an effective component of strategic planning

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Derry Finkeldey, Vertical Industries

February 25, 2014

[email protected] Twitter: @DerryFinkeldey

The Rise of the Business Buyer: Fact or Fiction?

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Who’s buying technology? Business or IT?

3


IT is now “Everyone’s IT”

4

IT only 22%

BU involved 78%


Key Issues

1. Is demand growing from outside the IT

department?

2. How is IT buying changing as a result?

3. How must providers respond to these

changes?

5


Key Issues


department?



changes?

6


A brief walk through history

7

c. 1998 c. 2004 Today

Era of Shadow IT

Centralized IT

Everyone‘s IT


Demand is growing from outside of IT

8

Note: 2010 n = 1,582; 2011 n = 1,552 and 2012 n = 1,523. Findings are from Gartner surveys of enterprise IT spending conducted in 2010, 2011 and 2012.

80 75

70

20 25

30

2010 2011 2012

Linear (Median % Total IT budget controlled by IT budget)

Linear (Median % Total IT budget controlled by Non IT)


It’s a lot of money

• IT directs 69% of IT spending

31% of IT spending is being directed outside the IT department!

• Total global market for IT in 2012 was $2.7 trillion¹

• Simple extrapolation

$816 billion IT spending in 2012 was by the BUs

9

¹ Forecast: Enterprise IT Spending by Vertical Industry Market, Worldwide, 2011-2017, 3Q13 Update 03 October 2013 | G00249265


And it isn’t held by Marketing

10

Note: n = 1,682. Data from a 2012 survey of CIOs and IT Leaders.

2.2

4.7

10.7

6.3

7.8

5.4

9.8

13.0

8.0

8.0

5.1

3.3

10.8

5.2

5.5

5.6

10.9

5.8

2.1

2.3

2.9

4.4

3.8

3.8

3.5

4.9

4.4

3.5

3.8

5.6

4.3

2.2

2.7

2.9

6.3

3.5

3.3

3.8

3.8

4.2

Health Payers

Wholesale

Insurance

Healthcare

Education

Banking & Sec.

Mfg. & Natural Resources

Other

Transport.

Retail

Utilities

Govt.

Comms., Media & Svcs.

COO/ Operations Other Business Unit CFO/ Finance Sales Marketing & Comms. Supply Chain/ Logistics Human Resources


Key Issues


department?



changes?

11


That’s not all that has changed

12


The B2B buying process has changed

Tech Go-to-Market: The B2B Customer Buying Cycle for

Technology Products and Services








Cross-functional teams are driving IT decisions

14

The IT dept. has a leader role in defining IT

strategies across the organization

22%

The IT dept. and BUs define IT strategies and

make decisions together

46%

BUs define their IT strategies and expect IT

dept. to support them 24%

BUs define IT strategies with the IT dept.'s

knowledge but no support 4%

BUs define and implement IT strategies autonomously without

the IT dept.'s knowledge 4%

Source: Gartner Enterprise IT Backbone survey, January 2014.

n= 2,016


And buy all types of IT

Note: n=404. 2013 Business Buyer Survey, 2013

13%

13%

13%

14%

14%

16%

16%

18%

19%

21%

25%

0% 5% 10% 15% 20% 25% 30%

Systems Integration Services

Storage

F&A, HR or Payroll software

CRM software

Database

Mobile Devices

Consulting Services

BI and/or Analytics software

Cloud services

Devices (PCs, laptops or tablets)

Industry-specific software


Business buyers are involved earlier in the relationship

Note: n=404. 2013 Business Buyer Survey, 2013

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Manage ongoing

relationship with provider

Manage technology/

services

Implement technology/

services

Choose one provider over

another

Determine which

providers could support

needs

Research/ evaluate

technology/ services

Set strategy Determine need

Don‘t Know

Other

IT

X-functional team led by IT

X-functional team led by BU

BU Leader

C-level exec. Mgmt.

Purchasing ProcessPurchasing Process


They are looking in different places

17

Banking Decision Makers

Industry Associations

University Research

Regulatory Bodies

Social Network

Groups

Publications

Conferences

Government Organizations

Technology Groups

American Bankers Association

Harvard Business School

BAI Retail Banking Conference

FS Technology Consortium

Reserve Bank

The Banker Magazine

On LinkedIn, etc.

Basel Committee

Consultants &

Advisors Gartner


For different outcomes

Business buyers want providers to deliver measurable business impact

• More than 2/3 of technology buyers believe that ―business value outcomes will take precedence over cost-based decision making" by 2015‖

• Buyers are 3 times more likely to purchase if the provider can quantify the business value proposition!

