

Text in some of the books about DEC include some comments by C Gordon Bell (technical god in DECs great years) which will not endear him to a place on Bob Palmers Christmas Card List (but words which many of us would agree with).

There was also a spoof Harvard Business Review article, written by George Van Treeck (a widely respected employee on the Marketing Notes conference maintained on the company network), which outlined the death of Digital – written in 1989 or so. Brilliant writing (I still have a copy in my files here), and he guessed the stages with impressive accuracy way back then. His words are probably a better summary than this, but until then, I trust this will give one persons perception.

It is still, without doubt, the finest company i’ve ever had the privilege to work for.

Rest in Peace, Ken Olsen. You did a great job, and the world is much better for your lifes work.

Start with the needs of the end user, and work back from there…

Great Customer Service

A bit of a random day. I learnt something about the scale of construction taking place in China; not just the factoid that they’re building 70 airports at the moment, but a much more stunning one. That, in the last 3 years, the Chinese have used more cement than the USA did in the 100 years between 1900 and 2000. The very time when all the Interstate and Road networks were built, in addition to construction in virtually every major city.

5 of the top 10 mobile phone vendors are Chinese (it’s not just an Apple vs Samsung battle now), and one appears to be breaking from the pack in emerging markets – Xiaomi (pronounced show – as in shower – and me). Their business model is to offer Apple-class high end phones at around cost, target them at 18-30 year “fans” in direct sales (normally flash sales after a several 100,000 unit production run), and to make money from ROM customisations and add-on cloud services. I’ve started hearing discussions with Silicon Valley based market watchers who are starting to cite Xiaomi’s presence in their analyses, not least as in China, they are taking market share from Samsung – the first alternative Android vendor to consistently do so. I know their handsets, and their new tablet, do look very nice and very cost effective.

That apart, I have tonight read a fantastic blog post from Neelie Kroes, Vice President of the European Commission and responsible for the Digital Agenda for Europe – talking specifically about Uber and this weeks strikes by Taxi drivers in major cities across Europe. Well worth a read in full here.

Summarised:

  • Let me respond to the news of widespread strikes and numerous attempts to limit or ban taxi app services across Europe. The debate about taxi apps is really a debate about the wider sharing economy.
  • It is right that we feel sympathy for people who face big changes in their lives.
  • Whether it is about cabs, accommodation, music, flights, the news or whatever.  The fact is that digital technology is changing many aspects of our lives. We cannot address these challenges by ignoring them, by going on strike, or by trying to ban these innovations out of existence
  • a strike won’t work: rather than “downing tools” what we need is a real dialogue
  • We also need services that are designed around consumers.
  • People in the sharing economy like drivers, accommodation hosts, equipment owners and artisans – these people all need to pay their taxes and play by the rules.  And it’s the job of national and local authorities to make sure that happens.
  • But the rest of us cannot hide in a cave. 
  • Taxis can take advantage of these new innovations in ways consumers like – they can arrive more quickly, they could serve big events better, there could be more of them, their working hours could be more flexible and suited to driver needs – and apps can help achieve that.
  • More generally, the job of the law is not to lie to you and tell you that everything will always be comfortable or that tomorrow will be the same as today.  It won’t. Not only that, it will be worse for you and your children if we pretend we don’t have to change. If we don’t think together about how to benefit from these changes and these new technologies, we will all suffer.
  • If I have learnt anything from the recent European elections it is that we get nowhere in Europe by running away from hard truths. It’s time to face facts:  digital innovations like taxi apps are here to stay. We need to work with them not against them.

It is absolutely refreshing to have elected representatives working for us all and who “get it”. Focus on consumers, being respectful of those afflicted by changes, but driving for the collective common good that Digital innovations provide to society. Kudos to Neelie Kroes; a focus on users, not entrenched producers – a stance i’ve only really heard with absolute clarity before from Jeff Bezos, CEO of Amazon. It does really work.

 

Starting with the end in mind: IT Management Heat vs Light

A very good place to startOne source of constant bemusement to me is the habit of intelligent people to pee in the industry market research bathwater, and then to pay handsomely to drink a hybrid mix of the result collected across their peers.

Perhaps betrayed by an early experience of one research company coming in to present to the management of the vendor I was working at, and finding in the rehearsal their conjecture that sales of specific machine sizes had badly dipped in the preceding quarter. Except they hadn’t; we’d had the biggest growth in sales of the highlighted machines in our history in that timeframe. When I mentioned my concern, the appropriate slides were corrected in short order, and no doubt the receiving audience impressed with the skill in their analysis that built a forecast starting with an amazingly accurate, perceptive (and otherwise publicly unreported) recent history.

I’ve been doubly nervous ever since – always relating back to the old “Deep Throat” hints given in “All the Presidents Men” – that of, in every case, “to follow the money”.

