And he's leap-frogging the CIO to get tothe CEO. For better or worse, technologyvendors are targeting business executives.And smart customers can turn this new selling trend to their advantageThe boffins in research buy a dozen non-standard PCs and a host of arcane applications and expect the IT department to support them. The CFO bypasses IT purchasing guidelines to contract directly with a vendor for a major new software development. When it doesn't perform as expected, he shows up on the IT department's doorstep demanding you test and integrate the new system. These two problems may be at opposite ends of some kind of imaginary spectrum, but both are symptomatic of the sort of issues that can arise when non-IS executives - oblivious to the technical implications - make technology purchasesAs vendors increasingly vie for increased sales success by developing new sales relationships with business unit managers and executives, including CEOs, CFOs and senior vice presidents, IT knows it can't afford to be left out of the buying loop. And while good governance can minimise the damage from such unrestrained activity, it will take some hard work - and ideally, the wholehearted cooperation of the CIO - to achieve it.
For better or worse, more and more technology vendors are targeting business buyers, to the extent where some sales managers no longer even know who the CIO is in some of their accounts. It's an indication, says Gartner Group research director John Roberts, of the growing trend to decentralise IT spending and put more accountability in the business areas.
From the vendors' perspective, according to Digital Equipment sales director Colin McKenna, it's a reasonable and logical approach that has merely evolved in response to an increasing demand for such sales activity "On the solutions side, where customers are looking more and more for a business outcome, we are finding it necessary not just to sell effectively to the technology executive, but also now to the business executive, the person charged with the business outcomes," he says. "It's very much focused on a developing understanding of business outcomes and how you use technology to get those business outcomes.
It's a much broader selling requirement than has been traditional when you are selling commodity-type products." But the impact on the organisation at large can be negative in the extreme, unless those business executives are prepared to let IT in - or IT has the clout to muscle itself in - on the buying decisions.
Peter Hind, InTEP manager with research company IDC and a CIO columnist, holds frequent focus groups with CIOs and IT managers, and says he regularly hears complaints about the issue, particularly about the way ERP (enterprise resource planning) sales are being conducted. "One of the complaints I get from IT managers about ERP sales is that they're happening above their heads at the financial controller level where people see the big picture but don't understand the implementation challenges and details," says Hind. "There's a lot of anxiety that IT is being pitchforked into decisions being made above the IT manager's head where people don't understand the full picture."And it's not always vendor sales reps that initiate such contacts. Graeme Simsion, managing director of IT consultancy Simsion Bowles & Associates, says his company has noticed a growing propensity over the past five years for business staff to go out and look for information systems services themselves, without reference to the IT group. "We've noted a much higher percentage of our sales than previously are to the business people rather than to the IT people," Simsion says.
"One of the things organisations are having to wrestle with is the complexity of the arrangements when a business unit goes out, buys IT equipment or services - perhaps not from the same vendors or to the same standards as their local IT department would want - but then expects the local IT department to provide support services and help as needed - and to carry the can," Simsion says. "And if we talk about hardware, business units will go out and buy PCs, for example, and then expect the IT help desk to support them. So the requirements on the IT department's resources and time is something that's out of their control." Simsion says business managers are often badly placed to buy appropriate services, at least where the advice they get from vendors differs from that of the central IT department. They also generate problems when they want to call in an outsourcer to develop a system but expect the IT department to provide services or an appropriate platform.
"The classic picture you are getting these days is that the business hires a consultant to help them in the architect role, or as a project director. They then retain another organisation to actually do the systems development, so that's two consultancies in the game. Then they involve their own IT department, which may well use an external service provider as well, or which may well be partially outsourced.
"It can be very complicated where you have people independently picking consultants to help them get the job done without necessarily [putting] a great deal of thought into how those groups are going to work together effectively and what their individual agendas may be. I think it can be a recipe for disaster. It can certainly be a recipe for a lot of tension," he says.
