Purchasing

For Enterprise Sales, nothing sells itself…

ianwaring Books, Budgets, Enterprise IT, Future Trends, Management, Purchasing, Selling, Software Leave a comment

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.

Sometimes a picture is “How on earth did you do that”?

ianwaring Amazon, Cloud, DEC, Enterprise IT, IBM, Open Source, Pricing, Purchasing, Software Leave a comment

IBM3270ALLIN1

People often remember a startling or surprising first impression. Riverdance when they first appeared during the voting interval during Eurovision 1994. 19-year old Everton substitute Wayne Rooney being put on the pitch against a season-long unbeaten Arsenal side, and scoring. A young David Beckham doing likewise against Wimbledon from the half way line. Or Doug Flutie, Quarterback for Boston College, throwing the winning touchdown in a Rose Bowl final from an incredible distance with no time left on the clock. There is even a road in Boston called “Flutie Pass” named in memory of that sensational hail mary throw.

There are always lots of pressures on IT Managers and their staff, with tightening budgets, constrained resources and a precious shortage of time. We used to have a task to try and minimise the friction these folks had in buying Enterprise IT products and services from us or our reseller channels. A salesperson or vendor was normally the last person they wanted to have a dependency on for basic, routine “stuff”, especially for items they should be able to work out for themselves. At least if given the right information in lucid form, concise and free of surprises – immediately available at their fingertips.

The picture was one of the ones we put in the DECdirect Software Catalogue. It shows an IBM 3278 terminal, hooked up to an IBM Mainframe, with Digital’s VAX based ALL-IN-1 Office Automation Suite running on it. At the time, this was a startling revelation; the usual method for joining an IBM system to a DEC one at the time was to make the DEC machine look like a remotely connected IBM 2780 card reader. The two double page spreads following that picture showed how to piece this, and other forms of connections to IBM mainframes, together.

The DECdirect Software catalogue had an aim of being able to spit out all the configuration rules, needed part numbers and matching purchase prices with a minimal, simple and concise read. Our target for our channel salesforce(s) was to enable them to extract a correct part number and price for any of our 550 products – across between 20-48 different pricing tiers each – within their normal attention span. Which we assumed was 30 seconds. Given appropriate focus, Predictability, Consistency and the removal of potential surprises can be designed in.

In the event, that business (for which I was the first employee in, working alongside 8 shared telesellers and 2 tech support staff) went 0-$100m in 18 months, with over 90% of the order volume coming in directly from customers, correctly priced at source. That got me a 2-level promotion and running the UK Software Products Business, 16 staff and the country software P&L as a result.

One of my colleagues in DEC Finland did a similar document for hardware options, entitled “Golden Eggs“. Everything in one place, with all the connections on the back of each system nicely documented, and any constraints right in front of you. A work of great beauty, and still maintained to this day for a wide range of other systems and options. The nearest i’ve seen more recently are sample architecture diagrams published by Amazon Web Services – though the basics for IT Managers seeing AWS (or other public cloud vendors offerings) for the first time are not yet apparent to me.

Things in the Enterprise IT world are still unnecessarily complicated, and the ability to stand in the end users shoes for a limited time bears real fruits. I’ve repeated that in several places before and since then with pretty spectacular results; it’s typically only a handful of things to do well in order to liberate end users, and to make resellers and other supply channels insanely productive. All focus then directed on keeping customers happy and their objectives delivered on time, and more often that not, under budget.

One of my friends (who works at senior level in Central Government) lamented to me today that “The (traditional vendor) big players are all trying to convince the world of their cloudy goodness, unfortunately using their existing big contract corporate teams who could not sell life to a dying man”.

I’m sure some of the Public Cloud vendors would be more than capable to arm people like him appropriately. I’d love to help a market leading one do it.

Footnote: I did a previous post on what Vendors, Distributors and Resellers want here.

Cutting Software Spend: a Checklist

ianwaring Budgets, Enterprise IT, Management, Pricing, Purchasing, Software Leave a comment

Arrow going down

No real rocket science, but if you’ve been put in a position to try to make savings on your software spend, this is the sort of checklist i’d run down. It is straight off the top of my head, so if there are nuggets you know that i’ve missed, please throw a comment at the end, and i’ll improve it. The list applies whether you are looking at a single organisations spend, or are trying to reconcile the combined assets from any company merger or acquisition.

