SOLUTION SELLING IN A CHANGING WORLD

Thomas Young, Managing PartnerRUMJog Enterprises

2014 US&C Sales ConferenceDallas, Texas

April 28, 2014

SOLU

TION

SELLING

IN A CH

ANG

ING

WO

RLDAgenda

1. Changing World• What is happening in the global markets?• Current state of affairs for buyers and sellers• What are the market trends? What is changing?• Where are we headed?

2. Solution Selling• What are Solutions and how are they different from Services?• Solution examples• Selling techniques in a rapidly changing market• What are the selling techniques and approaches that will be effective in

the market in 2014 and beyond?• Solution Selling

Solution Selling in a Changing World

OUR CHANGING WORLD

Physicality Virtuality

ISSUES TH

AT ARE ON

THE D

ESK OF TECH

NO

LOG

Y LEADERS

Technology Heat Map

The Technology Heat Map is dynamic and suggests both risk and opportunity to the market participants in the coming years.

Innovation

Big DataCollaboration

CLOUD

IT Consumerization

Automation OfKnowledge Work

SOCIALMEDIA

TalentManagement

Tablets & Death of the PC

Cyber-Security

Internet of Things

Unified Communications

& Analytics

Mobile Internet

AdvancedRobotics

3D Printing

DigitalLabor

Nanotech

The pace of change in today’s market is exceeding our collective pace of learning. Services and pricing are changing, but our commercial models were not designed for this new world.

BusinessAlignment

Technology& Services

Business Practices

x

We arehere

GrowingMisalignment

Market DisconnectsWhere is the misalignment?

Pricing• Pricing vectors for services are

dramatically dropping as Service Providers begin to implement

• Labor Automation• Big Data and Analytics• Software Tools & Platforms

Innovation• Normal commercial relationships (i.e.,

contracts) limit innovation by eliminating or severely restricting:

• Transparency• Risk Taking• Shared Failure• Shared Reward

Commercial Constructs• 1,000 page contracts with prescriptive

SOW’s, SLA’s, and pricing does not work well in a dynamic and sometimes ambiguous market.

• More collaborative and dynamic approaches are required.

PACE OF CH

ANG

E > PACE OF LEARN

ING

Commercial Market Trends

Collaboration

WAVE VIEW

OF TECH

NO

LOG

Y TREND

S - VIRTUALIZATIO

NWave View of Technology Trends - Virtualization

Current Cresting Wave

Virtualization of physical computing leading to greater reliance on network technologies.

New Wave Forming

Virtualization of technology labor resources leading to a full reliance on network technologies.

Innovation

Big Data

CLOUDIT Consumerization

Automation OfKnowledge Work

TalentManagement

Tablets & Death of the PC

Cyber-Security

Internet of Things

Unified Communications& Analytics

Mobile Internet Advanced

Robotics3D Printing

SOCIALMEDIA

CLOUD

DigitalLabor

Increase inNetwork-Enabled

Architecture

DigitalLabor

Reliance onNetwork-Centric

Architecture

The common theme in today’s changing technology landscape is Virtualization. Cloud Computing leading to the virtualization of physical compute, Digital Labor leading to the virtualization of labor. This will put Network Technologies center stage in coming years.

Nanotech

NETW

ORK CEN

TRIC SERVICE DELIVERY EVO

LUTIO

NNetwork Centric Service Delivery Evolution

NetworkAs Communications

NetworkEnabled Compute

Network CentricBusiness Platforms

Past Present Near Future

CloudComputing

DigitalLabor

The role of the network will have increasingly central role in the delivery of business platforms and service delivery. Cloud Computing – Phase 1. Digital Labor – Phase 2.

Network-CentricBusiness Platform

BT AMERICAS STRATEG

YBT Americas Strategy

The waves of Virtualization (Cloud Digital Labor) that lead to business models that rely on a Network Centric Architecture, position BT Global Services at the center of the action to capture growth and new business opportunities.

ConnectOne

Compute Secu

rity

Mob

ility

BT Americas Core Focus

Foundation for Growth

A BRIEF HISTO

RY OF TH

E MARKETA Brief History

of the Market

EVOLU

TION

OF TH

E BUYIN

G ECO

SYSTEM1970’s/1980’s: The Early Days

• In the early phases of technology development and deployment, Buyers assumed the de facto role of Service Integrator by buying disparate technologies directly from Technology Providers.