And Simsion says the difficulties escalate if each of the three or four service organisations working relatively independently for the organisation is seeking to expand its influence in the organisation.
Don't Get Mad . . .
Peter Dazeley is general manager information systems for mining company RGC Limited. To his mind, the trend makes perfect sense - at least if seen in the light of the model developed by US guru Rob Thomsett to explore the shifting power base between IT organisations and their host businesses.
Thomsett has mapped the gradual evolution from the "Dark Ages", when all the power resided in the IT shop, through "Tokenism", where not much more than lip service was paid to the idea of getting the business involved in IT, to a stage he calls "Get Even". Emboldened by the demystification of computing, the emergence of microcomputing and the sudden proliferation of outsourcing organisations, the business firmly takes control, outsources IT and downsizes just about everything.
After Get Even comes "Maturity", where business and IT form a true and cooperative partnership, but as Dazeley notes, so far relatively few organisations have reached Maturity. "I would suggest this selling to the business is a manifestation of the Get Even phase, where the business has now taken control very clearly even though they perhaps don't understand," says Dazeley. "It is still an immature phase; the full maturity is the partnership or even at a later stage where the overlap between IT and the business blurs completely or the barriers blur completely and are indistinct."While Dazeley says he "fully supports" a business making the decisions about its systems acquisitions, he believes few business units are fully equipped to make the final decisions, because of the technology overlays that need to be considered.
"The typical thing will be that maybe a [vendor] organisation will say we will give you these systems, we can help you implement them - we have a consulting division or we recommend XYZ Consultants at $2000 a day - and all you're dreams will come true.
"The reality of it is that scenario ignores some technology factors. For example I get people in our business here coming in with a glossy brochure on some marvellous new system that is supposed to make all their dreams come true, and saying: 'Why don't we buy this?' And when I have a very quick look at it, I see it runs on say an AS400 platform, which we don't use. And so I say: 'Okay, if you want to scrap all our Unix network and put in AS400 that's fine, but there are extra costs on that'."To Dazeley, who is fortunate enough to be involved in most IT buying decisions, the issue is symptomatic of the uneasy partnership that still exists between IT and business, with neither group fully understanding the other. He says part of the problem is that with computing apparently being demystified and growing numbers of people claiming to be computer literate, there's a tendency to believe all the problems are behind them.
"The real issue has been that for too long this goal of computer literacy has been used as a euphemism or a metaphor for information and systems literacy," Dazeley says. "So now we have a whole lot of people, particularly business people, who are computer-literate so they can pick that box and get on with their job. But the reality of it is computer literacy is not what we were chasing in the first place. We were chasing information and systems literacy."Policy MixWhat's the best way to reap the benefits of having business users take part in the buying process while avoiding the pitfalls? Experts and users recommend a good mix of partnership and filtering tempered with a firm IT policy.
Within Credit Union Services, problems are minimised, according to Queensland branch IT services manager Louise Doevendans, by having a stringent policy in place handled by a dedicated IT area. Within each business unit one primary area is responsible for hardware and software purchases, subject to the guidelines of the internal IT area in regards to purchasing. But Doevendans agrees the approach will not work within all organisations and says when problems arise IT may often be to blame.
"Speaking generally, I think in some cases if your IT area isn't timely in its response to business needs, then you'll find people going outside," Doevendans says. "Also if your IT area isn't effective in not only timeliness but in provision. On the other hand, IT can blackmail users to death with threats of a lack of support. There are a few drivers there you can use to encourage people to act within the guidelines."Most organisations have absorbed the ethos that ideally business should always be actively involved in making decisions about the technology it needs. It is now widely accepted that IT's role should be to confirm the selection criteria are adequate but only in a partnership with the business unit that ensures their concerns are also heard in the evaluation process.
Still, much depends, Dazeley warns, on the critical relationship between the CIO and the rest of the organisation, with the CIO needing to be a communicator capable of conveying the issues in a form that business people can understand and of listening to business as it explains its requirements.
