The internet is changing the way IT systems are bought in the business-to-business market, according to Tracey Dunlop, a consultant at ecommerce and IT consultancy firm Aris.
"Chief executives, managing directors and financial directors are becoming the point of contact for sales of IT solutions," she says. "Technology is being used to change the way in which companies do business, and it is often the sales and marketing departments that are looking for solutions. The budget often resides in these departments rather than with the IT departments themselves."
This means that the people selling solutions have to change their approach. "When selling to top executives, salespeople have to talk about the business solutions, not the technology. Usually these people do not care what the technology is, but only what it can do for them, what it will cost and what the return on the investment will be," explains Dunlop.
"The IT director is more interested in the technology, the skills needed to use it and how they will integrate it with existing systems. It is a different emphasis. Salespeople will turn off these executives if they lean too heavily on the technology."
Paul Edgeley, managing director at Lynx Technology, believes that the arrival of ebusiness has brought about big changes in the way negotiations are conducted by end users.
"Historically, we have gone in on the back of a request," he says. "People ask you to go, and you talk to the IT manager or the network man. The fundamental difference we are seeing with the emerging ebusiness market is that you are going in to talk to managing directors and financial directors to get a result for the business rather than to address a technology issue.
"We now have to talk to managing directors or financial directors, and the first questions they ask are: 'Have you got budgetary approval?' and 'Does the board really understand what it is you want to do?' That is a fundamental change," he adds.
Paul Berry, executive director at Compelsolve, the consulting arm of the Compel Group, also believes that ebusiness has changed the dynamics of negotiating with IT suppliers. Until recently, he claimed, IT investment had been the sole responsibility of IT directors and managers. "As companies have become more technology savvy, the links in the buying chain have changed and the issues and benefits have become the focus," he says.
Managing directors and chief executives are now just as likely to sit around the meeting table as the IT director, and Berry stressed that resellers must adopt a consultative approach to the more senior members of management.
"The senior board knows the results it wants to achieve as a result of implementing technology. It needs advice from the reseller on how best to achieve those goals and advice on what is required in terms of the logistics of implementation," he says.
No more dead ends
The change in attitudes is a healthy one for the industry, according to Edgeley. IT managers can waste a lot of time asking for quotations and functional specifications on systems before asking about the budget.
Dealing with the financial or managing director may mean asking different questions. These questions may very quickly dash all hopes of getting any business in the short term, but can also avoid time wasted pursuing a dead end.
Seamus King, director of small to medium-sized enterprise (SME) solutions provider Greengage Computers, believes that in smaller companies negotiations are usually conducted with the person responsible for finance, or indeed for the whole business.
"If we deal with a smaller company, we normally deal with the managing director or financial director or whoever owns the company, and we talk about business solutions. With big companies it's normally on a project basis. We deal with an IT manager who wants to know how much it costs. That's still not getting to the business solution. It is still very difficult to get to that level," he says.
Gavin Rowe, sales director at reseller Advantage Business Systems, says that the demands of IT and business are quite distinct. But there are subtle differences in the attitudes of each, because senior financial staff share some of the traits of both chief executives and IT managers.
"Chief executives and financial directors require a distinct return on investment sales technique. Financial directors and IT managers are interested in functionality, staying within budgets set and the technical infrastructure." Financial people are interested in both the cost and the technology, he claimed. But selling to either the financial director or the IT manager is hard work, and having access to the chief executive can make the salesperson's job much easier.
"The chief executive can buy a packaging machine, hire another employee or buy a Ferrari for himself instead of a finance system. If you show a clear return on investment, coupled with an ability to deliver superior management information, the system is sold. Chief executives are prepared to go on gut feelings, to accept that a relationship exists and a partnership is born in a spirit of co-operation and mutual interest in success," he says.
Financial directors, Rowe adds, tend to assume that everything will go wrong, that the supplier is out to stitch them up and that the project will fail.
"Financial directors will take contract negotiations to considerable lengths to protect themselves against what they see as inevitable. Buying decisions are fast and clear with chief executives. They take responsibility for the project from the outset. Employees don't feel that they need to cover themselves at every stage of the implementation. Project managers get quick decisions," says Rowe.
If you are simply trying to sell hardware, selling up the management chain can have its advantages, claims Brian Blanchard, managing director at storage vendor Maxoptix Europe. "Finance directors are by far the easiest to sell to, as they are still focused on cost and delivery. The managing director is now harder to sell to, especially within SMEs. It is no longer a handshake over lunch; they need to understand the business benefits, direct and indirect costs and in most cases, the technology too."
But the managing director will not be involved in simple hardware decisions, like the purchase of optical storage products. Hardware sales are often a combined decision between the IT director and the financial director, and there is a standard process that is always followed.
Dealing with senior managers can have its pitfalls. One reseller business warned that what normally gets forgotten is that, as you go up the chain of command, the real understanding of technology thins out. This business claimed to have once sold a network printer to a senior executive who believed it would make the company's photocopier redundant, only to find that the company did not in fact have a network. The senior partner who bought the machine had not been entirely ignorant of this, but had somehow formed the impression that a network card would connect all the company's PCs.
Taking a responsible attitude to relatively IT-illiterate directors is important. If IT managers focus less on the product and the pricing, resellers must ensure that they place enough emphasis on the technology, at least in terms of ensuring it will integrate with existing systems. Doing anything else will only sully their reputations.
