1. IT Sales & Marketing: Trends, Priorities, and Best Practices for 2006
Executive Advisory Services
IT Sales & Marketing: Trends, Priorities, and Best Practices for 2006
IDC Client Telebriefing
September 8, 2005

2. Agenda 12:00 (EDT) Presentation 12:45 Q&A 1:00 Adjourn Rich Vancil
Vice President
CMO Advisory Service
Donald MacDonald
Vice President
Sales Executive
Service
12:45 Q&A
1:00 Adjourn

3. “Issues” Identification
IDC Invests in Significant Research Foundation for Executive Advisory Services
Peer Networking and
“Issues” Identification
Executive Benchmarking Database
Unique Access
Unique Methodology normalizes activities
Vendors
$400 B Revenue
$60 B Sales & Marketing Spend
Vendor Surveys on Sales & Marketing Expenses and Practices
Benchmarking
Database
User Surveys on the Buy Cycle Experience
Buyer Experience Database
IDC Panel of users
Supplemental surveys
Awareness/ consideration
Consideration/ purchase
Application/ leverage
TDM’s & BDM’s
Buyer Experience
Database
IDC analyzes and advises on:
Benchmarking & Metrics
Best Practices
Customer Influence

4. The Sea Change in Tech Marketing & Sales
Double Digit Growth
Single Digit Growth
IT Past
IT Present
Selling Product to Early Adopters
Selling Solutions to Sophisticated Users
Bargaining Power
Held by Vendor
Held by Buyers
Limited Marketing Required
Sophisticated Marketing Required
Sales = Demand Management
Sales = Demand Creation $0
$200
$400
$600
$800
$1,000
$1,200
$1,400
1960–1999
$ Billions
Worldwide IT Spending
(1960–1999)
(1999–2008)
~15% CAGR
~4% CAGR
1999–2008

5. Executive Advisory Services
Trends in Tech Sales
Donald MacDonald

6. Donald MacDonald: IT Sales Trends, Priorities, and Challenges for 2006
In a word—complexity
Solution selling is ubiquitous and remains the major focus in IT sales
IT vendors continue to expand vertical offerings and routes to market
Need for increased demand creation has led to channel rationalization
Priorities
Creating new business opportunities
Maintaining profitability
Better sales planning & budgeting
More effective and efficient resource allocation
Challenges
Alignment remains the top challenge

7. The Customer Experience: What Do Customers Look for in an IT Vendor?
Respondent’s Opinion of the Importance of Vendor Alignment *
No influence
Don't know (1.1%)
(7.6%)
Figure 40
Moderate influence
(26.1%)
Significant
Influence (65.2%)
Total = 92
Source: IDC Solutions Selling Paradox Study, 2005

8. Sales Alignment Challenges
Alignment with the customer
Too short sighted
Focus on “C” level somewhat misguided
Solutions have marginalized the role of the sales rep
Alignment within the company
Financial metrics inadequate
Non-sales resources critical to sale’s success
Cultural challenges of solution selling
Alignment with the market
SMB space attractive but getting crowded
Channel conflicts need constant attention
Future challenges from unlikely competitors

9. Product Selling Productivity
IT Sales Challenge: The Recent Past
Product selling drives productivity but does not address increasing customer demand for solutions
Product Selling
High
Made for markets
Repetitive activity
Done quickly
Cost effective
Features-selling
Low content
Highly controlled
Productivity
Low
N= 26 executive interviews

10. The Solution Selling Challenge
“ When talking about solutions, the old adage seems to fit in that the whole is greater than the sum of the parts.”
SVP, IT
The inability for the industry to neatly define a solution is, in part, due to the fact that a solution is ultimately defined by a customer.
Customers we talked to describe a solution as an intangible. They expressed its meaning in terms of knowledge, expertise, and experience.
Customers define solutions in terms of the impact it has on their employees, the cost involved, the risk it represents to their company, the difference makes to their customers, and the potential to make money or save money—each of which is unique to that customer and no one else.

11. IT Sales Challenge: The Present
Solution Selling
Customer Centric
Managed process
Done right
Resource Intensive
Consultative-selling
High Context
Highly collaborative
High
Low
Solution selling diminishes
productivity but responds to increasing customer demand for solutions
Productivity
N= 26 executive interviews

12. Sales Performance
Last year only one out of every ten IT sales organizations met or exceeded their annual revenue plan
During the same period, only one in three sales representatives made quota
Source: IDC Solutions Selling Paradox Study, 2005

13. The Buyer Experience: The Solution Fulfillment Cycle
IT vendor sales teams that recognize the customer’s solution fulfillment cycle will be more productive and successful then those more short-sighted teams, that only focus on their own selling efforts
Decision-Making Cycle
Implementation Cycle
The Solution Fulfillment Cycle

14. The Buyer Experience: Vendor Interaction that Customers Value Most
Demonstrations
33.0%
Proof of Concept
29.9%
RFP Response
27.8%
Attentive to Client Needs
26.8%
References/Client Visits
19.6%
Technical Briefings
17.5%
Honesty/Integrity/Communication
17.5%
Follow Through/Support
15.5%
Knowledgeable People
13.4% 0% 5%
10%
15%
20%
25%
30%
35%
40%
Source: IDC Solutions Selling Paradox Study, 2005

15. The Buyer Experience: What Do Customers Look for in an IT Vendor?
Respondent’s Opinion of Vendor’s Alignment
Less aligned
Don't know (5.3%)
(7.4%)
No change (6.3%)
Figure 39
More aligned
(81.1%)
n = 95
Source: IDC Solutions Selling Paradox Study, 2005