General rules:

  1. Don’t buy new when you have redundant assets already
  2. Be mindful that committing to buy in volume is lower unit cost than buying individually
  3. Beware of committing to spend over several years where the vendor prices any agreement assuming straight line deployment toward your total user base at the end of the term. Assume most of the deployment will happen much faster – and that your projected spend will front-load with large true-up costs at annual contract anniversaries.
  4. Don’t pay extra for software updates where no updates are planned in the license term
  5. Don’t pay for software you’re not using!

So, the checklist:

  1. If there is a recommended software list to be deployed for a new employee, be sure to engage HR with a weekly list of leavers, and ensure their license assets are returned to a central pool. Licenses in that central pool should be reallocated out of that pool before electing to go forward with any new purchase. I’ve seen one company save 23% of their total desktop software spend just by implementing this one process.
  2. Draw up a master list of all boxed software (termed “Fully Packaged Product” or “FPP”) that appears to have been historically purchased by the organisation. The associated licenses are normally invisible to the software vendor from a purchase history point of view. Two main uses: (a) it forms a list of what should or could be purchased at more favourable terms in the future using an appropriate volume licensing agreement and (b) it’s a useful defence if your CFO receives a spurious “demand for unpaid licenses” from a vendor. I’ve seen one case of a subsequent reconciliation of previous purchases result in an unsolicited £6m invoice being settled for £1.8m instead.
  3. Likewise, compile a list of the various software licenses purchased, per vendor. This is often complicated because a single vendors products can be purchased from multiple sources, and there are several licensing programs in every vendor. You will often find purchases made for a specific project, where an organisation wide reconciliation can take overall licensing and support prices down – but only if centralising the negotiation supports each projects goals. I have seen one such reconciliation of a vendors licenses in one large multinational company run to 80 pages (and a huge discount to bring in an end-of-financial year renewal), though most result in a 1-2 page reconciliation. You then have the data to explore available change options with a vendor or reseller of your choice.
  4. Ensure that the support levels purchased are appropriate for the use of the products. There is no point paying “Software Assurance” for the remainder of a 3 year term if no new version is scheduled to be released in that timeframe (most effective resellers will have visibility of these release pipelines if you can’t get them directly from the vendor). Likewise, you probably don’t need 24/7/365 support on an asset that is used casually.
  5. Finally, don’t buy support on products that you’re no longer using. While this sounds like a flash of the obvious, knowing what is and isn’t being used is often a lengthy consolidation exercise. There are a variety of companies that sell software that can reconcile server based software use, and likewise others (like Camwood) that do an excellent job in reconciling what is present, and used/unused, across a population of Windows PCs. Doing this step is usually a major undertaking and will involve some consultancy spend.

If the level of your buying activity is large enough to be likely to attract the attention of a vendor or reseller salesperson visiting you in person, a few extra considerations:

  1. Be conscious of their business model; it is different for PC software vendors, Enterprise Software Vendors and Vendors predominantly selling “Software as a Service” or Open Source Software based subscriptions. Likewise for the channels of distribution they employ between themselves and your organisation – including the elements of the sales processes a reseller is financially incented to follow. Probably the subject for another day, but let me know if that’s of any interest.
  2. Know a resellers and vendors fiscal quarter year, and particularly their end of financial year, date boundaries. The extent to which prices will flex in your favour will blossom at no other time like these. The quid pro quo is that you need to return the favour to commit your approved order to be placed before their order cut off schedule.
  3. Beware getting locked into products with data formats exclusive to or controlled by one supplier; an escape route with your data assets (and associated processes) intact ensures you don’t get held to future ransom
  4. Consider “Software as a Service” subscriptions wherever possible, aka pay in line with the user population or data sizes actually employed, and flex with any changes up or down. You normally absolve your IT dept from having to update software releases and doing backups for you in the price, and you should get scale advantages to keep that price low. That said, (3) still applies – being able to retrieve your data assets is key to keep pricing honest.
  5. Always be conscious of substitutable products. Nothing oils the wheels of a larger than expected discount from a vendor than that of the presence of a hated competitor. If it’s Microsoft, that’s Google!
  6. Benchmark. If you’re trading with a reseller with many customers, they have an unparalleled view of previous deals of similar dimensions to your own – including past discounts offered, special deal allowances and all the components needed to lower a price. At the very least, an assurance that you’re “getting a good deal”. I have seen one example of a project deferred when it became apparent that the vendor was giving a hitherto good customer a comparatively poor deal that time around.
  7. For multinational companies, explore the cost differences in different territories you buy through and use the software in. I did one exercise for a well known bank that resulted in a 30% drop in their unit costs with one specific vendor – two years running.

So, what nuggets have I missed? Comments most welcome.