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Leveraging a Solutions Approach to Guarantee Product Impact June 19, 2009 Presented at: Art & Science of Services Conference Bentley College Presented.

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Presentation on theme: "Leveraging a Solutions Approach to Guarantee Product Impact June 19, 2009 Presented at: Art & Science of Services Conference Bentley College Presented."— Presentation transcript:

1 Leveraging a Solutions Approach to Guarantee Product Impact June 19, 2009 Presented at: Art & Science of Services Conference Bentley College Presented by: Stephen Hurley Managing Director Solutions Insights, Inc.

2 © 2009 Solutions Insights. All Rights Reserved.2 Solutions What is it??!!

3 © 2009 Solutions Insights. All Rights Reserved.3

4 © 2009 Solutions Insights. All Rights Reserved.4 Even Dilbert is talking about solutions!

5 © 2009 Solutions Insights. All Rights Reserved.5 Even Dilbert is talking about solutions!

6 © 2009 Solutions Insights. All Rights Reserved.6 Even Dilbert is talking about solutions!

7 © 2009 Solutions Insights. All Rights Reserved.7 These are more typical of the solutions that exist in the B2B world.

8 © 2009 Solutions Insights. All Rights Reserved.8 Much of the breakthrough research on technology-based solutions has been developed by ITSMA... ITSMA provides research and consulting insights on how to sell and market services to the world’s leading technology companies. Agilent Technologies Alcatel-Lucent AT&T Avanade Avaya BEA Systems BearingPoint BT CA Capgemini CGI Cisco Systems Cognizant CompuCom Systems CSC Diebold EDS, an HP Company EMC Ericsson Fujitsu Services General Dynamics Information Technology HCL Technologies HERMES Softlab Hewlett-Packard IBM Global Services Infosys Technologies Iron Mountain Juniper Networks Keane KPMG Kumaran Systems Lenovo Logica Microsoft NCR NetApp Nokia Siemens Networks Northrop Grumman Information Systems Oracle Orange Business Services Patni Pitney Bowes Polycom Raya Integration Satyam SBS Group Siemens Enterprise Communications Steria Stratus Technologies Sun Microsystems Symantec Talent Partners Tata Consultancy Services Tellabs Tiger Lily TriZetto Utimaco Safeware VMware Wood Mackenzie Xerox

9 © 2009 Solutions Insights. All Rights Reserved.9 Solutions are real—at least in the eyes of the technology vendors. Extremely Important Not at All Important Mean Rating = 4.6 Q. How important is the solutions business to your company? % of Respondents (N=41) Source: ITSMA

10 © 2009 Solutions Insights. All Rights Reserved.10 So…what is a solution? ITSMA’s Solutions Council came together and agreed upon the following definition. A solution is a combination of products and/or services with intellectual capital, focused on a particular customer problem, which drives measurable business value. Source: ITSMA Solutions Council 2006 DEFINITION Source: ITSMA

11 © 2009 Solutions Insights. All Rights Reserved.11 Here’s another way to look at it… A Solution is… Technology Process Resources The Solution Understanding Customer Needs Delivering Measurable Business Value Source: ITSMA

12 © 2009 Solutions Insights. All Rights Reserved.12 Solutions-related terms are hierarchical and discrete. Generic Customers with Common Problems Targeted Segments Targeted Functions A Particular Customer Source: ITSMA

13 © 2009 Solutions Insights. All Rights Reserved.13 Solutions appear to be an important part of a company’s overall portfolio. Q: What percentage of your company’s total revenue would you attribute to your solutions business, or to integrated business solutions, vs. discrete products or services? Mean % of Total Revenue (N=31) Solutions revenue (40.6%) Discrete product and services revenue (59.4%) Median: 30% Range: 0-100% Source: Solutions Insights/ITSMA Survey: Selling Solutions, March 2009 Sponsors & Approach Executive Summary Methodology & Demographics Detailed Findings