Earlier today, I was having some banter on one of the boards of “The Motley Fool” which referenced the ways certain institutions were imposing measures on staff – well away from a useful business use that positively supported better results for their customers. Well, except of providing sound bites to politicians. I can sense that in Education, in some elements of Health provision, and rather fundamentally in the Police service. I’ve even done a drains-up some time ago that reflected on the way UK Police are measured, and tried trace the rationale back to source – which was a senior politician imploring them to reduce crime; blog post here. The subtlety of this was rather lost; the only control placed in their hands was that of compiling the associated statistics, and to make their behaviours on the ground align supporting that data collection, rather than going back to core principles of why they were there, and what their customers wanted of them.

Jeff Bezos (CEO of Amazon) has the right idea; everything they do aligns with the ultimate end customer, and everything else works back from there. Competition is something to be conscious of, but only to the extent of understanding how you can serve your own customers better. Something that’s also the central model that W. Edwards Deming used to help transform Japanese Industry, and in being disciplined to methodically improve “the system” without unnecessary distractions. Distractions which are extremely apparent to anyone who’s been subjected to his “Red Beads” experiment. But the central task is always “To start with the end in mind”.

With that, I saw a post by Simon Wardley today where Gartner released the results of a survey on “Top 10 Challenges for I&O Leaders”, which I guess is some analogue of what used to be referred to as “CIOs”. Most of which felt to me like a herd mentality – and divorced from the sort of issues i’d have expected to be present. In fact a complete reenactment of this sort of dialogue Simon had mentioned before.

Simon then cited the first 5 things he thought they should be focussed on (around Corrective Action), leaving the remainder “Positive Action” points to be mapped based on that appeared upon that foundation. This in the assumption that those actions would likely be unique to each organisation performing the initial framing exercise.

Simon’s excellent blog post is: My list vs Gartner, shortly followed by On Capabilities. I think it’s a great read. My only regret is that, while I understand his model (I think!), i’ve not had to work on the final piece between his final strategic map (for any business i’m active in) and articulating a pithy & prioritised list of actions based on the diagram created. And I wish he’d get the bandwidth to turn his Wardley Maps into a Book.

Until then, I recommend his Bits & Pieces Blog; it’s a quality read that deserves good prominence on every IT Manager’s (and IT vendors!) RSS feed.

For Enterprise Sales, nothing sells itself…

Trusted Advisor

I saw a great blog post published on the Andreessen Horowitz (A16Z) web site asking why Software as a Service offerings didn’t sell themselves here. A lot of it stems from a misunderstanding what a good salesperson does (and i’ve been blessed to work alongside many good ones throughout my career).

The most successful ones i’ve worked with tend to work there way into an organisation and to suss the challenges that the key executives are driving as key business priorities. To understand how all the levers get pulled from top to bottom of the org chart, and to put themselves in a position of “trusted advisor”. To be able to communicate ideas that align with the strategic intent, to suggest approaches that may assist, and to have references ready that demonstrate how the company the salesperson represents have solved similar challenges for other organisations. At all times, to know who the customer references and respects across their own industry.

Above all, to have a thorough and detailed execution plan (or set of checklists) that they follow to understand the people, their processes and their aspirations. That with enough situational awareness that they know who or what could positively – and negatively – affect the propensity of the customer to spend money. Not least to avoid the biggest competitor of all – an impression that “no decision” or a project stall will leave them in a more comfortable position than enacting a needed change.

When someone reaches board level, then their reference points tend to be folks in the same position at other companies. Knowing the people networks both inside and outside the company are key.

Folks who I regard as the best salespeople i’ve ever worked with tend to be straight forward, honest, well organised, articulate, planned, respectful of competitors and adept at working an org chart. And they also know when to bring in the technical people and senior management to help their engagements along.

The antithesis are the “wham bam thankyou mam”, competitors killed at all costs and incessant quoters of speeds and feeds. For those, i’d recommend reading a copy of “The Trusted Advisor” by Maister, Green and Galford.

Trust is a prize asset, and the book describes well how it is obtained and maintained in an Enterprise selling environment. Also useful to folks like me who tend to work behind the scenes to ensure salespeople succeed; it gives some excellent insight into the sort of material that your sales teams can carry into their customers and which is valued by the folks they engage with.

Being trusted and a source of unique, valuable insights is a very strong position for your salespeople to find themselves in. You owe it to them to be a great source of insights and ideas, either from your own work or curated from other sources – and to keep customers informed and happy at all costs. Simplicity sells.