• Complexity limited innovation and adoption and created the need for order in the eco-system.

• The market was inefficient and significant resources were misallocated and wasted.

• The misallocation of resources created the business model for the formal creation of a Service Integration function as a viable business model.

Buyers

TechnologyProviders

De Facto Service Integrator Role

Complexity

EVOLU

TION

OF TH

E BUYIN

G ECO

SYSTEMEarly to Mid-1990’s: The Beginning of Outsourcing

• The formal creation of Service Integrators, masked the underlying complexity of the technology supply chain and simplified the interface to the Buyer.

• This model allowed the Service Integrator to act as an intermediary between the Buyer and Technology Provider.

• These were the early days of Outsourcing and the Service Integrators reigned.

• High margins• Control of the Ecosystem• Contracts on Service Integrator terms and paper• “Keys” to the technology kingdom

• The Service Integrators were in the “driver’s seat” and Buyers were along for the ride.

TechnologyProviders

Buyers

ServiceIntegrators (SI)

Complexity

EVOLU

TION

OF TH

E BUYIN

G ECO

SYSTEMLate 1990’s and Early 2000’s: Outsourcing Heyday

• As the Service Integrator market matured, Buyers sought to take stronger control of the ecosystem.

• This gave rise to formality in the procurement processes between Buyer and Service Integrator which led to the creation of the Third Party Advisor (TPA).

• This was the heyday of Outsourcing and the Buyers reigned.

• RFP’s dominate the landscape• Commerce on Buyer Terms• Competition fierce• Service Integrator cost and margin pressures• The rise of offshore labor and the Indian Services

market.

• The Buyers were in the “driver’s seat” and the Service Integrators had to compete for a ride.

TechnologyProviders

Buyers

ServiceIntegrators (SI)

Complexity

Procurement

Third Party Advisors (TPA)

EVOLU

TION

OF TH

E BUYIN

G ECO

SYSTEMMid to Late 2000’s: Outsourcing Maturity and Supply Chain Fragmentation

• The services that Technology Providers offered were progressing geometrically, while Buyer processes and TPA led commerce was on a linear path.

• This growing divide created a situation where Buyers and Technology Providers were bypassing the traditional SI and formal procurement routes to conduct commerce.

• The ability of Buyers to “cherry pick” which Technology Providers to procure directly and which to run through traditional SI business models indicated that a new model was needed to address the new realities of the technology service landscape.

TechnologyProviders

Buyers

ServiceIntegrators (SI)

Complexity

Procurement

Third Party Advisors (TPA)

BusinessAlignment

Technology& Services

Business Practices

x

We arehere

GrowingMisalignment

EVOLU

TION

OF TH

E BUYIN

G ECO

SYSTEM2013/2014: Visible Cracks in the Old System

TechnologyProviders

Buyers

ServiceIntegrators (SI)

Complexity

Procurement

Third Party Advisors (TPA)

• Buyer interfaces to SI’s and Technology Providers proliferate

• Price Vectors start to drop significantly as a result of technology disruption.

• Primary Driver Reduction of Labor in the Supply Chain from Automation and Elimination

• Emerging Price Vectors manifest initially on competitive pursuits by Service Providers looking to win new logos.

• Incumbent Service Providers are reluctant to proactively bring new price points to embedded contracts for obvious reasons.

SUPPLY CH

AIN

FROM

ON

E TO M

ANY

History of Models in One Chart

As technologies evolve, Functional Out-Tasking and Service Integration will emerge as the growth areas for Third Party Services. SI Management is strategic.

MultiTower

One Neck To Choke

Model

Tower 2

Tower 3

Tower 4

Market last 3 years

Importance of Labor Arbitrage

Importance of Software, Platforms,Labor Automation,

Scalability

Strategic Tactical

FUN

CTIO

NAL

OU

T-TA

SKIN

GTower 1

Next 3-5 years

Serv

ice

Inte

grati

on

Strategic Out-Tasking PlayersEMCAkamaiVMWareHitachiIPsoftOracleSFDCAmdocsAmazonXeroxIBMEtc.