14 © 2009 Solutions Insights. All Rights Reserved.14 Let’s give this a bit of a historical perspective… We noticed a significant shift in how ITSMA’s members were marketing shortly after “The Great Bust” in 2000… Reasons for the shift:  Dissatisfied customers  Continuation of product commoditization and margin squeeze  A screeching halt to industry growth; a scramble for a more meaningful value equation

15 © 2009 Solutions Insights. All Rights Reserved.15 So ITSMA’s members definitely made the move, and cited the following reasons… Increase company revenue (net new) Increase value delivered to the customer Increase product or services revenue (pull-through) Increase share of wallet Increase customer loyalty Increase sales productivity Increase control over customer satisfaction The Big Three Others Mentioned Increase overall profitability Respond to customer demand Source: ITSMA

16 © 2009 Solutions Insights. All Rights Reserved.16 Let’s look at solutions in the context of other strategic planning models. COMPARISON OF STRATEGIC PLANNING METHODS Method or Tool PurposeKey Elements Porter’s Five Forces Understand all of the external forces that can influence strategic direction Buyer Power, Supplier Power, Substitutes, Government Regulations, and Competitive Pressures PESTUnderstand how a range of external forces impact a company Political, Economic, Social, and Technology influences SWOTAnalyze how a company compares against a competitive set Strengths, Weaknesses, Opportunities, and Threats BCG MatrixDetermine how to allocate investments across a range of products, services, Business Units, or subsidiaries Cash Cow, Rising Star, Dogs, and Question Marks SolutionsUnderstand how to optimize all of the company’s resources — products, services, and IP —to best meet customer needs and deliver value Cross-Organizational Collaboration, Solutions Council, Integrated Financial Models, Buyer Behavior Predictive Modeling, Consultative Selling

17 © 2009 Solutions Insights. All Rights Reserved.17 Here are some examples of companies that have moved from products to solutions. Home Depot Products sold to handymen and contractors Installation services for wide range of products Customer demand; dissatisfied handymen CompanyStarting PointEnd PointMotivator Toro Corporation Large lawn mowers sold to maintenance departments for golf courses Outsourcing of golf course maintenance Revenue generation; offering extension GE Medical Systems Medical devices and related services sold separately Integrated products and services to address broader business problems Customer demand and revenue generation EMC Corporation Data storage units sold to IT departments Integrated storage, networking, and virtualization products and services sold to address broader business problems Customer demand, revenue generation, and competitive threats

18 © 2009 Solutions Insights. All Rights Reserved.18 ITSMA developed a Solutions Roadmap in collaboration with its Solutions Council. Source: ITSMA Five Core Elements Sustain Momentum and Growth Enable the Organization Leverage Opportunistic Solution Successes Sell Only Discrete Offerings Organization Marketing Activities Portfolio Management Sales and Sales Enablement Culture and Behavior SolutionsMastery Organizational Execution Building the Foundation Pilot and Test Phase 5Phase 3Phase 2Starting PointPhase 4 The Push and Pull Operationalize the Plan