11 steps to initiate a business spectacular – true story

Nuclear Bomb Mushroom

I got asked today how we grew the Microsoft Business at (then) Distributor Metrologie from £1m/month to £5m/month, at the same time doubling the margin from 1% to 2% in the thick of a price war. The sequence of events were as follows:

  1. Metrologie had the previous year bought Olivetti Software Distribution, and had moved its staff and logistics into the company’s High Wycombe base. I got asked to take over the Management of the Microsoft Business after the previous manager had left the company, and the business was bobbing along at £1m/month at 1% margins. Largest customer at the time was Dixons Stores Group, who were tracking at £600K sales per month at that stage.
  2. I was given the one purchasing person to build into a Product Manager, and one buyer. There was an existing licensing team in place.
  3. The bit I wasn’t appraised of was that the Directors had been told that the company was to be subject to a Productivity Improvement Plan, at the same time the vendor was looking to rationalise it’s UK Distributor numbers from 5 to 4. This is code for a prewarning that the expected casualty was…. us.
  4. I talked to 5 resellers and asked what issues they had dealing with any of the Microsoft distributors. The main issue was staff turnover (3 months telesales service typical!), lack of consistent/available licensing expertise and a minefield of pricing mistakes that lost everyone money.
  5. Our small team elected to use some of our Microsoft funds to get as many front line staff as possible Microsoft Sales certified. I wasn’t allowed to take anyone off the phones during the working week, but managed to get 12 people in over a two day weekend to go from zero to passing their accreditation exam. They were willing to get that badge to get them better future career prospects. A few weeks later we trained another classful on the same basis; we ended up with more Sales accredited salespeople than all the other distributors at the time.
  6. With that, when someone called in to order PCs or Servers, they were routinely asked if they wanted software with them – and found (to their delight) that they had an authoritative expert already on the line who handled the order, without surprises, first time.
  7. If you’re in a price war, you focus on two things; one is that you isolate who your key customers are, and secondly you profile the business to see which are the key products.
  8. For the key growth potential customers, we invested our Microsoft co-op funds in helping them do demand creation work; with that, they had a choice of landing an extra 10% margin stream new business dealing with us, or could get 1% lower prices from a distributor willing to sell at cost. No contest, as long as our pricing was there or thereabouts.
  9. The key benchmark products were Microsoft Windows and Microsoft Office Professional. Whenever deciding who to trade with, the first phone call was to benchmark the prices of those two part numbers, or slight variations of the same products. However, no-one watched the surrounding, less common products. So, we priced Windows and Office very tightly, but increased the selling prices by 2-3% on the less common products. The default selling price for a specific size of reseller (which mapped into which sales team looked after their account) was put on the trading platform to ensure consistency.
  10. Hand offs to the licensing team, if the business landed, were double-bubbled back to the field/internal salesperson team handling each account – so any more complex queries were handed off, handled professionally, priced and transacted without errors.
  11. We put all the measures in place, tracking the number of customers buying Microsoft software from us 1 month in 3, 2 months in 3 and every month. We routinely incented each sales team to increase the purchase frequencies in their account base on call out days, with programs that were well supported and fun in the office.

The business kept on stepping up. Still a few challenges; we at least twice got reverse ram raids, emptying returned stock back into our warehouse on day 30 of a 31 day month, making a sudden need for sales on the last trading day a bit of a white knuckle ride to offset the likely write down credit (until Microsoft could in turn return the cost to us). The same customer had, at the time, a habit of deciding not to pay it’s suppliers at month end at the end of key trading months, which is not a good thing when you’re making 1% margins assuming they’d pay you to terms.

One of the side effects of the Distribution business is that margins are thin, but volume grows aggressively – at least until you end up with a very small number of really big distributors left standing. A bit like getting wood shavings from wood on a lathe – you want just enough to peel off and the lathe turning faster and faster – but shy away from trying to be too greedy, digging the chisel in deeper and potentially seizing up the lathe.

With a business growing 40%+ per year and margins in the 1-2% range, you can’t fund the growth from retained profits. You just have to keep going back to the stock market every year, demonstrating growth that makes you look like one of the potential “last men standing”, and get another cash infusion to last until next year. And so it goes on, with the smaller distributors gradually falling away.

With the growth from £1m/month to £5m/month in 4 months – much less than the time to seek extra funds to feed the cash position to support the growth – the business started to overtrade. Vendors were very strict on terms, so it became a full time job juggling cash to keep the business flowing. Fortunately, we had magnificent credit and finance teams who, working with our resellers, allowed us the room to keep the business rolling.

With that, we were called into a meeting with the vendor to be told that we were losing the Microsoft Business, despite the big progress we’d made. I got headhunted for a role at Demon Internet, and Tracy (my Product Manager of 4 months experience) got headhunted to become Marketing Manager at a London Reseller. I stayed an extra month to complete our appeal to the vendor, but left at the end of June.

About 2 weeks into my new job, I got a call from my ex-boss to say the company’s appeal had been successful at European level, and that their Distribution Contract with the vendor was to continue. A great end to that story. The company later merged with one of the other distributors, and a cheque for £1000 arrived in the post at home for payment of stock options i’d been awarded in my last months there.

So, the basics are simple, as are the things you need to focus on if you’re ever in a price war (i’ve covered the basics in two previous blog posts, but the more advanced things are something i’d need to customise for any specific engagement). But talking to the customer, and working back to the issues delivering a good and friction free experience to them, is a great way to get things fixed. It has demonstrably worked for me every time – so far!