It is no longer technology that encourages your clients to prick up their ears and reach for their cheque book. It is business benefits.
Gone are the days when IT managers dare to buy technology just because of bells and whistles. It has to offer a tangible benefit to the business' bottom line, and any IT purchasing manager who thinks otherwise will not be in that job for long.
As Richard Doyle of Essteem Computers says: 'Boards today want to see actual benefits rather than perceived benefits, and IT purchase today is all about cost justification.' This has important ramifications for computer dealers' sales strategies and techniques.
THE PATRON SAINT OF SOFTWARE SALESMEN?
A reseller's sales message has to be based on the real business benefits of a system. John Maybury of Ranmor Computing says: 'One good thing that Bill Gates has done is convince the man in the street that he can trust Windows. Generally the level of confidence in IT and the belief that it will deliver all that it promises has gone up significantly. They know that it will work, but what resellers have to do now is convince potential customers that they will actually benefit in business terms from the IT that they purchase.'
Rosalind Hopewell of Tesseract agrees. 'We often don't have to make a formal presentation any more. If they like us and we convince them of the benefits the system will make to their business, customers will place an order. It comes down to personal chemistry and confidence that what we are selling them will make a dramatic difference to their bottom line and that the technology works is a given,' she says.
There is no classic method for establishing the potential benefits of information technology; every customer site will be different. But the basic principle is to measure the cost of the business processes before the new system is implemented, then to measure again afterwards and compare the two. Easier said than done. Exactly what do you evaluate? And what yardstick do you use to do the measuring?
That is the trick, says Stephen Weil of Tranzline, a provider sales and marketing software. He says it is often more effective to get the customer to undertake the measurement process themselves because then they are more likely to believe that it is not just sales hype. 'We can undertake a measurement process but it is hard to charge for it as a consultancy service and if we provide the framework for undertaking a measurement process, it is better if the customer does it,' says Weil.
DUST OFF THAT CRYSTAL BALL
Maybury adds that it is important for the reseller supplier to take a long-term view of a customer's business needs, even if the client does not. 'You must try to provide a system which is going to be satisfactory in two years' time, so you have to gauge how the business is likely to evolve and change over that time. You have to talk to them and see what their expectations are and make projections about their IT needs.' Unless this is done, says Maybury, any measurement process is superfluous.
He is critical of resellers which consciously only provide IT for the immediate or short term, with a view to being asked to provide more IT in the long term. 'It is not the way to keep customers. If you completely satisfy a customer's needs you won't lose them as client.'
Measuring the benefits of the IT that you supply is straight-forward if you go about it logically, says Maybury. 'First, you establish exactly what the current situation is, what their expectations are and what benefits they want to achieve. Second, you have clear objectives of what you have to do. Third, you can look back and be clear about what you've achieved.'
The benefits most frequently touted by resellers in their sales pitches are not those the customers really want to hear, says Maybury. 'Almost everyone claims improvements in price performance,' he says. 'They also claim a fantastic number of transactions per second or reel off great long statistical claims about the specifications, but really, who cares?'
Users are not usually impressed by technical claims, he says, preferring instead to know business benefits like the cost of ownership or improvements in business processes which will reduce the cost of running the business.
This is easy if the system you are selling offers benefits which are quickly apparent.
Doyle says that any system which improves document management and flow is an easy sell, because there are so many validated statistics which back up his claims. 'The big accounting houses have done surveys which show that, for example, any piece of document is likely to be copied an average of 19 times during its life, and an average of one month a year is spent looking for lost documents. These figures and others like them can be very helpful in a sales situation,' he says.
MAKING SURE THE GLOVE WILL FIT
Hilary Robb pre-sales manager of CIL, another document management systems house, says that during the first few meetings with a potential customer a reseller should be judging what the weaknesses of the business are.
'The reseller might decide that there is actually not much benefit to be gained by new IT, in which case they would be best advised not to proceed with the sale.' Better lose a sale, says Robb, than sell something which will show no benefit.
'The bottom line is always cost,' she says. 'And that means demonstrating potential cost benefits.' These can be in areas such as space savings, she suggests. 'If a company is paying a lot for its office space every bit counts, so if you can replace a filing cabinet with data on a tape streamer then you are saving them money.' Even fax and photocopying charges, and the cost of phone calls which can be replaced by email, should be considered.
