Functionality Drives Value in Advanced Sales Technologies

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1 Decision Framework, J. Galvin Research Note 19 November 2003 Functionality Drives Value in Advanced Technologies Advanced states of sales technology demand increased levels of functionality and require cultural evolution in order to create value for the individual, sales organization and enterprise. Core Topic Customer Relationship Management: Business Strategies, Technologies and Applications for Key Issue How will sales organizations use technology to meet the challenges of changing internal and external forces and business and market dynamics? The evolution of sales technologies from paper-based, pretechnology states to advanced value-network-enabled environments (see "Finding Business Value in Technology") demands increased functional capabilities. These advanced states test an organization's ability to change and adapt to new, technology-enabled business processes. Although more complex, these advanced states also drive significant value for the salesperson, the sales organization and the extended enterprise. Figure 1 shows Gartner's sales technology value framework. Gartner. Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice.

2 Function Managing Opportunities Execution Infrastructure Platform 1st None Typed forms Laminated cards Face-to-face training Personal organizers Brochures Three-ring binders meetings Demo bags Faxed orders Internal systems Paper reports 3x5 cards Post-it notes File folders Binders Figure 1 Value Framework: Functionality View 2nd Individual Productivity Excelforms System access Low-end contact Word templates CDmarketing content Excel price lists Web content Terralign Map info. BasePC Office apps. Web access 28.8 connections 3rd Channel Effectiveness OMS Accounts Contacts Opportunities Team sales PRM Marketing encyclopedia Guided selling Config./price Propose Electronic order submittal Territory Ad hoc teaming Incentive comp. Quota analytics Broadband Wireless Self-service 4th Intraenterprise Integration Crossdepartmental opportunity Marketing campaign Marketing encyclopedia Guided selling Config./price Propose Electronic order submittal Crossdepartmental customer data model Customer analytics Broadband Wireless Self-service 5th Value Network Enabled Interenterprise opportunity Distributed order Shared commerce Shared customer data model Dynamic workflow Distributed architecture OMS = opportunity system PRM = partner relationship Source: Gartner Research (November 2003) Managing Opportunities The challenge of measuring and managing the opportunity base in any selling environment has always been an issue for the sales organization. Early-stage, paper-based approaches involved administrative resources to manually collect and aggregate opportunity data. Spreadsheet technologies reduced the administrative burden but failed to be more than a pipeline/forecast accounting system. It's in the evolution to the third stage where true opportunity emerges with methodology and process-driven workflow to manage accounts, contacts and the sales process. Third-stage opportunity significantly improves the administration of and visibility to pipeline and forecast data, while supporting a consistent sales methodology. It also increases the consistency and execution of the sales team with proven strategies and common terminology to increase productivity. Once the sales organization has embraced the processes of true opportunity, fourth-stage opportunity becomes possible, including other customer-facing organizations and relevant internal resources, resulting in the mythical "one number" forecast. Major Obstacle: The evolution from second-stage "individual productivity" to third-stage "organizational execution" is less about technology and more about business leadership driving the. 19 November

3 cultural change demanded to collaborate for organizational success, as opposed to individual achievement. Significant Value: Real-time, cross-functional opportunity analytics facilitate fact-based market analysis combined with operational visibility for all levels of sales, finance and the extended enterprise to improve decision making. Execution execution is the creation and of customer solutions by the sales representative or team. Solution defines the act of selling from the identification of an opportunity through qualification of customer needs, configuration, pricing and presentation of a solution which, it is hoped, results in a bookable order. The creation of a customer solution requires access to relevant content and meaningful messaging, combined with accurate product and pricing data. In the absence of technology, large volumes of paper-based content, managed with binders or bookcases, force sales to physically manage and then carry a large quantity of materials. Electronic documents emerge in the second stage, followed by third-stage solution systems, which tie lead distribution, content libraries, product configuration and pricing tools with proposal generation systems, which are then linked to the electronic order system. The fourth stage extends the solution to include marketing for campaign, lead generation, content packaging and pricing, or manufacturing for product availability. Fifth-stage sales execution includes distributed order and shared commerce. Major Obstacle: Advanced states of sales execution put tremendous pressure on marketing to deliver quality opportunities, meaningful messages, relevant content and compelling products, all priced and bundled against a competitive landscape. Marketing organizations can no longer hide in corporate conference rooms, because their impact is felt and measurable in every step of the solution process. Significant Value: High-impact messaging, combined with relevant content throughout the solution creation process, allows for consistent value statements. Technology's ability to present current, relevant content, as well as the ability to extract usage and results, increases sales productivity and marketing impact through real-time market analytics centered on the customer's buying process. 19 November

4 Infrastructure The sales infrastructure manages the assignment of accounts to sales representatives and establishes the sales hierarchy for reporting, along with the associated of quotas and sales performance. Early-stage sales infrastructure was managed with internally created systems made available through paper reports. Second-stage, first-generation opportunity systems (OMSs) introduced more-flexible and more-sophisticated systems to support the account ownership and hierarchy requirements of sales force automation systems. Performance was done independently with internally developed commission systems or massive collections of spreadsheets. Moving beyond basic territory, advanced stages of sales infrastructure will tie together the territories, hierarchies, quotas and performance plans into an integrated "central nervous system" for sales, providing real-time analytical capabilities and advanced modeling to ensure optimization of enterprise resources around the most profitable or strategic customers. Major Obstacle: Territory systems remain an isolated component of OMSs, while enterprise performance systems are only now beginning to emerge, let alone be integrated with territory and opportunity systems. Significant Value: Multidimensional visibility and flexibility to more rapidly redeploy or realign sales resources in real time, based on factual analysis of customer, performance or financial metrics, are improved. Platform The traditional paper-based platform of three-ring binders, index cards and daytimers has quickly given way to personal productivity applications of , word processing or spreadsheets on a personal computing device. Advancing to organizational execution demands robust connectivity for the mobile workers, first through dial-up 28.8-kbps connection speeds, then via high-bandwidth cable/dsl access, and eventually through a wireless-enabled anytime, anywhere device. An open platform for interactive buyer/seller communication or customer-driven buying opens the door to the fifth stage distributed architecture allowing all parties engaged in the selling process to participate, regardless of their environments. Major Obstacle: The rapid advancement of broadband access has made remote or partnered salespeople just as connected as their inside counterparts. However, until the wireless infrastructure achieves the ubiquity of today's cellular network, 19 November

5 with bandwidth equivalent to today's broadband, mobility will remain a challenge. Significant Value: The freedom and flexibility of a mobile computing infrastructure that provides anytime/anywhere access will empower the extended customer team to share and collaborate on customer solutions with unparalleled access to customer data and intelligence. Bottom Line: Progression through the sales technology value framework will require a combination of sophisticated technologies and cultural evolution to be successful. Although many of the advanced-stage technologies exist today, few sales organizations are culturally prepared to capitalize on their functionality. Successful organizations will take a measured approach to advancing through the framework, embracing technologies that can improve productivity today while, at the same time, contributing toward the customer-focused, fifth-stage value-added network. 19 November