SOU

RCING

EVOLU

TION

LABOR W

AVE THEO

RYSourcing Evolution Labor Wave Theory

Think of the market progression from the left hand side of the chart to the right in two waves: Wave 1: Labor Arbitrage; Wave 2: Labor Automation

Wave 2 CharacteristicsWave 1 Characteristics• 15%-30% cost take out• Model is scalable to the extent that you can

scale labor• Custom/complex, legacy :“Your mess for less”• Access to Low Cost Labor necessary to provide

continuous value• Revenue/Profit correlated to People

• 40%-75% cost take out for relevant functions• Model is scalable and is largely independent

of labor growth• Transformative – New way of doing business• Access to “Rocket Scientists” who can codify

manual processes• Revenue/Profit NOT correlated to People

Wave 1LaborArbitrage

Wave 2Labor

Automation

THE RO

AD AH

EAD

The Road Ahead

POLAR SH

IFT IN TH

E RELATION

OF TECH

NO

LOG

Y & LABO

RPolar Shift in the Relation of Technology and Labor

Busi

ness

Pro

cess

Tech

nolo

gyPe

ople

Busi

ness

Pro

cess

Tech

nolo

gyPe

ople

Big Data&

Analytics

Moore’s Law

Cognitive

Polar ShiftOld: Technology Supports LaborNew: Labor Supports Technology

Today Tomorrow

COG

NITIVE TECH

NO

LOG

IES: SCI-FI MEETS REALITY

Cognitive Technologies: Sci-Fi Meets Reality

• Language comprehension• Nuance Technologies

• Language production• Narrative Science – news articles written by bots

• Understanding• IPsoft’s Amelia – avatar with a neural processor

capable of dynamic process grafting

• Pattern Recognition• Opera Solutions – signal to noise data parsing• Google Brain

• Subjective Assessment• IBM Watson

• Synthesis of Complex or Large Scale Data• Google Car

• Self Aware Systems• Kurzweil’s Singularity

Essential Ingredients = Risk Taking + Acceptance of Failure

RUM

JOG

INN

OVATIO

N FO

RMU

LAInnovation will Transform the Business Landscape

Individuals

AreCreative

Groups

DeliverInnovation

Business Knowledge+ Execution Skill

Innovation = Creativity + Business Knowledge + Execution

+ Essential Ingredients** - 1 part Risk Taking & 3 parts Acceptance of Failure

RUMJog Innovation Formula

• Innovation over the next few years will:• Virtualize the physical into the logical• Reduce the role of Labor in the Supply Chain of Services• Expand the role of Expert Systems and AI into the ecosystem

DYNAM

IC MARKET CH

ANG

ES – TWO

SIDES O

F THE CO

INDynamic Market Changes – Two Sides of the Coin

Risk RewardTwo Sides of the Coin

MarginalizationDiminishing ReturnsObsolescenceExistential

Profit ExpansionSignificant ReturnsMarket LeadershipRelevance

Change is neither wholly good nor bad. There are two sides of the coin when it comes to change – Risk on one side – Reward on the other. There is no Reward without the corresponding Risk – the proverbial “no free lunch” axiom.

One Defines the Other

Minimizing Risk Minimizes Reward

The goal is not to minimize risk in a changing market, but to understand the nature of the changes in the environment and Manage Risk and Capitalize on Reward.

GOAL: Manage Risk & Capitalize on Reward

THE RU

MJO

G ZERO

CON

CEPTThe RUMJog Zero Concept

RUMJogZero

Concept

ZeroCost

ZeroCycle Times

ZeroDefects

CostCycle TimeDefect Rate

Time

As Cost, Cycle Times, and Defect Rates trend to zero from their current levels, the businesses that are supported by the underlying Service Delivery models will themselves transform into new businesses and new business models.

23

DIG

ITAL LABOR: W

AVES OF VALU

EDigital Labor: Waves of Value

The primary impacts of labor automation in the business case are obvious: lower cost, shorter cycle times, improved quality, etc. The secondary and tertiary waves, enabled from Service Delivery Telemetry, are less obvious, but can dwarf the primary impacts.