• They struggle to build a business case or to measure the return

18


Business outcomes matter most

19

Source: Gartner Enterprise IT Backbone survey, January 2014.

n= 2,016


Line of business buyers care about industry-specific outcomes

20

CIO CFO COO CRO CMO Product Exec. or Actuary

Buyer Role Buyer ,

decision maker

Buyer , decision maker, veto authority

Buyer , decision maker

Buyer, decision maker



Visionary, influencer,

veto authority

Focus IT

Financials, balance sheet,

risk and compliance

Efficiency and service

performance

Risk management

Branding and distribution

growth Product P&L

Strategy and direction, regulatory

Impact on Decision

High High Medium High

(risk-specific) Medium High Medium

Key Message and Themes

Operational excellence, prioritize IT

investments, align BU

objectives, resource planning/ skills availability, global sourcing

strategies

Cash flow, cost discipline,

ROI, compliance

risk and compliance

Efficiency, simplicity,

lower costs, improved service,

staff reduction, greater control and

management of staff and

service levels

Address regulatory challenges

(Solvency II, ACA, etc.),

manage risk (reputation,

credit, market, operational, underwriting)

Brand enhancement,

improved management of

marketing teams,

improved content

management

Distribution, product

innovation, speed to market

customer retention

and acquisition

Revenue growth,

competitive positioning,

M&A targets, risk

management

CEO


Key Issues


department?



changes?

21


• Segmentation: who are you speaking to?

• Targeting: at what stage?

- Explore

- Evaluate

- Engage

- Experience

• Positioning: how can you help the buyers meet their goals?

Marketing: Targeting the Team

22


Sales: Interacting with the Team

Low High Business Value

Low

High Te

ch

nic

al C

om

ple

xit

y

Buyer Focus: Business Outcome

Sales Approach: Consultative/Partner

Buyer Focus: Technology/Commodity

Sales Approach: Transactional/Supplier

Buyer Focus: Solve Problem

Sales Approach: Solution

Tech Go-to-Market: The Future of IT Sales and Factors Driving This Evolution

Tech Go-to-Market: The Future of IT Sales and Factors Driving This Evolution


Digital Business disrupts existing business models

24


Technology Focus

Vertical Marketing and

Product Strategy

Vertical Excellence

Vertical Marketing and

Horizontal Product

Fully Aligned VI Business Unit

Horizontal Focus

Vertical Focus

Optimizing Manage Defined Developing Informal

Ad hoc Industry Experience Dedicated Vertical SME Delivery Team Service and

Delivery

Technology Transformation Industry (Process) Transformation Product and IP Development

Technology-focused Sales Dedicated Vertical Sales SMEs Sales and Distribution

Product Vertical P/LBU Organization

Technology Innovator Trusted Industry Advisor Segmentation, Targeting and

Positioning

But how vertical to I have to be?

© 2014 Gartner, Inc. and/or its affiliates. All rights reserved. © 2014 Gartner, Inc. and/or its affiliates. All rights reserved.

Industry-specific business buyers

are reshaping and transforming

technology adoption and

investment

26


Cross-functional teams are developing IT strategy and buying IT

The Business dominates the earlier phases of strategy, evaluation and decision.

Business decision-makers are looking for (quantified) business outcomes

► Target business roles, as well as industry segments, in your planning

► Assess the appropriate level of vertical investment for your offering and target market

► Include appropriate business forums and media in your marketing communications and activities

► Build a quantifiable business case for your customers‘ business

Key Takeaways

27

►Don‘t abandon the CIO and his team!


Recommendations for Engaging with New Buyers

Old World New & Next

World

What?

Technology

Solution

Business

Solution that

uses

Technology

Focus your message on business

solutions that speak to a business

driver (revenue, cost, customer),

instead of a technology solution.

CIO Only

CIO +

Business

Leaders

Engage with the business buyers to

create awareness and be part of

technology strategy and selection, not

only implementation.

A

Technology

Trend

Digital

Business

Speak to how your solution ties trends

together, instead of focusing on one.


Recommended Gartner Research

• Marketing Essentials: How to Develop and Assess a Vertical Market Strategy

• Marketing Essentials: Introducing the Vertical Strategy Framework

• Toolkit: Assessing Your Vertical Industry Go-to-Market Strategy Position

• Market Trends: The Rising Importance of the Business Buyer — Fact or Fiction?

• Tech Go-to-Market: The B2B Customer Buying Cycle for Technology Products and Services

• Tech Go-to-Market: The Future of IT Sales and Factors Driving This Evolution

29

an effective component of strategic planning

Leadership & Management