In my eight plus years at TFP, I’ve engaged in more value conversations than I care to count. Most have gone reasonably well; at the end of the process, our value selling team—usually my client, their customer, and me—can usually produce an effective financial analysis that helps the customer understand the potential value of my client’s technology in their environment.
The occasional engagement has gone sideways. Periodically, I look back at those conversations and wonder what I could have done differently. In some cases it wasn’t going to end well no matter what I had tried. It might have been a “hail Mary” ROI to rescue a floundering deal. Or the customer wasn’t really engaged in the first place, and wasn’t willing or able to devote the time to make the process useful for anyone.
One interesting consideration is introduced by some new IFRS (International Financial Reporting Standards) guidelines that took effect at the beginning of 2019. Of particular interest are the changes related to the IFRS 16 standard which say that going forward, virtually all leases must be treated as CapEx. Why this matters has to do with the definition of a “lease.”
On January 1st, 2019 a new lease accounting standard, IFRS 16, came into effect for all companies that report under the International Financial Reporting Standard. Under IFRS 16, virtually all leases must be shown on a company’s balance sheet. This can have an important impact on large technology purchases and to technology vendors who hope to make it easy for customers to buy. Let’s explain why.
In general, leases have been of two types: finance leases and operating leases.
My colleague, Drew Wright, wrote a piece a couple of years ago invoking both the Gene Simmons novelty-rock band and a reminder that “Keep it Simple Stupid” doesn’t always apply (like when applying discount increments).
For me, when I think about keeping it simple, I remove
the last S, because none of us are stupid and keeping it simple can frankly be
hard. After all, simplicity can be is the ultimate sophistication.
Are Cloud Options Lengthening Enterprise Sales Cycles?
With a public cloud provider popping up in many technology sales, enterprises are faced with an even more complex variety of acquisition options regarding how to license, support, host and pay for the solution. How these options line up can have a significant impact on budget, short- and long-term cost, and receipt of business value. And getting your prospect to choose can have a huge impact on the sales cycle!
For the enterprise account manager, communicating the business value nuances of selling with and against the public cloud can be a key to streamlining the buyer decision making process. (more…)
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.
Not too long ago I bristled when I overheard a colleague tell a salesperson that it’s never a good sign when a company buys back their own stock. Upon reflection, I was more likely stuck on the use of the word “never” (a trigger word that “always” gets to me) than the negative ramifications of buybacks. In addition, after several months of doing business alignment reviews, I’ve observed company after company report in their 10-Ks that they are taking a substantive portion of the US corporate tax gain as fuel for share repurchases. Needless to say, I’ve come around to my colleague’s point of view.
Have these corporations lost their collective vision for strategic growth initiatives and innovation? Or are we, the enterprise sales community, failing to develop compelling business cases that point to technology ROI and long-term shareholder value that justifies such investments? (more…)
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…)