However, when things go wrong the blame does not necessarily always lie with the CIO, according to Dazeley. "A CIO can be limited or enhanced according to the environment he's operating in. If you put a person into an environment that is not conducive to achieving the goals that should be achieved, then he's not going to achieve those goals no matter now good he is."As CIOs battle to align IT with business strategies, Gartner Group says what it calls the "Office of IT" is typically striving to develop an appropriate governance framework to avoid many of the pitfalls. The governance framework seeks to provide a forum and an environment that prevents the business from choosing solutions outside the overall endorsed architecture developed by the CIO. Roberts describes the governance framework as a sort of "written IT constitution" defining the things business units can and can't do and formalising the steering committees which are there to ensure individual business units don't got and make significant IT investments in isolation.
While he says it helps a lot if the CEO is on side when the CIO is forming that governance framework, it is unrealistic to rely on having too much of the CEO's time on your side. "Often the CEOs are so busy that in fact it is really the networking skills of the CIO themselves within their peer group, the general managers and the business units, that gets the job done. So it becomes almost a political process of influence rather than the mandate that comes from the CEO, who has written it in blood," he says.
Simsion agrees, but adds a cautionary warning of his own. "I think the first step is to recognise that the game is lost as far as central control of these decisions is concerned. The CIO is unlikely to succeed in most organisations in a grab for total control and total approval over all these decisions. So the positioning has to be as a partner, as an adviser, rather than a central authority. And I think it is the making of that move that can cause a lot of organisations trouble, where the CIO has found it hard to let go of the responsibility."But while it might be hard to let go sometimes, Simsion has no doubt the results are usually worth it. By making clear that IT's role is to advise, provide expertise and work with individual strategic business units on making IT work, the CIO can send a clear message that is likely to see business executives working happily and cooperatively with them on shared goals.
He also confirms that a study his consultancy conducted a year ago with large organisations highlights the fact that in some ways, the pendulum is now swinging back. From a management style that saw the strategic business unit idea of full business unit autonomy, there is now a new recognition that there are some important synergies that do need some central coordination. At the very top of the list, naturally, is basic IT&C infrastructure.
"This is not saying they're happy for the IT department to mandate all applications, but at a chief executive level they are saying we do need common platforms and infrastructure throughout the organisation. We're not happy about business units making decisions about basic communications platforms, basic hardware and so forth," Simsion says.
"The CIO is just as likely to find that the CEO is on side with this at that basic infrastructure level. That being so, you've got to go for the 20 per cent that is going to provide the 80 per cent of importance," he says. "So I would counsel CIOs to ask what is really important to coordinate and have control of and then to make sure they go after that rather than trying to take control of everything.
"The thing to do is to pick your mark carefully. What are the things you really do need to control and coordinate that will provide the greatest benefit to the organisation? Make a strong pitch for keeping that control, but recognise a lot of the application decisions and so forth will have to go out and be in the hands of the business."Another vital area demanding central control, according to Simsion, is key databases, in the interests of good data management. But while there are undoubted benefits for a customer service organisation in taking a decision to maintain a single central database for customers, for instance, such a decision is worth little unless it is rigorously enforced. Fortunately it is a notion that is easily saleable to the CEO because there are strong business advantages attached, even though the principle may come under threat on a month-by-month basis from the business units.
Once that control is established, he advises, you can afford to let the business units take responsibility for other products and services they see as desirable. "Let them take those decisions, but keep central control of what matters - fundamentally, the key resources which have a major organisation-wide impact - the resources which help the organisation to function as a whole rather than as separate business units."Tricks of the TradeHow salespeople target their pitches to business executives:Ken White, managing director of oil and gas at Torch Energy Advisers in Houston Texas, says he needed foreign language classes to understand some of the sales presentations he sat through when his company chose business management software a couple of years ago. "Some of the salespeople literally spoke in tongues," he says. "It was difficult to get people to talk at a level that was understandable."White's experience is an excellent lesson in how not to sell to business executives. A successful presentation requires more than the typical feature-rich technical rundown that many high-tech salespeople are used to.
