In the course of working with our technology clients and their enterprise sales teams, we’ve noticed an interesting trend in the last six to twelve months. Increasingly, I.T. buyers are expressing a preference (or sometimes a need) to be able to acquire cloud-based technology as a capital expenditure event rather than as operating spend. That’s right, the buyer is asking for a CapEx offer vs OpEx.
This is contrary to the pattern of I.T. buyer behavior we’ve seen over the last several years, which has been toward buying technology with operating budget dollars rather than CapEx. However, a recent pivot toward a desire for spending CapEx dollars shouldn’t be entirely surprising for a number of reasons.
We live in a world of increasing complexity. In their quest to create value, enterprise customers continuously test and embrace new technologies, which come with many labels–-digital, analytics, automation, the Internet of Things, machine learning, artificial intelligence, and so on. Software deployments now involve public clouds, private clouds, hydrid set ups, managed service providers, and/or customers’ premises. Software licensing metrics may involve users, seats, names servers, geographies, limited timeframes, sublicensing…
As a consequence, use-rights being applied to modern IT environments have some times evolved into complex (and potentially baffling) licensing terms which has made entitlement tracking more difficult. The risk is now higher that even simple technology refreshes will cause an enterprise to fall out of compliance.
Simple is better—Best Practices from the Software Industry
“Simplicity is the ultimate sophistication.” Leonardo da Vinci
“Making the complex simple” is a promise built into the ethos of companies in just about every industry and business imaginable. What are these companies trying to tell us?
Oracle taught me the benefit of making the complex simple some 20 years ago through their successful vendor financing program. Oracle Financing had many Fortune 500 clients, who absolutely did not need “financing” from Oracle, however, these clients routinely used Oracle payment plans to enable their transactions. Why? Because they were simple. (more…)
In retrospect, as a result of working in tandem with many enterprise software vendors (large & small, private & public) across a tenure of more than twenty years, I have found certain unmissable similarities among my clients. These trends, whether intentional or unintentional, can have a direct effect on bottom line results and specifically on an organization’s ability to be effective. Often it takes the perspective of an outsider or third party consultant to point out such trends that sometimes become corporate culture. I find that a company’s ability to quickly identify which trends are accretive to corporate goals as well as trending activities that can break down effectiveness often can be the difference between success and complacency.
For example, how does a silo mentality affect an organization’s ability to execute in a sales capacity? (more…)
On a recent tour of Alcatraz, I learned the story of the famous Alcatraz escapee, Frank Morris. Despite all odds and having limited resources, he and two others managed to escape the island and were never seen again. In some ways, the story of his research, planning and determination reminded me of a good account manager. Veteran sales reps know that focused research and thorough planning are critical to executing a professional proposal.
This can be a time consuming but exciting step–determine what is important to your customer. Do you know your customer’s business initiatives? Do you know how your customer’s sales are trending? Have you read the CEO’s Letter to the Shareholders? You should!
How many of us have lost a deal and felt this way? You spent months working on the deal and didn’t get it. You felt like the time you poured into the negotiation should account for something, right? WRONG!
I recently was on a business trip. I was traveling with two women who also work in financial sales.
One of our group members, we will call her Mary, was knee deep in a transaction. She still needed several items from her client including a statement from his accountant and a credit card number for the bank appraisal fee. Mary thought the deal was in the bag. She was already counting her commission dollars. Thursday, Friday and Saturday she spoke to the customer reminding him repeatedly of the documents she needed; however, he was dragging his feet.
On Sunday night Mary received a call from her client. While on speakerphone, she rattled off the information she needed to submit his application. By this time, we all knew what he needed to send. The client interrupted her and said “STOP.” Now, Felicia and I knew from experience what was about to happen. Mary’s client told her he was going with another lender who already approved him. (more…)
The son of a close family friend graduated from college this past weekend. I was fortunate to be part of their celebration which included a smorgasbord, liquid refreshments, tears of joy, and lots of laughs. It was a great time. When walking by the table of the congratulatory gifts, cards and stuff, I noticed that one of the gifts was a book called “Oh, the S*** You Don’t Know!” by Antonio Carter.
I picked up the book and started to read it and giggled along with all the words of wisdom. It covered a few of the more typical daily life lessons like taxes, work and relationships. After a good laugh, I put the book down and went back to mingling and catching up with old friends. As the day went on my mind kept drifting back to the title of the book, “Oh, the S*** You Don’t Know!” The book ended as expected with the life lesson that you are not done learning as long as you are open to it.
The next day was a wet and rainy day. A good day to stay inside and get caught up on work. I started to going through some of my unread work emails and got caught up on reading some of the trade magazines that have been piling up on my desk. One of the articles that caught my eye was in the Funding Source Issue of the Monitor Daily, a trade magazine focused on the equipment finance industry. The article was called “Blockchain: The Next Big Thing For Equipment Finance?” by Keith B. Letourneau and Stephen T. Whelan. I had never of heard blockchain or maybe it just wasn’t registering. I quickly realized that I was a couple years behind the learning curve. Oh, the stuff I don’t know…. (more…)
“I never lose—I either win or learn.” That’s one of my favorite mantras and something I remind myself of when things feel like they are about to crash and burn. There is a lesson in everything. When I don’t get the outcome I wanted either personally or professionally, I don’t dwell on not “winning” but take a step back, think through the situation and focus on what I could have done better. I make note of the lesson and carry it with me.
For example, when I started out on my career path in financial sales (gulp, many, many years ago), sales reps would typically engage my colleagues and me when a customer requested some type of financing option. These conversations typically took place near the end of the sale cycle after pricing had been formalized and the deal was close to or completely committed. Inevitably the customer would wait until the last minute to inform the rep of their lack of budget. Typically the customer required a zero percent payment plan because incurring interest costs was not likely to be approved. The end result was an additional discount offered (bad!) or no deal reached (even worse!).
I’ve been involved in many of these scenarios and although it sometimes works out in the end, there is another approach I’ve learned over time. This approach focuses on incorporating financial selling throughout the sales cycle. I promise you don’t need to be a wizard at Excel or in reading financial statements either (although it doesn’t hurt!). I’ll break this approach down into five key inflection points within the sales cycle. (more…)
Your technology sale to a Fortune 1000 customer has been on the forecast for several quarters. The solution is expected to be an on-premises perpetual license (capital budget), including maintenance and professional services (usually operating budget items).
The opportunity has been moving steadily through your sales forecast internally from lead to qualified lead toward close. It has also been making its way through the customer’s approval processes.
You’ve forecasted the deal to close, and the end user has budgeted a reasonable amount in the current year’s capital budget to make the acquisition. Enough budget to get you to Club. Hello Cancun!
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…)