Why organisations spend on IT

Unless investments in IT are providing business value, they will not be justified. Understanding this is vital for salespeople - unless wasting time chasing unqualified opportunities is the goal. 

Why do organisations spend money on IT?

 

 

 

Spend on IT will link to one or more of the four “Business Imperatives”. Initiatives which support one or more of these provide increased business VALUE to the organisation. VALUE is defined as activity or investment which directly supports the goals of the organisation.

Strategic Value is gained from two Business Imperatives - to increase revenue and to reduce costs.

Reduce Costs

The costs associated with IT include not only the capital purchase of new equipment, but also the ongoing costs through its lifetime. The operational costs can be up to three or four times the purchase cost. Total Cost of Ownership, or TCO, is a term often used to describe this. TCO is becoming a little dated as a term because IT ownership is in fact optional. Enabled primarily by virtualisation technologies, software and hardware are becoming decoupled and increased mobility means organisations do not need to own infrastructure - they can simply pay for "services" to be provided - for some or all of their needs. Total Cost of Operations may be a more fitting meaning for TCO.

Increase Revenue

Commercial organisations are typically goaled to drive profitability. Simply put, Revenue minus Costs equals Profit. The way to achieve this is to provide the best possible levels of service for customers so they buy more products and or services. For public sector organisations, the focus on service provision is in fact the primary goal. Better service provision should drive improved funding which is used to cover the organisation's costs. The end result is similar to commercial organisations - but the focus is on service provision rather than profit.

Organisations also need to drive Operational Value. The two Business Imperatives here are to increase agility and to reduce risk.

Increase Agility

Organisations need to respond ever more quickly to market demands. New applications must be rolled out in shorter time frames, test and development cycles must be slashed and the costs associated with new projects need to be curbed. In summary, as IT evolves, it must become more agile - in line with the business itself.

Reduce Risk

As businesses grow, become more globalised with 24/7 operations and become more regulated - whether by internal or industry governance - so the pressures to avoid business risk mounts. With IT so central to business operations, so Risk Management has become a critical operational imperative. Legal compliance, information management, business continuity, backup and disaster recovery are all initiatives which fall under this category and provide necessary value to the organisation.

Unless an IT purchase supports at least one of the Business Imperatives and VALUE is increased, it will not be justified. Conversely, if you can demonstrate how an investment in a particular technology supports one or more business imperatives, this will strengthen your case to get budget approved.

 

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What is selling anyway?

Have you ever been in a conversation and at the end thought "I don't think she listened to a word I said"? Or conversely "I don't have a clue what he was talking about?" Especially over the phone, it can be difficult sometimes to get a point across. It can be even harder to gain real commitment from someone you may not have spoken to before or at least have not met in person. And yet, that is the purpose of you calling your customers/ prospects.

It may seem like quite an achievement just to get through to your customer. To have an engaged conversation can be harder again and your well written call plan will certainly help with this. But all this can be for nothing if you and the conversation are not remembered, if you have not had a personal influence on your customer.

Why is personal influence so important? Well it boils down to the fundamental reality of what selling is.

I often tell delegates in my training sessions that they cannot sell anything. I am not trying to be disparaging when I say this, it is not a personal slight on their abilities. It is a rather controversial statement to be making in a room of sales people and does tend to get the conversation started. Some will be intrigued, some will disagree and someone will say - "What do you mean by saying that?

"Well", I continue, "who in here reckons they can sell?" One way or another, someone volunteers (or is volunteered). "OK", I challenge, "sell me something". This tends to flummox the volunteer. If she is smart, she will say "well what do you want?" And that is my point. You can only sell something to someone who wants it, who sees some value to be had and is willing to part with money in exchange for it. You cannot sell unless someone wishes to buy. Of course, there are some unscrupulous  people out there who find ways to cajole, manipulate or con their "customers" out of money by convincing them that they want something - but this is not legitimate selling.

There is no sale without a willingness to buy. So selling is actually the process of communicating with people, ideally in a targeted way, with the purpose of firstly discovering a willingness to buy a product or service that you can fulfil. Then, it is personally influencing that person (or perhaps multiple decision makers) to buy from you.

This final process is personal because the buyer is either buying for himself or putting his personal reputation on the line if buying on behalf of his company. Your ability to influence the purchasing decision will be governed by a number of factors such as price, product fit for purpose, your compliance with any purchasing rules etc. But the old adage, people buy from people, is as true today as it ever was because ultimately, a person needs to raise that purchase order and we are all driven to do what we perceive to be right by ourselves, our employer and by our peers (probably in that order).

In order for you to build influence with your customers, you need to spend time with them. This is partly so you can build rapport and trust, and partly so you can get to understand their personal drivers. Doing "right by ourselves, employer and peers" is subjectively and personally defined. So unless you get to know the person, your ability to influence will be dramatically reduced. Win over the person, and your ability to win the sale will skyrocket.