Lower CostsReduce Cycle Times

Improved Quality

Consequential BenefitsBig Data Monetization

Business TransformationRevenue Opportunities

Process RedesignThrough

Big Data/Analytics

More LessBenefits Visibility

DigitalLabor

Begets

Service Delivery

Telemetry

Base BusinessCase

Primary Secondary Tertiary

SOLUTION SELLING

You Cannot Sell a Solution if You do

not Know the Problem

25

SHIFTIN

G M

ARKET TREND

SShifting Market Trends

• “Buyer Led” commerce is giving way to “Seller Led” commerce• There is a long term secular trend changing the landscape of sourcing market:

• Custom Standard• Complex Simple• Single “throat-to-choke” best of breed sourcing

• Power shifting to the users• CXO’s & horizontal leaders moving from:

• Providers of Service Administrators of Service• In order to be successful in the market going forward:

• Vertical Domain Expertise & Business Knowledge is essential• Service Providers will deliver vertical solutions with horizontal foundation capability

• Horizontal capabilities are table stakes in the market going forward.• Success will be determined vertically.

Horizontal VerticalServices & Procurement Solutions & Engagement

Buyers of Solutions

Vertical Leaders

Business Knowledge Essential

SHIFT FRO

M H

ORIZO

NTAL BU

YER TO VERTICAL BU

YERShift from Horizontal Buyer to Vertical Buyer

Buyers of Services

Horizontal Leaders

Service Delivery Knowledge Essential

• Lower cost & elastic pricing• Avoid capital outlays• Improved service quality• Access to skills and technology• Shift Operational Risk

RTB ITBRun the Business Improve the Business

• “Just make it work” – Outcome focus• Minimize – Run the Business costs• Maximize – Technology Investment in

the business to Transform• Solve business challenges with

Innovation & new technologies

Vertical leaders are taking a more active role in the procurement and delivery of technology within their franchise. Vertical leaders want solutions not services.

General Market Trend

Solution Selling Focus Areas“Educate”/”Convert” to Create the DealDeal Set by BTGS

Typical Sales Focus AreasSell & Close the Deal

Deal Set by Client

CUSTO

MER SEG

MEN

TS IN A CH

ANG

ING

MARKET

Today’s Clients Segments in a Changing Market

“Asleep”UnawareClueless

40%

“Awake”Confused

Scared

30%

Startingto Seek

Solutions

20%

Clients ReadyTo Buy

10%

Religion Bibles

In today’s rapidly changing market, the majority of potential clients are asleep or confused as to the market realities. Solution Selling requires BTGS to engage client early to create the deal and drive a different outcome than typical approaches.

You cannot sell bibles until you sell religion

DIFFEREN

TIATION

: STAND

ING

OU

T IN A CRO

WD

ED M

ARKETDifferentiation: Standing Out in a Crowded Market

Unique messages and interactions stand out in a world filled with “Sameness”

What does Standing Out in the Crowdmean for your Situation?

Style matters as much as Content Simple beats complex Do things differently Think for yourself

avoid crowd-think Communicate from client

perspective, not your own Listen and react to what is said –

don’t follow a script Talk about client/customer and

their interests and business

CLIENT PERCEPTIO

N O

F SERVICE PROVID

ERSClient Perception of Service Providers

Generally speaking, how do clients (and advisors) view value propositions and proposals in a sourcing context?The base level evaluation of the Service Provider solutions and capabilities are analogous to:

Compulsories in a figure skating competitionYou can lose a competition if this is done poorly, but it will not ensure a “Win” in competitive pursuitTherefore, a good solution and capability set is necessary, but not sufficient.

Proposed Solution &

Service Delivery and Capabilities

THE IN

TANG

IBLE DIFFEREN

TIATORS

The Intangible Differentiators

More often than not, deals are won and lost based on the intangible differentiators in a pursuit.

Proposed Solution &

Service Delivery and Capabilities

Relationship Reputation Communication Creativity

RELATION

SHIP

Relationship

Relationships are not created or developed overnight. Relationships take time and must have a foundation that is genuine.

When you have a genuine relationship, you are able to empathize with the buyer of services. With this empathy, you can “sell” the way that they want to “buy”.

Who do you know within the client team? How well do you know them? Do you know what is motivating the decision

makers? Do you know the Advisor team or Consultants? Can you say, “If I were you, I would……”?

Need to be qualified to say this with credibility

REPUTATIO

NReputation

Everyone thinks that their baby is cute. Some are. But some are actually ugly babies and are not likely to get many modeling jobs.

Do you know your firm’s heritage reputation whether it is deserved or not? Don’t argue or be defensive about the

reputation If it is positive, leverage if negative, address

with facts Does the client have prior experiences with

your firm? Do you have a realistic perspective of that past

experience? Are past clients with the target client advocates

for you? Client references

Many positive references within the industry are key validations to the client.

