Death of the Traveling Salesman Problem
Cloud computing, try and buy, and why more IT staff are playing golf
By: Zvi Guterman
Jul. 6, 2010 10:45 AM
A seeming paradox exists today in most software vendors. It goes something like this:
Our product is hard to explain, demonstrate, and sell. So we need to hire more salespeople to help sell it. But salespeople are expensive, so we don't want them to spend too much time with each customer. But customers want to try the product before buying - and our product is hard to explain, demonstrate, and sell...
The paradox: how to simultaneously have and avoid having salespeople interacting with customers.
This paradox is made even worse by the economic downturn. Enterprises and mid-market organizations alike have slashed their IT budgets, are taking longer to make purchasing decisions, and are much more "hands-on" in evaluating offerings - while vendors, under pressure, have slashed sales budgets, reduced headcount, and restricted travel.
The questions: how to resolve the paradox, is Cloud Computing the universal remedy, and what's behind the comment about IT staff playing more golf?
The Traveling Salesman Problem
Ironically, the actual challenges of physical presence have only increased with time. One can only imagine the horror a traveler from the 1800s would feel when confronted with the realities of today's travel costs, scheduling, and cost options (in hotels, rental cars, cell phone and data plans) - to say nothing of Homeland Security checkpoints.
Yet these are the challenges faced by sales engineers on a daily basis - as well as the challenges of scheduling, handling customers serially (hard to handle another when onsite doing a demo with one), gaining access to equipment and data centers and networks, and generally wrangling logistics instead of doing actual onsite proofs of concept or real IT.
All under the pressure of knowing that every delay cools the prospective customer's ardor; that 40% of deals simply vanish from the sales funnel because it took too long to get the customer's hands on the product.
The worst part - after all the wrangling to get a product ready for hands-on, on site... the customer actually does this by walking back to their desk and logging in. The Proof of Concept might as well be set up a thousand miles away for all they can tell.
Why Get Hands-On?
Unfortunately, customers have been poorly treated in the past, and IT consumers have long memories (especially when the issue is career related). Dilbert's characterization of salespeople's stereotypical willingness to "Golf and Sell" the CIO into technology that IT would then face layoffs for failing to make work resonates with many current consumers.
The result: while customers are often happy not to see salespeople per se, customers do have a burning need to "Try & Buy", not "Golf & Sell" - which means the SE starts calculating their optimal travel path.
Cloud Is Not a Remedy... But It Can Be (Has Been) Useful
But in its more passive form, Cloud has never pretended to be a cure-all - and yet has actually made great strides in curing IT of the Traveling Salesman problem.
Consider for example WebEx and other web conferencing SaaS companies. Ever since the introduction of the telegraph (to say nothing of phone and fax), remote communications have led to the "virtual handshake"; salespeople who don't travel, but instead handle a far greater number of customer relationships (and sales) from the comfort of their own office.
What happens when this concept of remote communications is extended to the actual hands-on trial experience?
Using a combination of collaboration tools such as WebEx, "lab management" and virtual server technology from VMware and on-demand computing services from Amazon Web Services, tech vendors have already started to reduce travel, engage customers interactively and equip sales engineers (SEs) with access to the vendors' entire suite of applications without requiring SEs to lug servers around.
The immediate result is a new class of SaaS vendors is emerging, focused on ITaS (IT as a Service). Such vendors are architected to provide actual, hands-on IT to multiple end users, in minutes, without on-site presence - and to manage and track all the deployments from a central location.
Beyond WebEx: Five Tips for Virtual Sales (Engineering) Engagement
With that in mind, there are five tips to validate maximizing the use of an ITaS solution.
1. Get ahead of your competitors: push customers to Try & Buy, don't Golf & Sell.
Be bold and aggressive. Vendors who have great products want prospects to get their hands on them as quickly as possible and let the products "sell themselves."
ITaS means the economics of evaluations change significantly. Instead of days, they take minutes to set up. Instead of SE travel that wastes countless working hours, SEs and customer staff can collaborate online. Instead of dedicated hardware, everything is done on-demand in the cloud. Much of the overhead cost and unnecessary hassle are simply cut out of this process.
