As sales and marketing professionals in the high tech world we are responsible for helping create and deliver customer-centric value propositions for our products and services. The idea is that we need to get out of the mode of talking about product features and functions and instead focus on benefits to the customer.
ROI! Is the frequent cry. We must focus on the return that a customer gets from a project. After all, every project has costs, and those outlays must come from the budget. Budgets are shrinking or flat in these challenging times. We must wring cost out of the system! Lower costs mean higher returns right?
Wrong. Well, sort-of wrong. The problem is that we frequently put so much focus on costs, that we neglect the most exciting part of the conversation which is the customer outcome – the new capability that will help grow the top line for our customer.
There have been a lot of studies which have identified that IT expenditures today are largely comprised of outlays that serve only to maintain the status quo. The lion’s share of IT budgets are for “just keeping the lights on.” The number varies but most estimates reinforce the pareto principle ie around 80% of IT budgets are for maintaining existing capapbilities while around 20% goes toward new capabilities and innovation. (Update: I just read the 10/10/2010 published 2011 IT Budget Planning Guide For CIOs from industry analyst Forrester. They define a concept called MOOSE as being an acronym for IT spending to Maintain and Operate the Organization, Systems, and Equipment. Across all industries and sizes of companies in their survey, MOOSE was slighty over 70%)
I work at Dell which has an interesting way of describing the opportunity with the following chart:
Let’s focus on the“Top of the Chart”. What it says is that if we are able to reduce the percentage of the budget that is spent on maintenance, we can increase the spending focus on strategic initiatives that will improve the top line. Here is a great discussion with Dell’s CIO Robin Johnson during which he describes Dell’s initiative to make this transformation with it’s own IT spending.
Your challenge is to figure out what the “Top of the Chart” looks like for your customer. For example when you are at a hospital talking about IT in health care, the top of the chart might be “improved patient outcomes“. For a retailer the top of the chart might be “Gross Margin Return on Space“.
This type of conversation is what will win you a seat at the table with the CIO and status as a trusted advisor to your customer.