COM

MU

NICATIO

NCommunication

Oral communications provide an opportunity to draw clients in to invest more time and attention to you. Presentations and Sales discussions are not the vehicle for transmitting every detail about your service offerings.

Who are you selling to you?Do you know:

the decision makers, the owners of the checkbook, the key influencers, etc.

Less is moreAvoid having a “Slide 112”

► Details don’t sell concepts and ideas sell

► Are you listening? Or are you following a script?

► If they have difficulty understanding you in the sales process, they will assume that they will not be able to communicate if you are awarded business.

CREATIVITYCreativity

Innovation is on every buyer’s mind. While true innovation is rare and elusive, creativity is a key ingredient to Innovation and by extension is a key differentiator.

Hard to define it, but you know it when you see it. If the client views you as being creative, you will

score well in: Your perceived ability to adapt to their environment

with unique value-add solutions. What is your style?

If you are boring, you are not creative. Creativity is not a commodity and it is hard to

replicate. A creative solution can short circuit a “commodity”

approach to the award of business.

OTH

ER ISSUES TO

CON

SIDER

Other Issues to Consider

Many other factors affect the environment for selling products and services. Many of these factors will never be stated or obvious to the clueless seller.

► Take advantage of “back-channels” if you want to get a better understanding of where you stand in a pursuit.

Balance of Trade Are you bringing a knife to a gun fight?

“When you have a hammer, everything looks like a nail” don’t be that guy

Client Executive perception of the value that you bring to them professionally: Future career opportunities Is picking you viewed as safe or risky?

Political Considerations

SUG

GESTED

2014/2015 SALES ACTION

PLANNo Selling Sales Approach

From the dozens of issues, trends, and changes going on the world of the CIO, BTGS should carve out franchise expertise in a few emerging areas for Market Briefings

General Market TrendDigital Labor Network Centricity• Labor is moving into the cloud as

software in the form of Digital Labor• Cloud Computing + Digital Labor will

lead to radically new cost and performance models.

• At the core of this trend in the Network and Network Based Service Delivery Platforms

Market Briefings

► Develop a quarterly briefing package for the C-Suite for all major clients Cover major technology, business, financial, political trends

► NO Selling this is an educational opportunity and meant to build the relationship, credibility, and jointly developed visions for the future

► Let the client pull – don’t push. If the briefings are good, you will not need to push.

Industry/Vertical Trend

Industry Vertical Briefings for 2014• Banking & Financial Services• Consumer Products• Manufacturing• Healthcare• Retail• Travel & Transportation• Media• Etc.

APPENDIX SLIDES

NEW

BEHAVIO

RS: MAXIM

IZING

VALUE IN

THE ECO

SYSTEMNew Behaviors: Maximizing Value in the Ecosystem

• Clients, primarily the Procurement and Finance organizations, need to be open to trying new ways of engaging the market for services.

• Clients need to recognize the innovation requires both buyer and CSC to work together in an open environment and be willing to:

• Take Risk• Share the Risk/Reward

• Service Providers needs to be transparent, reasonable, and be proactive driving the most innovative solutions – even if it is to the detriment of short term revenue.

• Collaborative Contracting is not for commoditized or near commoditized services.• Collaborative Contracting works ideally, when transformation is required and the path

ahead undefined or untested.• Technology Providers need to better understand how their technologies fit into the

overall Services Ecosystem.• You cannot have the trumpet playing off a different sheet of music.

• Advisors need to be more consultative and less process driven.• Ecosystem neutrality (orchestra leader) is key to help facilitate a commercial dialog that

achieves the commercial goals of:• Price optimization• Innovation & Collaboration• Trust and Transparency

THE RO

AD AH

EAD: KEY TAKEAW

AYSThe Road Ahead: Key Takeaways

• The changes that we have seen in the Technology Services markets has challenged our current business models and paradigms.

• Old playbooks are not yielding new results.• The pace of change is accelerating, and gaps in our processes and

knowledge will increase at an alarming rate.• People need to end most of their sentences in question marks, not

periods.• All participants in the ecosystem need to be open to changing their

approach to engaging in commerce.• Collaboration, trust, and transparency are going to be foundational

elements to success in an undefined future market.• No ones knows for sure how the markets will progress, but it is safe

to say that a status quo paradigm is wrong.• Be open to change, take risk, accept failure, and try again.