Vendors who introduce virtual evaluations early in the sales process have a lot to gain and nothing to lose. Prospects are engaged sooner and have the opportunity to see the value of the product. In a competitive situation, this can give the vendor a real edge over other solutions, whose vendors are still in the PowerPoint stage of the sales process. It's a no-nonsense approach that inspires confidence and accelerates the buying decision.
2. Avoid that (big) blind spot: stay in touch, but without annoying customers
The blind spot phenomenon is especially common in POCs and evaluations, when the prospect may take a few weeks to examine the product. Sales reps and SEs are often reluctant to inquire too frequently so as not to nag the prospect or appear to be insecure, but when they do get a response, it is not necessarily an informative one.
By conducting evaluations that are provided as a Cloud service, the vendor gets complete visibility into the prospect's evaluation process - from knowing whether anyone is actually using the product, to the number of users involved, what they are doing with the application, how many hours they are investing in it and so forth. This provides highly valuable insights that can be used by the sales team to spot and preempt potential issues, to assist the prospect in making the most out of the evaluation and to improve sale forecasting.
3. Control the outcome: allow customers free rein in a walled garden
Rather than "ship and pray," using ITaS vendors can now run a fully collaborative process that provides more visibility, insight and predictability - but do so in a "walled garden" that provides the vendor a degree of control not felt by the customer.
Online virtual proofs-of-concepts and technical evaluations establish a high degree of collaboration between the vendor and buyer from the start, allowing the vendor to act on needs that arise during this process and steer it toward a successful outcome. They also allow the potential buyer to assess and appreciate the vendor's responsiveness to his needs, also an important factor in the buying decision.
4. Do more than PowerPoint and screen-sharing: engage in a shared IT environment
This is especially the case in opportunities that have an historically lower priority, whereby the tradeoff is not one between an on-site evaluation and a virtual one, but between having a virtual evaluation and having no evaluation at all due to lack of resources (SEs, equipment, and travel budget).
While you would always be able to allocate resources for that $5M deal, it's the multitude of $100K deals that are left to your competitors - and there are more of those around, especially in a downturn.
5. Empower your channel partners - while retaining full visibility
In addition, resellers and integrators need to prioritize their investment in their portfolio of products and services, so vendors must make it easier for their channel partners to sell their solution, as opposed to others in the channel partner's portfolio.
Just as vendors can make their direct sales process more efficient and predictable, they can empower their channel partners to do so, increasing the flow of business from the channel and improving the relationship with partners. Vendors also place themselves in a better position to assess the effectiveness of each partner, spot technical issues and knowledge gaps, and deploy their channel support resources more effectively.
In short, the secret to success with ITaS is to reverse the conventional thinking in sales about Try & Buy - not to avoid it, but rather to embrace it wholeheartedly via ITaS.
Conclusion: Why More IT Staff Are Playing Golf
This approach has the side-benefit of solving the Traveling Salesman problem, lowering sales costs while simultaneously increasing sales productivity and customer satisfaction.
Using an ITaS solution enables sales to spend much more time selling: pushing prospective customers to try these online replicated demos, checking on their progress, and closing. With ITaS, an online demo can be in the hands of the customer before a salesperson has finished the phone call, then the salesperson can move on to the next customer while the first is still trying the demo for a few weeks. Sadly for sales, this means a lot less time on the golf course.
IT, on the other hand, has been given more time by the introduction of ITaS. Instead of frantically scrambling to set up repeated demos, IT teams and sales engineers need only set up master prototypes in the system for salespeople to dole out to end users. Since monitoring of these environments (and customer successes) can be done anywhere, from any browser, up to and including an iPhone on the 18th hole, the introduction of cloud-based ITaS seems a leading indicator for lower IT handicaps.
ITaS bodes well for the IT business. Companies such as VMware, SAP, Cisco and others employing such solutions have seen sales productivity rise, more customers and more revenue per sales rep, less work for IT people, and more customer satisfaction.
Seems like a win-win, and something assessable on any ITaS vendor's site in under five minutes. Give it a try - and say goodbye to the Traveling Salesman.
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