Thursday, August 24, 2006

Today’s Holy Grail: The perfect offering

In todays enterprise solutions world, what is the best offering? That is the latest grail quest that CEOs are on. There’s installed software, hosted software, outsourced services, outsourced support, on-demand software, upfront licensing, integration partners, value added services, etc, etc, etc.. Companies are trying to mix and match all these concepts to offer the perfect offering. Offerings have become more and more complex because of this. You can use installed software managed by yourself, but with outsourced support or even occasional outsourced services to help you through the bad times.


In this concoction of offerings, how important is the software? Well, it depends on the problem you’re trying to solve. If you’re trying to automate a process, say HR, then it’s very important that you have a software that has features to fit your processes and not a software that you have to fit your processes around. I recently heard that a leading daily in the middle east implemented SAP and used it as a publicity standpoint that they were now automated by SAP, however when someone called up and wanted to book advertising space 3 months in advance, they couldn’t do it. Why? Their software didn’t support it.
However if you’re trying to purchase analysis/intelligence/expertise based solutions, then the software isn’t as important. All you need is software that’s flexible enough so that when given to a few smart people, magic can be woven.


Firstly, when I mean services I don’t mean support services as in bugfixes, hot patches, feature developments, etc. I mean professional services like implementation, analysis, recommendations and the ability to provide expert opinions and strategies for your problems. These services tend to be ongoing in nature. How important are these services?

Again, if you’re automating a process, the services you’ll be most looking for is implementation and change management unless you take on that to do it yourself. It might also be worthwhile to tag on process redesign and such higher value services if you’re really looking for value add to your organization.
If you’re purchasing analysis/intelligence/expertise based solutions, you should be looking for such services and it may make more sense to invest in a solution that provides you with the end result rather than the software or the tools to perform it.


Support is the one thing that can differentiate predominantly software based offerings. They tend to produce that extra perception of value if your support has quick response and is able to provide a little more than what’s their domain of expertise. Support staff should be encouraged to move forward and understand the business more so that they may add more and more value to the client.

So having said all this, how does a company go about designing a perfect offering? Because in today’s world the design of the offering is more important than the design of the software or the expertise of the services. I’d say design your offering based on the business that you’re in. Higher the value, the more you should lean towards services. The more automation related the solution is the stronger your product functionality should be. A continually improving support organization will always lend value. Segment your market and ensure that you provide offerings that are affordable and relevant to all your target segments. We need to identify what is most important to what segments. To some segments the final business value added is what’s most important to them. Usually large companies that don’t really consider small software costs as a burden on their finances are that way. They need to see how your company is providing value and they’ll willingly give you more business. To some segments pricing and cash flow are most important since each IT purchase is a huge expense to their firms. You need to be flexible in your pricing and ongoing fees on such segments. To some segments speed of implementations are important because they go in with a specific objective to get the new solution up and running before some milestone.

It is quite a challenge developing the perfect offering, or maybe there’s another way out. Don’t create an offering. Create a set of guidelines on pricing/timelines/resource usage and train your sales people to weave a solution for each customer only keeping in mind that those guidelines are not violated. So create a specialized offering for each customer.

Whatever you do, never underestimate the customer. Today’s customer whether he/she’s buying a 5 rupee matchbox or a multi million dollar ERP solution is an intelligent and in the very least an informed customer. Do not try and convince him about value which doesn’t exist. Even if you get away with it at first, it’ll always come back to bite you.


Anonymous said...

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