Instead, the sell should be soft, soft, soft. Talking technology is verboten; rather, sales folks want to feel the business executive's pain, says Nimish Mehta, senior vice president of the industry applications division at Oracle Corp in the US. "The truth is," he says, "if you're going to sell to a functional line-of-business manager at, say, a refinery, you need a different skill set than [you would] in straight database sales.""Usually, when you think sales, you think Glengarry Glen Ross slimy stuff," says Phil Rawlins, president of Dallas-based The Sales Consultancy. "We're trying to raise the bar on the whole profession. If you want to be a strategic team player for the customer, the only way you can do that is to understand their systems and business processes, and add value to that."According to Jeff Thull, founder and president of Prime Resource Group in Minneapolis, which teaches selling strategies to software companies, salespeople can best help their cause by listening. "Talking to a business executive should be about 80 per cent to 90 per cent listening," he says, since it's only by understanding the business problem that salespeople can determine whether their product will solve it.
Smart sales organisations do a number of things to engage business executives in the sales process. First, many firms carefully research an executive's specific business needs, which vary widely by industry and position. Oracle, for example, creates sales research tools on the nine or so vertical industries it targets. The books and CD-ROMs it produces for its sales staff about the oil and gas industry include an extensive glossary of industry terms, a section of industry research and a guide to developing "C-level" (as in CFO, CEO and COO) relationships. Profiles of executive job concerns and eight pages of business questions help salespeople get into the shoes of executives. Some examples: How competitive is your cost position? How do you intend to accelerate new exploration?Lotus Development in the US fields a research staff that supports specific industries, says Stuart Finn, Great Lakes district manager in Lotus's Cincinnati office. Two or three experts per industry research pertinent business drivers and produce pain sheets outlining functional executives' business concerns. "We need to know what their critical business needs are," Finn notes. Once vendors understand a business need, they can position their products more effectively, he says.
Another strategy involves giving conferences aimed at specific industries. The topics revolve around business issues in that industry; if technology is mentioned, it's with an air of, "Gee, how did databases sneak onto this program?" Oracle presents a couple of programs annually for each target industry. The venue is swanky, the cognac and cigars are abundant, and the sales pitch is more about Oracle as a company than Oracle's product. "We're selling a brand at this point," Mehta says. "These people are interested in a brand name and risk mitigation." - Carol HildebrandReader ROINon-IS executives increasingly make technology purchases that run into the millions, without understanding the technical implications of the purchases.
This article outlines steps business executives can take to prevent buyer's remorse. Readers will find outWhy they should never leave the IS department out of technology buying decisionsHow to get help in decoding product technobabbleWhat every business executive should know about prospective technology partners before signing a contractAre You a Good Witch or a Bad Witch?Phil Rawlins of The Sales Consultancy in Dallas explains how non-IS executives can divine which salesperson has a magic wand and which wears a pointy black hatGlenda and Glen, the Good SalespeopleKnow something about your business and its challenges. They need not be completely steeped in industry knowledge, but they should know your hot buttons when they walk in the door.
Can shut up and listen. They are willing to be educated by their customers.
Understand that the product should take up only 10 per cent of the conversation.
State honestly whether they can help, and, if they're not sure, they should be willing to find out.
Gladly supply references-and plenty of them.
The Wicked Sales Witches of the West
Lead with the product.
Do all the talking.
Profess to be experts in the customer's business. There's a fine line between knowing what an application can do for the business and actually knowing the business.
Haven't done their homework. For example, they don't know how the person they're calling on fits into the organisation or what success factors drive this person.
May or may not wear ruby red shoes.
- Carol Hildebrand
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