The traditional Chief Information Officer role is under threat. You may think this statement is an exaggeration, but consider this: CIOs used to strategically manage and deploy the IT assets of the company, making data accessible only to specified employees and not to others, according to predetermined, and often inflexible, business rules.
Today, digital opportunities like building multi-channel customer experiences, harnessing social data, and enabling super-fast decisions powered by real-time data have become critical. CIOs are finding it harder to exert as much influence as they had in the past. Other line-of-business heads like sales management, marketing officers, and newly- created roles like digital business and data officers are all taking a hands-on attitude in purchasing tools relevant to them, often helped by developments like cloud, subscription, and bring-your-own-device. The CIO is increasingly finding that she is losing part of her relevance. (more…)
The Move to Usage vs. Ownership of Technology & the Impact on Sales Cycles
Piggybacking on Nora Yam’s recent blog: A Funny Thing Happened on the Way to Subscription Pricing, I’m taking a look at how the move to the cloud and changing accounting rules are impacting the sales cycle:
As software vendors continue their shift to the cloud, looking for higher stock valuations and lower costs, the shift can lead to delayed sales cycles and unintended outcomes.
Here are some of the reasons cited for sales delays:
Budgets: Most enterprise software sales have long sales cycles. Customers have planned for on-premises solutions which were budgeted for in the prior fiscal year. In the world of perpetual licenses, capital budgets may have been already allocated.
When selling hosted solutions in the cloud, operating budgets–generally larger and more flexible than capital budgets–are being tapped. What’s the issue then? Most customers’ operating budgets are being hit with unexpected costs during the transition. Without a strong business case the sale may be delayed until the next budget year. The cloud is putting pressure on operating budget availability. (more…)
As technology vendors move to software subscriptions as their primary pricing model, it presents new challenges as they attempt to meet customer demands while also managing company objectives. Historically customer finance programs have been used as strategic sales tools for many reasons, not the least of which was reducing the need for large, upfront payments. So is customer finance still relevant in today’s world of subscription-based, pay-as-you-go pricing models?
You’ve decided to offer annual subscriptions to your software solutions. Great! You’re on track to maximizing recurring revenue, not to mention increasing your liquidity multiplier if you’re planning for an IPO or acquisition.
But, of course, the next big question is, “Do you offer incented multi-year subscriptions?”
Possibly not for the rest of this year. You are already grieving over a large sum of deferred revenue that is going to disappear into retained earnings come January 1, 2018 (thank you ASC 606). Moreover, once 2018 hits, multi-year subscriptions won’t be fully ratable, so it’s probably best to only offer annuals, right?
Well, let’s first consider a few key factors:
- If you were to offer multi-year subscriptions, how much would you need to incent your customers?
- What is your expected annual subscription renewal rate?
- How do you plan to compensate your sales team to keep your top performers?
- What is the expected operational cost to obtain those renewals?
Your answers to these questions and associated analysis (as outlined below) should help you determine the profitability of offering multi-year subscriptions. (more…)
Pay as you go, utility, consumption, subscription, and the cloud have been the rage during the past several years. As a result, many vendors scrambled to adjust their offerings to meet the perceived needs.
The key drivers of this trend were:
1) OpEx budgets were plentiful in the good old days because most IT products were treated as capital assets. In some ways, operating budgets were easier to sell to than capital ones.
2) The perceived advantages of seemingly lower costs and not having to make a long-term commitment (true only if one compares a one- or two-year cost to owning an asset that can perform over a much longer period, and if there are no costs to switching platforms). Already, early adopters have come to realize that the yearly costs can stack up over time and can far exceed buying and owning your own licenses and IT assets.
3) Some customers have strategically chosen to divest themselves from owning and maintaining their own IT infrastructure. This last point can be a smart option for those customers for whom IT is not a differentiating core competency; however, this may not be the right solution for everyone. (more…)
Ipsa scientia potestas est. This phrase came from Sir Francis Bacon in Bacon’s Mediationes Sacrae in 1597. It means “Knowledge itself is power,” and it offers valuable guidance to technology sales professions.
For a B2B sales executive, these words especially apply to reviewing a prospect’s 10-K. In this short discussion, I will demystify the effort it takes to review and interpret a prospect’s financial statements and provide a short overview of the structure of an annual report and the 10-K.
Some say that solution selling is a dying concept or less relevant than it used to be. I think it is still an important part of the sales process, but its effectiveness relies on having a strong financial acumen and access to a robust financial solutions capability.
Over the years I have attended several annual IT sales kickoff events. I have also participated in hundreds of other sales events including QBR’s, sales training and education programs, and analyst events hosted by the likes of IDC, Gartner, and others. The concept of “solution selling” has seemed to survive the test of time.
It is almost always mentioned or referred to in one form or another. Whether it’s part of the keynote speech on the main stage or included in individual breakout sessions or part of the sales training curriculum. Apparently, solution selling continues to be a relevant part of most sales strategy discussions. (more…)
While sitting in traffic listening to sport updates, I was reminded of my busted NCAA bracket. For the last fifteen or so years, I’ve entered a bracket into my office March Madness pool. Relatively speaking, I’m a late arrival to the excitement of Big Dance. It wasn’t until after college when I was working in Los Angeles that a convincing officemate sat me down to walk me through the selection process (A xeroxed copy of the newspaper-published bracket) and promptly took my $10 entry fee.
My brackets have not improved much over the years. So why do I keep playing every year?
I’ve learned to enjoy the fast-paced nature of the game, the last minute heroics and the unforeseeable upsets.
March Madness is much like quarter-end at many companies: fast-paced, emotionally charged with equal parts excitement and anxiety and full of unexpected turns. I’ve learned that the teams that end up on top of March Madness have a lot in common with the sales reps I’ve known who have been the most successful.
Back in the … gulp … late 90s, many software vendors were slow to realize that customer finance (successfully used for providing leasing to grow and accelerate hardware sales) had any utility in their fast growing industry. For a short period of time, it wasn’t even clear that cost justification was required. And then the dotcom bubble burst. Suddenly financial sales execution mattered again—cost justification to help customers understand why they should buy and extended payment deal structures to make it easier to buy.
Fast forward to the present day and everything is feeling a bit cloudy. Offering subscriptions has become a popular bridge to establishing more consistent recurring revenue in the hopes of cranking up a company’s valuation multiplier. And now many software subscription vendors are questioning whether customer finance (successfully used for providing extended payments to grow and accelerate software sales) has any utility in their fast-growing industry.
Albert Einstein famously declared “Dancers are the athletes of God,” and rightfully so. A dancer, a ballet dancer in particular, must possess the strength, endurance, and stamina of a professional athlete all while maintaining the grace, artistry and control that is instrumental to success in the world of ballet. Ballet is not just tutus and pointe shoes–it is physically and mentally demanding. Ballet is no joke.
Many sales managers have a propensity to hire former athletes. However I’d be inclined to seek out a ballet dancer.
Presentation and Preparation
There are many parallels between ballet and top sales reps. Let’s start with an easy one. A strong dancer will convey a story holding command of the audience throughout the performance. A dancer will practice, practice, practice and then practice some more, perfecting each step. They don’t just get up on stage and “wing it.” They’re prepared. Dancers may need to improvise a sequence or two, but regardless when they step on stage, they have a plan and steps (literally) in place to execute. (more…)