leveraging a solutions approach to guarantee product impact june 19, 2009

Leveraging a Solutions Approach to Guarantee

Product Impact

June 19, 2009

Presented at:Art & Science of Services ConferenceBentley College

Presented by:Stephen HurleyManaging DirectorSolutions Insights, Inc.

© 2009 Solutions Insights. All Rights Reserved. 2

SolutionsSolutions

What is it??!!What is it??!!


Even Dilbert is talking about solutions!


These are more typical of the solutions that exist in the B2B world.


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 TechnologiesAlcatel-LucentAT&TAvanadeAvayaBEA SystemsBearingPointBTCACapgeminiCGICisco SystemsCognizantCompuCom SystemsCSCDieboldEDS, an HP Company

EMCEricssonFujitsu ServicesGeneral Dynamics

Information TechnologyHCL TechnologiesHERMES SoftlabHewlett-PackardIBM Global ServicesInfosys TechnologiesIron MountainJuniper NetworksKeaneKPMGKumaran SystemsLenovoLogica

MicrosoftNCRNetAppNokia Siemens NetworksNorthrop Grumman

Information SystemsOracleOrange Business

ServicesPatniPitney BowesPolycomRaya IntegrationSatyamSBS GroupSiemens Enterprise

Communications

SteriaStratus TechnologiesSun MicrosystemsSymantecTalent PartnersTata Consultancy

ServicesTellabsTiger LilyTriZettoUtimaco SafewareVMwareWood MackenzieXerox


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


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 2006DEFI

NIT

ION

Source: ITSMA


Here’s another way to look at it…

A Solution is…

Technology

Process

Resources The Solution

UnderstandingCustomer Needs

Delivering MeasurableBusiness Value

Source: ITSMA


Solutions-related terms are hierarchical and discrete.

GenericCustomers

Customers with Common

Problems

TargetedSegments

TargetedFunctions

A ParticularCustomer

Source: ITSMA


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%Median: 30%Range: 0-100%Range: 0-100%

Source: Solutions Insights/ITSMA Survey: Selling Solutions, March 2009

Sponsors & Sponsors & ApproachApproach Executive SummaryExecutive Summary Methodology & DemographicsMethodology & Demographics Detailed Findings


Let’s give this a bit of a historical perspective…

We noticed a significant shiftin 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


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


Let’s look at solutions in the context of other strategic planning models.

COMPARISON OF STRATEGIC PLANNING METHODS

Method or Tool Purpose Key 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

PEST Understand how a range of external forces impact a company

Political, Economic, Social, and Technology influences

SWOT Analyze how a company compares against a competitive set

Strengths, Weaknesses, Opportunities, and Threats

BCG Matrix Determine how to allocate investments across a range of products, services, Business Units, or subsidiaries

Cash Cow, Rising Star, Dogs, and Question Marks

Solutions Understand 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


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

Company Starting Point End Point Motivator

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


ITSMA developed a Solutions Roadmap in collaboration with its Solutions Council.

Source: ITSMA

FiveCoreElements

Sustain Momentumand Growth

Enable the Organization

Leverage Opportunistic

Solution Successes

Sell OnlyDiscrete Offerings

OrganizationOrganization MarketingMarketingActivities Activities

Portfolio Portfolio ManagementManagement

SalesSalesand Sales and Sales

EnablementEnablement

Culture andCulture andBehaviorBehavior

SolutionsSolutionsMasteryMastery

Organizational Organizational ExecutionExecution

Building the Building the FoundationFoundation

Pilot and Pilot and TestTest

Phase 5Phase 3Phase 2Starting Point Phase 4

The Push The Push and Pulland Pull

Operationalize

the Plan


Each Element must be managed as a company moves to a new Phase.Portfolio Management

SolutionsMastery

Organizational Execution

Building the Foundation

Pilot and Test


The Push and Pull

Portfolio Management: Solutions ManagementPortfolio 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


Member companies have made the changes required to move into the next phases of ITSMA’s Solutions Roadmap.

2002

2007

Source: ITSMA

Sustain Momentumand Growth

Enable the Organization

Leverage OpportunisticSolution Successes

Sell Only Discrete Offerings

SolutionsSolutionsMasteryMastery

Organizational Organizational ExecutionExecution

Building the Building the FoundationFoundation

Pilot and Pilot and TestTest


The Push The Push and Pulland Pull

Operationalize the Plan


“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 meanswe 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!


There are a number of considerations as you develop your solutions strategy.

Custom Turn Key

Companywide Business Unit

Technology Infrastructure Business Process

Supporting Role Primary Strategy

Overlay Structure Integrated Structure

Core Brand Positioning Sub-brand Positioning

Source: ITSMA


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 & Sponsors & ApproachApproach Executive SummaryExecutive Summary Methodology & DemographicsMethodology & Demographics Detailed Findings


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


Go Go Forth Forth and and SolveSolve

leveraging a solutions approach to guarantee product impact june 19, 2009

Documents

solutions business

business solutions

solutions revenue40

solutions approach

itsma solutions council

technologybased solutions

itsmas solutions council

solutionsrelated terms