January 30, 2012

Execution for IT vendors: a worksheet

It seems that my IT vendor strategy worksheet was well-received, by companies at different stages of development, clients and non-clients alike.* So here’s the promised sequel — a similar worksheet with more of an execution orientation. If your answers to these questions don’t dovetail well with your strategy responses, you have some serious rethinking to do.

*Those who’ve worked it through include a multi-billion dollar powerhouse, a two-person lifestyle business, and some pre-revenue start-ups.

For the strategy worksheet, I took the extreme position that every employee of every IT vendor should have at least some idea of the answers. In this case, I won’t go quite that far. But I will say that most IT vendors will find most of these questions to be of great importance. So no matter what your role in the organization, you might find it helpful to see how much of this stuff you actually know.

And if you’re the CEO, you should score 100%.

Once again, for reasons of length, I’ll summarize up top and comment on each question below.

Marketing and business development

Relationship development: We invest ____________________________ in building personal relationships with ______________________________.

Awareness: Beyond that, we build awareness by ____________________.

Our people responsible for social media are ___________________.

Lead generation: We get leads by _______________________________.

Repeat marketing: We market in support of repeat sales by ___________.

Sales

Qualifying prospects: Our prospect qualification criteria are ___________.

Sales cycle: The length and effort of our sales cycles is about __________.

Sales productivity: A sales team can generate ______________________ in sales annually, after a ramp-up time of ___________________________.

Repeat sales process: Our repeat-business sales process is ___________.

Technology and delivery

Development (weaknesses): Our plan for fixing our technical weaknesses is ________________________________________________________.

Development (strengths): Our plan for extending our technical lead is __________________________________________________________.

Support: Our support organizations look like ________________________.

Manufacturing and/or service delivery: We make our stuff by _______.

Finance and human resources

Cash flow: We expect to spend _________________________________; our operating cash intake could be as low as ________________________.

Investment: Our plan for getting investment is _____________________.

Hiring: Each hire consumes _____________________________ resources.

I’ll explain some of what I mean.

Marketing and business development

Relationship development: We invest ____________________________ in building personal relationships with ______________________________.

Suppose you’ve done everything right in strategic messaging, and come up with an awesome story that people will believe. How do you cash in?

It all starts with personal relationships — with (potential) investors, with (potential) partners, with prospects, with influencers of all kinds. As I noted in the strategy piece:

Few people get their impressions about you directly, mainly:

  • Core influencers with whom you maintain significant personal relationships.
  • Existing customers whose impression of you comes almost solely from how you perform in their account.

Almost everybody else gets their impression of you refracted through influencers.

Given that, influencer-relations is a make-or-break challenge. Often, several categories of influencer (for example partners, press, analysts, and self-appointed evangelists) are central to the business mission, perhaps for several different reasons.

Awareness: Beyond that, we build awareness by ____________________.

But business isn’t just done one-to-one. You need to build broader awareness, if for no other reason than to prime the pump for future one-to-one interactions — such as sales cycles. Advertising (especially online), trade shows (ever less), mailing lists — even the abominations that are press releases — all can have their place.

Prudence is a virtue when building awareness. Cost-effectiveness is key. So is not-screwing-up; there are a lot of ways that careless marketing can undermine your story, your image, your messages, and your chances of success. But don’t take prudence to the too-common extremes of blandness, mushiness or neglect. Marketing is an arena in which fortune favors the bold.

Our people responsible for social media are ___________________.

Companies are confused about how to use social media. That’s the smaller problem. The bigger problem is that, even when they understand approximately what to do, they don’t muster the resources and staying power to do it.

My biggest social media tip is this: Empower multiple, selected (or self-selected) employees to engage in social media for you. By “social media” I mean blogs (your/their own), blog comments, forum posts, and Twitter, to start with. By “empower” I mean:

The most fertile ground to recruit bloggers and the like may be in your pre-sales support group, since pre-sales support people are professionally required to:

If you leave social media to senior executives and/or marketing staffers, it’s probably not going to happen to nearly the extent it should.

Lead generation: We get leads by _______________________________.

For most sales models, it is necessary to generate leads. Lead generation overlaps heavily with a subset of awareness-building, but it is emphatically not the same thing. It’s more reasonable to say:

Please note that leads aren’t just measured by quantity. Quality is a much more important metric — the point of a lead is to kick off a sales cycle that has good chances for success.

Repeat marketing: We market in support of repeat sales by ___________.

Repeat sales are a whole different animal from initial sales. If nothing else — by definition, there’s only a limited universe of potential repeat buyers.

Sales

Qualifying prospects: Our prospect qualification criteria are ___________.

