Gantry
Group
Issue No. 25, June 2004
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The Gantry Group |
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Best Practices for ROI Assessments | Gantry Group Newsletter Issue No. 25, June 2004 |
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Solution providers – technology vendors and managed service providers – have scrambled to revamp their strategic messaging and marketing programs to communicate bottom line value, instead of the unsubstantiated soft-speak hype encouraged during the Internet era. Today enterprises only want to hear about what the technology solution – whether it is on-premise, hosted or completely outsourced – will do to improve their business performance. In other words, how will the solution create economic value? This appetite for proof of value is pervasive throughout the enterprise community, no matter the industry. According to a recent IDC study that polled software vendors and buyers, “72 percent of software vendors and 70 percent of software buyers strongly believe that the software industry must place a greater focus on clearly establishing the business value of software.” [“Future of Software Licensing”, IDC, March 2004] Solution providers’ abilities to meet revenue goals, whether their offering is a product or service, are clearly dependent upon their ability to demonstrate solution value. “Selling with ROI” has become the new mantra in the technology sector. ROI calculators have become standard equipment for the sales organization. But just how effective are ROI programs? Far too often, ROI programs fail and the solution provider gets no ROI on their ROI initiative investment. This newsletter issue explores the tangible reasons why ROI programs fail and proven remedies that can circumvent the failure scenario.
Solution providers make large investments in ROI programs, measured in both outlaid money to 3rd party consulting firms who develop the programs and the internal resources that must be dedicated to the effort. A robust ROI calculator is at the heart of any ROI initiative. But the company roll-out of the ROI program must be given as much attention as the development of the ROI selling tools. Unfortunately, this rarely happens. The ROI program roll-out is too often considered an afterthought. The first simple question to ask is who within the company will be using the ROI calculator? Solution providers with comprehensive enterprise solutions rarely wish to leave their prospective customers in the driver’s seat of their ROI calculators. This is a justifiable concern since without appropriate training on the use of the ROI calculators, the buyer may make an error that mistakenly leads to a negative ROI conclusion. Doing an ROI profile well requires a consultative session with the buyer. During this session, it’s important not only to communicate the bottom line impact data, but also the solution’s key value drivers that make this impact possible. Buyers must believe that the solution can, indeed, deliver on the ROI promise. Doing such sessions well necessitates a time commitment. Solution providers must be realistic about the time required to brief the enterprise about the data needed to complete the ROI profile, conduct the ROI profiling session, and then follow up to deliver the final ROI report to the buyer. |
Account managers, client services, sales support, professional services organizations and sales forces are all candidates for owning the ROI profiling charter. All can be equally effective. What’s mandatory is to choose one that has the time to learn how to effectively use the ROI calculator. Simply turning the tools over to the sales force and hoping for the best is an assured route to failure of the ROI initiative. Operating under sales goal pressures, sales teams often don’t feel they have the time to devote to become proficient with the ROI tools. Well-intentioned promises and postponements to use the ROI tools the following month or quarter get overrun by the next calendar period’s sales goals. The net result is that the ROI tools are never embraced, even though they would be a major catalyst to closing business. Whatever organization is selected for the ROI profiling task solution providers must make it part of this ROI team’s charter and performance assessment. ROI profiling must be fully integrated as a crucial component of the sales process.
Training the ROI Team |
Once the ROI team is identified, they must be trained. Simply turning over ROI selling tools to the team can be disastrous. They must be instructed not only on the operational aspects of the ROI calculator, but also on the underlying strategy of the ROI calculator. The ROI team must learn how to convey and convincingly articulate each value driver within the solution that contributes to each of the following benefit categories:
Hands-on ROI workshops, reinforced with buyer/seller role playing, are essential to the success of an ROI program. Without proper training and reinforcement, there is a high probability that the ROI tools will become shelfware.
The ROI of and ROI program is highly dependent upon the users being comfortable
with the tools.
This may sound like an obvious recommendation. However, there is a propensity
for solution providers to skip training for any one of the following all too
common reasons:
| Considering the Alternatives |
There is an alternative to this dilemma. Solution providers can outsource the ROI profiling task. Companies that specialize in doing technology ROI assessments are top candidates to provide objective, accurate ROI profiles for buyers. In this scenario, the ROI outsourcer becomes an adjunct to the solution provider’s sales force, ready at any time to be called upon to profile a customer’s realized value post-deployment or to forecast a prospect’s expected net benefits. The net effect is that the ROI Profiling Service immediately “ROI enables” the sales force and the ROI tools are put to their intended use. Solution providers maximize the ROI from their investment in the ROI program by outsourcing the application of the ROI tools.
Such ROI profiling services can be acquired on a monthly subscription basis as a:
| Netting It Out |
When considering investment in an ROI program, solution providers must consider the entire ROI program, not just the ROI tools. The solution provider must realistically assess their own strategic initiative plate and time constraints created by it. If that plate seems to be overflowing, outsourcing the ROI profiling task may be the most economical and consistently effective way to get full value from the ROI program.
Supporting the sales force with an always-available ROI profiling service to quantitatively communicate buyers’ bottom line value delivery, further differentiates the solution from its competition. In short, an ROI program that fails to be activated is ineffective. An ROI program that is fully applied, can substantially improve the probability that customers will renew or buy more products/services, and prospects will make that critical decision to purchase.
| About the Gantry Group
The Gantry Group is the only management consulting firm specializing in technology ROI. The Gantry Group’s ROI impact analyses are validated by primary market research to ensure accurate capture of the real value drivers and costs. With over 200 technology clients, 3,000 business process interviewers and profiles in their knowledge base, and more than 1,000 ROI business processes and value drivers modeled, Gantry offers its clients the greatest depth and breadth of ROI experience and invaluable objectivity. Gantry Group’s ROI Profiling Service immediately “ROI enables” the sales force. With this service, Gantry Group ROI analysts are available as resources to fully support your sales force. Since 1997 Gantry Group has provided ROI Calculators, Benchmark Studies, White Papers, Case Studies and ROI Sales Training Materials for hundreds of technology companies in healthcare, financial services, mobile/wireless and business process optimization. Gantry Group’s client list of solution providers includes leading IT vendors such as PeopleSoft, McKesson Health Solutions, Thomson Media, palmOne, Xerox, Politzer & Haney, and Best Software. For more information on The Gantry Group and the services it provides visit http://www.GantryGroup.com or call (978) 371-7557. |
| The Gantry Group, LLC 30 Monument Square, Suite 214 Concord MA 01742 |
Phone: 978-371-7557 Fax: 978-287-0043 Email: info@gantrygroup.com Web: http://www.gantrygroup.com/ |
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