The approach of sales staff is vital. Kevin Magee, sales and marketing director at software vendor Information Builders, says that he is now dealing primarily with managing directors, chief executives and business managers, but the IT manager cannot be ignored. "We have changed the way we sell and the type of salesperson we employ. We need business-oriented salespeople who can understand [the company's] account as much as IT infrastructure."
Businesspeople, claims Magee, want to know how much money and time the system will save, rather than how much it will cost. They want to know how quickly it can be up and running, rather than what hardware it will run on. They are not interested in the technical architecture; they want advice on how to ensure that their people use the system.
"We find that businesspeople are more sold on the vision than the reality, and we need salespeople who can describe that vision," he says. But the politics of decision making over IT often gets in the way. "We find the IT manager is often a blocker. The businesspeople want an ally against their own IT department," he adds.
In such situations, the supplier can be dragged into the internal struggle between the department or director and the IT manager. This can mean making enemies of the people responsible for the smooth running of systems within the business, and that's not the best basis for building a long-term relationship.
Blanchard points out that changes have not just taken place in the decision-making process. In some organisations, the role of the IT manager as a decision maker has also changed. "Where he used to be a cross between technical support and software solutions, he is now more involved in the business process," he says.
Even so, IT managers are still the hardest people to sell to, said Blanchard, adding that understanding their specific role and the decision making process is crucial, but that no route to the sale is easy. "IT companies still tend to target the financial director, IT director and managing director and work down the chain. This is still by far the easiest route to those responsible for purchasing decisions," he explained.
If resellers can understand the process, they may have some chance of coming to terms with the internal politics. This is becoming more important as ebusiness increases the potential for conflict within the IT decision making process and increases the chances of on-going problems with systems integration.
In the driving seat
Stephen Millard, marketing director for ebusiness products at Oracle UK and Ireland, said that at the corporate level, the board has an increasingly influential role in driving UK ebusiness projects, although in many organisations IT departments still hold a great deal of sway.
"Many board members clearly understand the benefits of ebusiness in terms of increased shareholder value through new channels to market, lower-cost operations, dramatically improved business intelligence, or perhaps even all three. The challenge for the reseller is to learn to find the key business drivers and to present IT solutions that meet those needs, both to the board and the IT department," he explains.
But it is even more important, he adds, to ensure that senior decision makers know that integration with other systems is key to success. "They need to understand that any ebusiness project will have a limited likelihood of success if it is undertaken in isolation. Integration is paramount," he says.
Unless this is understood, the project can fail even if it does have board level backing. A system sold on the basis of a political war of wills in which the IT manager is vanquished may lead to a non-co-operative IT department, but it could also mean that a system that simply doesn't work has been forced on the business.
In an ideal world, chief executives might make the decision on the basis of return on investment and long-term benefits, but only with the full approval and sanction of IT managers.
Personal agendas and preferences can get in the way of clear decision making, according to Martyn Jackson, business development manager at specialist networking distributor Equinox, but this is less true at board level.
"The managing director tends to be more interested in the benefits to the business," he says. "Everyone has a personal agenda, and it is important to try to understand both the corporate agendas and personal agendas. The corporate agenda is a higher priority than the personal agenda at the managing director level. The opposite is often true within the IT department, where personal relationships with manufacturers or suppliers are often difficult to overcome."
Case study: Computacenter
Computacenter has produced a guide for IT managers, describing how they can improve their dealings with finance directors. The document offers some excellent pointers on how relationships can work inside the corporate organisation.
The guide points out that IT projects often fail due to poor project management and conflicts between the IT and finance departments. On one hand, the finance department sees spiralling costs and 'scope creep' as the project gets more complex and the completion date recedes.
On the other, the IT department is under increasing pressure to deliver results to ungrateful colleagues who do not appreciate the difficulty of what they are trying to achieve. Project management should be a joint effort of finance and IT.
According to Computacenter, financial directors have accepted the greater efficiencies brought about by distributed systems, and have seen IT spend as a proportion of their costs rising throughout the years. These costs have risen to a point where, for a lot of businesses, it comes second only to staff costs. This means they want to have greater control over that spending and want to deal with IT departments and suppliers to get a clear understanding of the costs and implications of IT projects.
While it is accepted that IT saves money in areas such as head count, IT investments can lead to rising costs in other areas and cause financial directors to become disenchanted with the IT department. Therefore, joint responsibility must be taken for purchases at the outset, and all of the cost implications analysed.
Financial directors want to see a "suitable technology" approach, said Computacenter. They want to avoid financial penalties for technology investments through related costs, and they want standardised technologies.
While many financial directors have an increased knowledge of IT and cost implications, 'traditional' finance directors would rather avoid the shock of incidental costs that might result from changes to the IT infrastructure.
The bottom line is that financial directors have increasing influence over IT strategy and projects. It is therefore essential that IT managers and suppliers understand and take into account the financial implications of such projects.
- Ebusiness is compelling more chief executives and managing directors to become involved in the decision making process for IT solutions.
- Business strategies and budgets are higher on the agenda for chief executives, managing directors and financial directors.
- Return on investment and real benefits to the business are what chief executives and managing directors want to see, not the technology itself. IT managers are more interested in products.
- A responsible attitude must be taken when selling to directors with regard to the true functionality of products and their integration with legacy systems.
- Politics and personal agendas can get in the way of the decision making process.
- It is beneficial if IT managers are involved in the process at some stage and are supportive of board level decisions.
- IT managers must be more aware of the financial and business implications of IT projects than they have been in the past.
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