Most sales cycles die before they start, and that’s a good thing. A crucial sales skill is “qualifying” prospects — i.e., determining which are worthy of the large investment a full sales cycle takes. Your qualification template is a filter for sales cycles; those that get through should, on average, produce revenue well in excess of their cost.

Sales cycle: The length and effort of our sales cycles is about __________.

Enterprise sales is a process, which goes through a typical series of steps, which have predictable delays. An experienced sales manager coming to a new start-up might mis-predict average sales cycle length by a factor of 1.5-2. She will not, however, be off by a factor of 5.

Sales productivity: A sales team can generate ______________________ in sales annually, after a ramp-up time of ___________________________.

One of the key metrics in running an enterprise IT business is sales productivity, which equates roughly to

(Win rate) x (Revenue per successful sales cycle) x (Sales cycles per team per year).

Also important are the cost and composition of a sales team, and how long it takes them to achieve their expected level of productivity. When I encounter management teams that don’t understand these basic concepts, snark can ensue.

Repeat sales process: Our repeat-business sales process is ___________.

A large fraction of an IT vendor’s business comes from repeat sales. So does an even larger fraction of profits, where by “larger fraction” I mean a number that can easily exceed 100%. So it’s crucial to do repeat sales well.

Key differences between repeat and initial sales include:

Technology and delivery

Development (weaknesses): Our plan for fixing our technical weaknesses is ________________________________________________________.

Some competitive liabilities, while not precluding initial success, inhibit you from expanding your market footprint past a certain point. So what you do in sales and marketing is hostage to your efforts in technological catch-up.

Please note that catch-up may be a different kind of engineering, requiring different kinds of management, than is needed for initial creation of something cool-but-fragile. What’s more, the schedule of problem-fixing can be hard to predict — if you knew everything about how to fix your product problems, you wouldn’t have designed them in in the first place.

Development (strengths): Our plan for extending our technical lead is __________________________________________________________.

Few IT vendors are blessed with truly stupid competitors, and so your biggest technical advantages won’t be as big forever. Software vendors may try to act on multi-year forward-looking development plans while still allowing for reactive catch-up. Hardware vendors more typically build and finish discrete product lines. But no matter what you’re developing, you have to be sensitive to a lot of other people’s priorities and timetables.

Support: Our support organizations look like ________________________.

An IT vendor has to be good at post-sales support. Period. An IT vendor that isn’t tiny also has to be efficient at support. And you have to be flexible with respect to just what it is that you’re good and efficient at, for reasons including:

This all just becomes more true in the open source world, where the software itself is commonly free.

Manufacturing and/or service delivery: We make our stuff by _______.

Support aside, “How exactly are we getting the results of our engineering to customers?” may not be a big question for software products vendors. But it’s indeed major if you’re offering hardware, appliances, and/or some form of SaaS (Software as a Service). Going completely inhouse is rarely the best choice — but no hosting solution is ideal, and neither is any hardware OEM or contract manufacturer.

Finance and human resources

Cash flow: We expect to spend _________________________________; our operating cash intake could be as low as ________________________.

A basic rule of business is “If you run out of money, you’re out of business.” So you need to plan for your reasonable worst-case cash flow. Cash flow, of course, equates to the difference between cash in and cash out; of the two, incoming cash is usually the harder to predict.

Investment: Our plan for getting investment is _____________________.

If you don’t need money, and never will, congratulations. Otherwise, little is more important than getting it when — or preferably before — you need it.

Hiring: Each hire consumes _____________________________ resources.

Hiring is a huge part of what you do. It consumes substantial time for sure, especially but not only from management. It may also consume significant cash. And once somebody is hired, training is a big deal as well.

If you don’t have a hiring and training plan, then you probably don’t have a growth plan at all.

Comments

4 Responses to “Execution for IT vendors: a worksheet”

  1. Strategy for IT vendors: a worksheet | Strategic Messaging on March 11th, 2012 10:47 pm

    [...] That was long. I have an equally long list of more execution-oriented questions outlined as well, but for now I’ll defer turning them into an actual post. Of course, if [...]

  2. Marketing communication tips | Strategic Messaging on December 9th, 2012 5:45 am

    [...] IT vendor strategy and execution [...]

  3. Open source strategies | DBMS 2 : DataBase Management System Services on April 18th, 2013 2:42 pm

    [...] open/closed source distinction is central to only a few of the issues on our strategy and execution worksheets, mainly the ones influenced by pricing. However, it is at least slightly relevant to a [...]

  4. Judging opportunities | Strategic Messaging on July 12th, 2014 3:08 am

    [...] less well-known execution worksheet that followed [...]

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