16. The Sales Executive: Challenges for 2006
Managing sales expenses
Selling, General, & Administrative costs
Better expense tracking and reporting
Selling Expense (the “S” in the SG&A line)
Benchmarking your sales expense ratio
Go-to-market planning (GTM)
Benchmarking sales resource and program expenses
Maintaining sales performance
Driving revenue by creating new business opportunities
Sales training and upscaling sales teams
More effective solution selling
Measuring Customer Fulfillment Profitability
Alignment
Deploying the right sales & marketing resources at the right time

17. Tech Marketing Trends: Inside the Successful Marketing Organization
Executive Advisory Services
Tech Marketing Trends: Inside the Successful Marketing Organization
Rich Vancil

18. Marketing & Sales Alignment Continues to be an Area for Significant Improvement
Q. Please explain any planned initiatives in the upcoming year for improving marketing and sales alignment
Source: IDC’s 2005 CMO Tech Marketing Benchmarks Study (n=92)

19. Inside the Successful Marketing Organization
Alignment with a more complex IT marketplace will require a more highly functional marketing organization.
“Six for ‘06”
Increase Overall Investment
Develop the Organization Chart
Improve Skill Sets
Focus on Global Alignment
Invest in the Marketing Operations Role
Invest in Marketing Performance Measurement

20. #1: Tech Marketing Investment Climbs to the Highest Growth Rate in 4 Years, Outpacing IT Spending
Avg. %
Services(8.9%)
Hardware(5.3%)
Software(7.0%)
6.0%
6.4%
-1.7%
Source: IDC’s 2003, 2004 and 2005 CMO Tech Marketing Benchmarks Study

21. #2: Marketing Organization Charts – A Work in Process
Marketing Function
By Marketing Function
+ Optimizes marketing expertise
- Fosters empire building
Marketing Function
Product/LOB
Region
Marketing Function
Region
Region
By Region
+ Optimizes local touch and sales interaction
- Increases potential for redundancies and inconsistencies
Product/LOB
Customer
The 4th Dimension: Market-Driven Structure
Optimizes solution and vertical marketing
Improves marketing & sales alignment
Optimizes Voice of Customer
Product/LOB
By Product or LOB
+ Optimizes product knowledge and interaction with product management
- Increases alignment challenges

22. #3: Building Skill Sets and Staff: Expected Staff Allocation Levels
Driving a market-driven strategy
Increasing marketing and sales alignment
New Role: Improve marketing’s
efficiency and effectiveness
Source: IDC’s 2005 CMO Tech Marketing Benchmarks Database

23. #4: Achieving Internal Marketing Alignment: A Special Challenge for Fast-Growth Vendors
IDC asked CMOs to indicate their level of alignment within marketing: 6
Marketing staff & strategies are fully aligned globally[6] 5
4.5 4 3 2
Regional/BU mktg. operate independently of corp. mktg.[1] 1
Average
Rank
Source: IDC’s 2005 CMO Tech Marketing Benchmarks Database

24. # 5: Invest in Marketing Operations#5
Q. What marketing roles/programs do you intend to deploy in the next 12 months to increase your efficiency and effectiveness?
Source: IDC’s 2005 CMO Tech Marketing Benchmarks Database

25. #6: Marketing Performance Measurement is on the “To Do” List of Virtually Every Tech CMO
IDC asked CMOs to indicate the maturity of their marketing performance measurement program. . .
A comprehensive marketing performance measurement program is in use. 6
IDC Analysis:
Hardware sector is higher than software and services (3.9 vs. 3.4)
Services is low due to its higher Awareness-Demand ratio(64%)  measurement is a greater challenge
Mid-range software companies are struggling with MPM development
Essential Guidance:
Culture of measurement
Process development is first, technology is second
MPM should expand using a step-wise process – no big bang strategy 5 4
3.6 3 2
Marketing provides limited or no performance metrics. 1
Average
Rank
Source: IDC’s 2005 CMO Tech Marketing Benchmarks Database

26. 2005 Key Performance Indicators for Tech Marketers
KPI
2005
2004
Marketing Investment Change (most recently closed fiscal year to current fiscal year)
6.4%
6.0%
Marketing budget ratio (marketing spending per revenue for the most recently closed FY)
3.1%
3.2%
Program-to-People (P-to-P) ratio
63.5%
66.1%
Marketing Centralization Ratio
62.9%
59.6%
Awareness-Demand Ratio
49.4%
55.6%
Marketing Throughput (program spend/staff)
$288K
$336K
Outsourcing Ratio
55.3%
60.5%
All data is for the current fiscal year unless stated otherwise.
Source: IDC’s 2004 and 2005 CMO Tech Marketing Benchmarks Database

27. Essential Guidance: Get Aligned for Success in 2006
Mis-Alignment is Expensive !!
Get Aligned Inside the Organization
Sales with Marketing
Operations
Get Aligned with your Customers
How and why they buy
How they are Influenced by your marketing messages
What they think of your sales team
Better Alignment Means Better Results

28. Additional Resources from IDC’s Executive Advisory Services (sample deliverables)#1
Benchmarking Studies for Budgeting and Planning
Marketing Budget Planner: 2006 Program & Staffing Benchmarks, August 2005
Sales Performance and Solution Selling Metrics and Benchmarks, Fall 2005
Management Best Practices
Marketing Programs that Drive Revenue Growth, Fall 2005
Solution Selling Effectiveness, Fall 2005
Customer Program Alignment, March 2006
Events and Peer-to Peer Forums
Marketing Performance Measurement Forum, East and West Coast locations, Winter 2006
Executive Roundtables and Breakfast Briefings, quarterly, East and West Coast locations
Consulting Resources
Analyst inquiry

29. For more information . . . Rich Vancil VP, CMO Advisory Research
Phone:
Donald MacDonald
VP, Sales Executive Service
Phone: