Received the following via my weekly email subscription from McKinsey Quarterly (read their "Inventing the 21st-century purchasing organization" article here).  The exhibit shows how one European manufacturer achieved €100 million in savings within nine months by creating more than 50 cross-functional purchasing teams organized around spending categories.  Is this an area in which Enterprise RSS can add significant value?  Very possibly.

Rethinking the Purchasing Function, McKinsey Quarterly
"Goods and services can represent 70 percent of all a company’s costs. Yet many companies treat purchasing as a backwater; pay little attention to securing the best talent for the job; cling to a traditional mind-set that focuses on saving money for specific items rather than on overall costs; and mostly ignore the potentially large role of procurement in implementing strategies, innovating, and improving performance. Top performers, by contrast, view purchasing not only as the commercial conscience of the organization but also as its competitive eyes and ears.

The exhibit shows how one European manufacturer achieved €100 million in savings within nine months by creating more than 50 cross-functional purchasing teams organized around spending categories. Led by purchasers and including key people from engineering, manufacturing, and marketing, the teams worked on developing products and optimizing processes, not just on purchasing in the narrow sense. Beyond the immediate financial gains, this approach helped to counter the confusion that ensues when one group focuses on costs while another tries to innovate.

As an early round investor, here's the top ten list of what I want from Enterprise RSS:

1.  To solve a set of targeted, specific business problems (not the amorphous "information overload")
2.  To deliver quantifiable business value to customers
3.  A large, readily accessible market
4.  An easily identifiable buyer (or group of buyers)
5.  A coherent go-to-market strategy
6.  Repeatable sales processes that scales
7.  Predictable, profitable revenue growth from solution sales (software and services)
8.  A broad base of channel partners to extend market reach
9.  An "open source" approach to add value to the solution
10.  A clear exit strategy

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The web is abuzz about Forrester's prediction of a $4.6 Billion Enterprise 2.0 market by 2013.

Dennis Howlett at ZDNet makes an excellent contrarian observation that requires serious consideration:

"It is when Forrester strays into the collaborative workspace that I believe they’re over reaching. They make the implicit assumption that major players like IBM and Microsoft will subsume Web 2.0 software into existing collaborative offerings. They argue that a combination of factors such as commoditzation, legacy and the marketing muscle of the incumbents will serve to make Enterprise 2.0 products “fade into the fabric of enterprise collaboration.” Apart from the difficulty in getting adoption, to which I have referred elsewhere, I believe this is solving the wrong problem."

The overall point is interesting, but I'm inclined to disagree with Dennis' underlying thesis that E2.0 is focused on solving the wrong problem: 

"Collaboration is about problem solving in the flow of business processes - or at least it should be. That’s where cost sits and where all the automation in the world will not rescue the business manager. Enterprise 2.0 doesn’t solve problems per se but it may serve to expose them."

Actually, McKinsey & Company published a paper that compares and constrasts Transformational, Transactional and Tacit work ... and highlights the contributions each make to the U.S. economy and impact on corporate profitability.

In an article entitled "Competitive Advantage From Better Interactions" The McKinsey Quarterly 2006 article, Volume 2, (premium membership required) the authors illustrate the top and bottom line impact that can be achieved by optimizing Tacit Interactions and this is likely to result in significant competitive advantages.  Summarizing:

Employees engaged in highly collaborative, complex problem solving activities produce some of the greatest impact on a company’s profits.  These activities are know as Tacit Interactions.  Knowledge workers involved in these activities are the fastest growing segment in the enterprise: 41% in the U.S. and 45% in the U.K..  Running supply chains, managing customers and partners, negotiating acquisitions, or selling to the enterprise are among just a few examples. The old strategies for efficiency improvements don't apply to employees whose jobs mostly involve Tacit Interactions; instead, a company must boost these workers' productivity by making them more effective at what they do. As a result, the company will build talent-based competitive advantages that are difficult for rivals to duplicate.

"Executives must learn how to compete, innovate and manage in an era where Tacit Interactions dominate and drive performance."

Transactional work is certainly a mainstain in the modern enterprise.  And E2.0 may indeed optimize those processes.  But it's more likely that E2.0 will make the greatest impact on ad hoc collaboration - ala Tacit Interactions. 

See also my earlier related posts here and here and here and here

I had the pleasure of visiting with Bruce Sheer, founder of FutureSight Consulting, yesterday.  I was thoroughly impressed with the completeness of their vision and their ability to execute.

Bruce was kind enough to share how FutureSight is helping technology companies sharpen their value propositions by articulating business value through beautifully executed  microsites and interactive ROI calculators.

But their story goes much deeper than that.  The firm has pulled together all the right elements to deliver extraordinary value to their B2B clients.  FutureSight's services span the gamut from insight-driven marketing strategies to superlative design work and rock-solid delivery capabilities. After reviewing a cross-section of their client list, it's clear that FutureSight already is a world-class firm.  It's only a matter of time before it becomes the dominate player in B2B Marketing.

From "Better Projects" :

"An important aspect to the role of the business analyst is communicating... The clichéd line about the BA being a translator between IT and The Business is a clue to the importance of communication in the requirements management process."

My reply:

"You're right on point. Communication is key. I'd also add that the role of BA is changing and growing in importance... evidence this summary I received from Forrester today:

"Everyone agrees on the importance of the business analyst role, but few know exactly what it is that business analysts do. In truth, there are two main types of business analyst: business-oriented and IT-oriented. But with the move from information technology (IT) to business technology (BT), the distinctions between these breeds of analyst are blurring. Many business analysts will continue to specialize in one or the other of these domains, but a new breed of business technology analyst will emerge to play a new role implementing changes to business policies directly within supporting software."

Forrester's world view matches my own experiences.

There is an emergent role within the enterprise; for those analyst/strategists who can not only communicate, but see the bigger picture; span the continuum between strategic and tactical; find hidden connections; bring order to chaos and help IT and Business deliver transformational value to customers and shareholders alike.

Microsoft's Rapid Economic Justification Framework is used to evaluate the business and financial impact that an IT initiative will deliver.  It goes beyond the traditional Total Cost of Ownership (TCO) analysis and recognizes that IT investments can also play a more strategic role - such as driving new revenues. 

"The Microsoft Rapid Economic Justification (REJ) Framwork defines the value of an IT initiative as a business performance improvement that is aligned with the organization's critical success factors (CFSs), and that enables the organization to make optimial use of its resources with the context of acceptable risks."

But perhaps more importantly, it seeks to establish a shared vision between business and IT; facilitate sound business planning; and, promote effective communications between stakeholders.

"REJ goes beyond building bridges between IT managers and business executives: the REJ process enables 'fusion,' a plan for IT managers to keep business critical success factors and key performance indicators (KPIs) in mind by using the common language of economics to demonstrate how IT investments can benefit a business." 

More later in Part II. 

Post and comments from Burton Group EAP Blog: 

 
Right on point.  I'd add there is an opportunity to explore an emerging roll (or department) that serves to unify IT and Business... and is focused on driving innovation in the context of strategic business drivers. 

I'm reminded of some of the core concepts of the Catalyst.

Mike Rollings at The Burton Group posted this today which underscores why clients place a premium on Business Technology Providers who are fluent in technology, operations and finance and can span that continuum.

"In the April 3rd APS blog post “Spanning the layers”, Chris Haddad (Vice President and Service Director for Application Platform Strategies) asks “does thinking about business and IT alignment trigger brain buffer overflow”?  He states that during the Burton Group Institute Service Oriented Architecture Workshop sessions last week, the audience was quiet when the discussion focused on how to measure business value, but discussions about technology topics were more animated.  This seems to be a recurring theme associated with enterprise architecture and the justification of IT investments.

IT professionals continue to focus on the design and engineering aspects of technology adoption and seem to forget that technology is only relevant in relation to the business value it provides."

In a recent post by Lighthouse:
"[Burton Group] needs to develop a less technology-driven, more business-based, approach towards IT infrastructure as part of the broad management of technology risks, costs, services and processes."

The Burton Group responded:
"We [Burton Group] couldn't agree more. All of us who come from industry backgrounds have lived this requirement. As an analyst firm, we do you a disservice if we omit the analysis of business context. Fortunately, Burton Group has always presented business context as part of its analysis. What's different now is that we have introduced new channels and content types that focus primarily on business drivers.

Within the Executive Advisory Program, our modus operandi is to identify business implications that arise from our technical research and pull those out for closer inspection. In many cases, we roll up those implications to the CxO level where business decisions require concise explanations and infrastructure value discussions. Furthermore, infrastructure choices like Service Oriented Architecture (SOA), Software as a Service (SaaS), and Unified Communications (UC) must be assessed for their business impact and driven by actual need, lest they remain obscure technical discussions that never get off the ground. Or more ominously, they are chosen as solutions without careful analysis of future business and architectural risk."

Received my weekly email blast from Forrester this evening.  In it was an invitation to their 2008 Marketing Forum.  Here's how they setup the event:

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"Today, marketers face a tough reality: The classic "marketing funnel" is broken. Only 13% of consumers say they buy products because of ads. And more than half of B2B marketers say they struggle to reach decision-makers at customer organizations. As the power of traditional marketing fades, companies must develop a new approach: engagement. Fortunately, marketers have an expanded tool set for engaging customers — from digital innovations that encourage user interaction to social media that turns customers into influencers."

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In a post earlier today, I wrote about Digital Distribution and Engagement:  "...the advent of publish/subscribe tools (RSS) and social media give rise to a 'participation economy,' which influences messages, media and tools used throughout the CEJ.  In this participation economy, Business Technology Providers have the opportunity to leverage their own thought leadership to create communities, engage customers - and with the help of their customers - define/refine/quantify the value of their solutions."

Certainly not an earth shattering coincidence, but weird timing nonetheless. 

A quick recap: we're examining how Business Technology Providers use quantifiable business value to attract, convert, service and extend profitable customer relationships... and, how if leveraged properly, Value Justification can improve Return on Marketing Investments (ROMI), enhance competitive differentiation, shorten sales cycles, capture greater market share and accelerate revenue growth by properly.

ACS+E in the B2B environment is arguably more complex (but perhaps less ambiguous), yet key principles still apply:

User-Centered Design (UCD).  If the purpose of UCD is to ensure relevancy, establish priority and deliver a consistent experience across media and customer touchpoints, the Value is the lingua franca of such efforts.  Sound design principles, appealing creative and compelling messaging aren't secondary, they're simply expressed in the language that resonates with business executives.  But perhaps more importantly, UCD (grounded in business value) intersects with persona development so messaging (and value propositions) remain relevant for each participant in the CEJ.

Digital Distribution and Engagement.  Of course it goes without saying that marketing collateral and sales arsenals need to support the CEJ and be deployed in a manner readily accessible to participants at the appropriate touchpoints AND add value to each of those customer interactions.  But the advent of publish/subscribe tools (RSS) and social media give rise to a "participation economy," that influences messages, media and tools used throughout the CEJ.  In this participation economy, Business Technology Providers have the opportunity to leverage their own thought leadership to create communities, engage customers - and with the help of their customers - define/refine/quantify the value of their solutions.

Value Justification Methodologies.  There are plenty of off-the-shelf tools and methodologies to choose from, including: Future Insight's Business Value Calculator, Microsoft's Rapid Economic Justification, Forrester's Total Economic Impact, Gartner's Total Value Opportunity, or more generically, an approach such as Balance Scorecard that encompass not only financial analysis, but also account for other perspectives such as customer, internal process and learning and growth.  When, where and how to make these assets available are important considerations and should be selected based upon the unique requirements of the CEJ.

More later... 

Avenue A | Razorfish created the Customer Experience Journey (CEJ) framework to coordinate media, channels and touchpoints in order to move the consumer through the Attract, Convert, Service and Extend (ACS+E) continuum.

The CEJ is certainly applicable to B2B marketing and sales, but unlike the consumer-drive CEJ, Value Justification plays a much more front-and-center role in the B2B model.

Value Justification directly influences market positioning, value propositions, competitive differentiation, thought leadership activities, demand generation strategies, pre-sales engagements, etc. for Business Technology Providers.

Business Technology Providers can improve Return on Marketing Investments (ROMI), enhance competitive differentiation, shorten sales cycles, capture greater market share and accelerate revenue growth by properly applying Value Justification throughout the ACS+E continuum.

ACS+E in the B2B environment is arguably more complex (but perhaps less ambiguous), yet key principles still apply:

Multi-Channel Coordination.  In a landmark paper published in 2003, "The Customer has Escaped" by Paul F. Nunes and Frank V. Cespedes, Harvard Business School, the authors recognized that traditional go-to-market strategies were no longer effective because they assumed customers were staying in the channels that were designed for them.  And while the paper was focused on consumer shopping behavior, Business Technology Providers are facing similar challenges in the B2B marketing and sales environment.  The need for a coherent, coordinated Multi-Channel strategy - where Value Justification is central - becomes even more imperative.

Persona Development.  Unlike the consumer-driven CEJ model, the number of participants in a B2B decision making process is much greater (users, researchers, analysts, coaches, influencers, sponsors, decision makers, etc.), but persona development for each role adds value in terms of predictability and repeatability.  Understanding how each persona views, interacts with and is affected by Value Justification is crucial.

More later...

The folks at FutureSight Consulting frame the issue well:
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"The greatest difference in B2B, and the one that frames all others, is that ever rational marketing, selling and buying decision can be traced to quantifiable economic factors. Dig down far enough into business motivation, and you reach...Money. Even non-rational motivations - ego, fear of failure, the need for approval, ambition, being seen as a winner - are inextricably linked to the financial performance... Business value is a turn-on for a fact-based business target market. That means business value supported by verifiable financial proof in the form of Return on Investment."

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It's a fact that matches my own personal experiences - and it's why I'm so passionate about the subject.

As a quick aside... I co-led a pursuit team selling an enterprise engagement totalling more than $10MM in software and services.  The original budget (as estimated by the client) was set at $3MM and had difficulty gaining traction with internal executive sponsors.  After properly framing the challenges within the context of the client's strategic business drivers, articulating a compelling business case (including Value Justification) the budget was tripled and the project approved.

Earlier this week, I posted articles about the need of Business Technology Providers to continue to evolve... to go beyond presenting solutions with ambiguous value propositions.  To efficiently and effectively couple those solutions with strategic business drivers backed by quantifiable (business) value... the impact of which would be reflected in the positive movement of a company's Key Performance Indicators.

I stumbled upon a related article "Is IT becoming extinct? No, it's just evolving" by Charlie Bess at EDS:
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"I read Michael Krigsman's blog entry titled Is IT becoming extinct?, and had to wonder what his definition of IT really was?? If he views IT as a technology focused organization that is separate from the core business, I'd probably agree" ... "those IT organization not focused on delivering ever increasing business value ("caretakers") and actively making decisions about their future will be extinct..."

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I'm not about to tackle the IT-Business alignment issue, but Charlie (and Michael's) comments illlustrate the importance of  focusing on value.  The fact is, just as IT is evolving, so to is the selling environment for Business Technology Providers.  And just as it took time to evolve from selling technology feature to delivering solutions that solve a problem, it will take time for providers to adopt and assimilate Value Quantification best practices.

I'm running a quick analysis for a Company on their public facing collateral and go-to-market messaging.  What struck me this morning was that they're doing a great job presenting their technical credentials, but they're almost completely silent on what quantifiable value they produce for their clients. 

The default mindset of the typical Business Technology buyer is initially focused on Cost, Effort and Risk.  Having great technical credentials address the Risk component, but does nothing to address Cost and Effort.

But what's more important, Cost and Effort are impossible to properly evaluate unless Business Technology Providers quantify the value of their solution in the context of their customer's strategic business drivers.  It's responsibility of both the Company and Business Development professional to perform sound Value Quantification and articulate how its solutions will improve their customer's key performance indicators.  To that end:

The Company must... 

• Arm their salesforce with a comprehensive arsenal that demonstrates a track record of driving measurable Value through the implementation of their solutions; and
• Provide a straight forward methodology for Value Quantification during pre-sales pursuits.
  

The Business Development professional must...

• Be fluent in the language of business and finance to connect the dots between their customer's strategic business drivers and the Company's offerings.

 Executive Conversations offers several programs to address this and frames the issue this way:
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"...to elevate the conversation to the executive suite - where the strategies that drive purchase decisions originate - your sales team and other key players in your organization must be fluent in the language of business."

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In order to remain relevant, shorten sales cycles, grow revenue and capture market share, Business Technology Providers must put greater emphasis on Value Quantification.  This requires a level of business and financial fluency that still the exception and not the rule.

This article is not about criticizing anyone, pointing fingers or playing armchair quarterback.  It's about the absolute requirement to rationalize ambitious goals with sound execution... and subtle a reminder just how important practicing sound fundamentals are to success of any venture.

Late in November 2005, I invested a modest sum of money in a technology start-up... a trivial amount compared to the millions of dollars put up by local angel and venture capital firms.

I was introduced to the company by a long-time friend whom I'd worked with on more that one occasion. The management team had delivered solid results in the past and the Board of Directors had their own impressive list of credentials.  More than two years have past and the company's performance has been uneven at best and the company is struggling to produce enough revenues to keep the doors open.

Despite valiant efforts by all, it's not hard to identify why the company is struggling... it's still having difficulty connecting its value proposition to its target customers' most strategic initiaitives.  In other words, they are not lashing up their solution to a specific mandate from a senior executive and demonstrating how it improves that customer's Key Performance Indicators in a meaningful way.  Instead, you see the typical undifferentiated, quasi-value prop that is so quickly dismissed by Fortune CxOs ("we solve information overload" for example).

I received my weekly email Forrester that made the case for me - albeit tangentially.  In it was a summary of an article by Ray Wang that articulated the need to align IT projects with current business drivers:

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"Successful packaged apps strategies require business process and applications professionals to align with corporate business drivers. But because business drivers for individual IT projects often shift with time, the portfolio of apps initiatives requires organization and alignment by economic state and project risk. Once alignment is achieved, business process and applications professionals should identify the high-priority initiatives that best align with current business drivers and create a business technology (BT) value plan that connects the dots between corporate strategy and application tactics.

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Connecting the dots as Ray describes is a fundamental practice not only for business process and application professionals, but for business technology providers as well - startup or otherwise.  It is this alignment that quantifies business value, gauges relevancy and prioritizes limited enterprise resources.  It should be crafted in the language that is most relevant to the business sponsor - not IT.

The (in)ability to connect the dots is an all too familiar ailment that many business technology providers suffer from.  As an industry, we have evolved from selling technology features - to solutions that solve a problem - but many are still struggling to quantify business value that is contextualized to their target customers strategic initiatives.