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For
every adversity there's a seed of opportunity. At least that's how
I see the current challenges in the high technology sector. Keith
Newman's article "Get your MoFo Rising" struck a chord
with me having just finished advising my client, a collaborative
services company, on how to exploit the trend towards Proof-of-Concept
(POC) in pre-sales. Most enterprise software vendors see POC as
slowing down the sales process and even anathema to building momentum
towards closing the deal. That's the old wisdom.
Here's what I learned from interviewing 30 enterprise software
vice presidents of sales. Virtually all of them saw POC as mandatory
for the customer building the ROI case to purchase. It might surprise
you to learn that over 75% of software buyers now demand a "try
before buy" experience-not a demo but a working POC in their
sandbox. This is especially true of the SMB who don't have much
error margin these days for capital investments or expense items.
So why POC? From the customer perspective, the POC is used to prove
ROI before buying. What do customers say they want from the numerator
and denominator of ROI calculations?
Return
- Test user acceptance; ROI is a function of user adoption which
depends heavily on usability
- Prove that the functionality will deliver the expected business
benefits
- Quantify expected business benefits (e.g. revenue impact, cost
reduction, productivity, gain, etc.)
Investment
- Prove that the technology will work in the customer's environment
using their data and systems.
- Address IT issues such as network security, change management,
performance, etc.
- Quantify all true hard and soft costs associated with the software
deployment
I believe that the customers' desire to prove ROI is a great opportunity
for VARs and integrators who want to add value to the customer and
differentiate themselves from direct sellers. In my interviews with
the direct selling Sales VP's, I heard clearly that they are very
hard pressed to accommodate 30-day POCs when their sales engineering
teams are already stretched thin in terms of geographic coverage
and bandwidth. Furthermore, software sellers are sometimes in conflict
between leveraging software sales and selling professional services.
The POC can be a political hot potato. Channel players can build
the POC more readily into their value delivery systems. For example,
integrators are more likely to be paid for some of the POC work
than a software vendor.
And, lastly, one of the scariest parts of the POC for vendors is
not knowing what the customer is doing with the software during
the trial period. Channel players often have much more presence
in the customer environment and visibility to intercede if the POC
is off-track.
For all these reasons, I see the POC phase as a great opportunity
for channel payers to shine in an otherwise gloomy scene. Good selling!
Sridhar Ramanathan (Pacifica
Group) is a management consultant specializing in revenue growth
strategies for enterprise technology companies. He can be reached
at (650) 355-9700 or sridhar@pacifica-group.com.
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