Doyle agrees, saying: 'Many resellers are still obsessed with selling on technical benefits, but if they could just think laterally and engage with the direct, measurable business benefits their sales message will be more effective.'
Compass specialises in providing its customers with an IT evaluation service. Managing director Stephen Tunstall says: 'At Compass we offer real financial rewards that accrue from making IT do the job it is supposed to do.' Compass examines its clients' IT systems in detail, measures efficiency, describes where improvements are necessary and calculates the savings that will ensue. 'There is always room for improvement,' says Tunstall, 'and as technology keeps advancing so best practice can never stand still.' Financial benefits are real, he says, and it is important to live in a world of provable facts and figures rather than intangibles.
Stephen Weil, marketing manager of software house Tranzline, which sells Tranzline System, a sales and marketing software product, is clear about the necessity of pointing out the potential benefits of IT, and the importance of helping a customer achieve them. 'It comes down to cost justification,' he says. 'That is what the finance director is going to want to see.'
But Weil also says that it is no good having a list of possible benefits on paper and putting the system in if the business does not change to take advantage of the IT as the benefits will never be realised. 'They will think they have been conned, even if the benefits could still be achieved,' he says.
BESPOKE BENEFITS FOR BUSINESSES
Evaluating the benefits of IT is essential for getting an order approved and signed off, says Weil, so resellers have to provide the criteria for improvement to the customer. 'It's no good just listing a series of technical benefits, you have to interpret those as improvements to the business.'
He says that general benefits can usually be outlined, such as improvements in data security and speed of access times, which will in themselves improve the bottom line of the business. 'But you need to be more specific.'
In Tranzline's case this means establishing the way a company undertakes its sales and marketing processes and then pointing out the measurable benefits such as the cost per call and the ability to streamline a marketing campaign so that it is more focused and gives better returns. 'We all know the companies who do scattershot mailshots, but if those mailouts can be better targeted the response levels are higher, then that's a tangible benefit,' says Weil.
He says that the cost of each enquiry can be evaluated, and it is possible to use IT to make sure that sales energy reaps better rewards. 'By making sure that a higher number of sales are closed then you have demonstrated a benefit.'
Tranzline uses the following points to emphasise the benefits of its software:
Consistency of data entry, thereby reducing costs
Security and control over corporate data, thereby reducing costs
Avoidance of data re-entry and duplicate keying-in, thereby reducing costs
A single source of up-to-date information, thereby reducing costs
Better access to the central database for input and retrieval, thereby reducing costs
Enables cross-selling, thereby reducing costs
Improves customer service, thereby improving customer relations
Enables customer profile analysis, thereby improving customer relations
Enables integration of marketing and sales activity, thereby reducing costs
Facilitates effective mailshots, faxes and quotations, thereby improving customer relations.
A CASE OF TEACHING OLD DOGS NEW TRICKS?
In all those cases, says Weil, it is possible to take a snapshot of the way these things are done before computerisation and then assess the benefits computerisation has brought. 'Although many of these are intangibles, it is possible to create a real and tangible benefit,' he says.
Cranfield School of Management believes that very few companies actually achieve the benefits promised by their information technology, and that the main reason for this is a certain reluctance within the company to accept change. A report last year said that there are three kinds of benefit associated with IT: to automate and improve efficiency; to inform and provide effectiveness; and to transform and product a better business.
Benefits are often heavily biased towards cost savings with improved management information also rated highly. Cost reduction and profit improvement are the most important drivers, followed by process efficiency, business quality, customer service and competitive rating also measurable. Morale and goodwill are harder to quantify but equally valid as financial benefits.
But the Cranfield report states that only a handful of companies realise all the potential benefits of IT investment because of cultural or personality difficulties. Investment in IT alone does not yield returns, it simply facilitates benefits. Resellers must ensure that their clients understand that if benefit is to be derived from IT they must undertake other changes as well.
FACTS TO CLINCH THE DEAL
Reasons why companies should move to computerised document storage and retrieval (according to Richard Doyle of Essteem Computers).
- 33 per cent of employee time is spent with documents
- 25 per cent of a company's labour costs are associated with documents
- 15 per cent of a company's revenue is spent on documents
- Each employee spends an average of one month a year looking for lost documents
- It costs u16,000 to fill a four-drawer filing cabinet
- It costs u1,440 a year to maintain one
Three per cent of documents are misfiled or lost
It costs u80 to recover a lost document
Most documents are copied 19 times.
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