19 © 2009 Solutions Insights. All Rights Reserved.19 Each Element must be managed as a company moves to a new Phase. Portfolio Management Solutions Mastery Organizational Execution Building the Foundation Pilot and Test Phase 5Phase 3Phase 2Starting PointPhase 4 The Push and Pull Portfolio Management: Solutions Management  Products and services are bundled into packages for ease of selling  Cost-plus or product-based pricing predominates  Few or no external partners are involved  There is little cross-BU coordination; services and products are developed independently  New offering development is product- or practice area-led  For product companies, services take a back seat to products  For product and service companies, there is a limited view of solutions opportunities due to organizational silos  Products and/or services plus IP are combined to deliver an integrated solution; may also include partner-provided offerings  Cost-plus or market pricing dominates  The portfolio is composed primarily of offerings based on available supply/capabilities  There is little sharing of cost information between partners  Solutions development is primarily field-based; entrepreneurial  New solutions development is both product- and services-led  Solutions development processes are tested with beta solutions  The solutions portfolio becomes more demand- driven, requiring deeper collaboration across BUs and with business partners  More flexible pricing models based on value added and benefits delivered are introduced  Partner costs are integrated into pricing models  Solutions life-cycle management is not yet well developed  The solution development process becomes increasingly standardized  Offerings are combined with those of business partners to deliver a more complete solution  Development costs are allocated separately to the BUs that control the offerings  The “voice of the field”— opinions of sales and delivery staff—provides input to the development process  There is a portfolio of integrated, repeatable solutions, with seamless messaging and value propositions  Business partner capabilities and offerings are more tightly integrated; however, pricing continues to be customized by particular opportunity  There is more serious experimentation with results-based pricing models  Appropriate systems, processes, and governance are used to develop solutions centrally, based on field experience  Repeatability of solutions improves through mass customization  Solutions are managed as part of a portfolio to reduce complexity, maximize profit, and encourage innovation  Value pricing is used extensively; results-based pricing becomes more frequent  Information is shared with partners to enable joint offer development, pricing, marketing strategy, and sales  Clients and influencers recognize firm expertise in a number of focused solution areas  Clients take a larger role in solutions development  A significant portion of development costs are centrally managed  Fully integrated solutions packages are developed with partners Source: ITSMA

20 © 2009 Solutions Insights. All Rights Reserved.20 Member companies have made the changes required to move into the next phases of ITSMA’s Solutions Roadmap Source: ITSMA Sustain Momentum and Growth Enable the Organization Leverage Opportunistic Solution Successes Sell Only Discrete Offerings SolutionsMastery Organizational Execution Building the Foundation Pilot and Test Phase 5Phase 3Phase 2Starting PointPhase 4 The Push and Pull Operationalize the Plan

21 © 2009 Solutions Insights. All Rights Reserved.21 “Wait a minute — What is a solution?” Technology-Based Solutions “Do we really want to sell solutions?” “Hey!! Look! Everyone’s pushing solutions… we better do it, too!!” “Hooray! We’ve done it! Our website says we’re selling solutions…that means we are a solutions company!” “Hey…this is a lot of hard work.” “We’re making progress... and it’s worth it!” The Evolution of a Solutions Company—From Discovery to Commitment Be careful about your strategy and tolerance for pain!

22 © 2009 Solutions Insights. All Rights Reserved.22 There are a number of considerations as you develop your solutions strategy. CustomTurn Key CompanywideBusiness Unit Technology InfrastructureBusiness Process Supporting RolePrimary Strategy Overlay StructureIntegrated Structure Core Brand PositioningSub-brand Positioning Source: ITSMA

23 © 2009 Solutions Insights. All Rights Reserved.23 The trend appears to be towards “productizing” solutions. Q: Solutions can range from highly customized one-off deployments to highly packaged offers combining many “fixed” elements such as products or implementation services. Some firms strive for mass-customization—the right mix of off-the-shelf products/services with strong market or customer customization. In response to the current economic climate is your firm planning to: % of Respondents (N=31) Build and deliver more mass-customizable solutions (48%) Build and deliver more highly-packaged solutions (36%) Build and deliver more customized solutions (16%) Source: Solutions Insights/ITSMA Survey: Selling Solutions, March 2009 Sponsors & Approach Executive Summary Methodology & Demographics Detailed Findings

24 © 2009 Solutions Insights. All Rights Reserved.24 So…what are your 3 takeaways? ● Complex products require services in order to realize their benefits— the question is who will provide these services? ● Product enablement into the customer’s business environment needs to be designed into the product from the beginning ● Product enablement requires that you transform your entire value chain—not just your marketing messages

25 © 2009 Solutions Insights. All Rights Reserved.25 Go Forth and Solve

26 © 2009 Solutions Insights. All Rights Reserved.26


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