The UK’s top IT analyst, Richard Holway of TechMarketView, also has a marketing background… we interviewed him to get his thoughts on the future for the software and IT services market, and what that means for IT marketers.

First a potted history…

Richard was one of the 95% of the British population who didn’t go to university in 1966 and was instead recruited by the NHS, who trained him to be a computer programmer. In 1968 he became employee number 40 at Hoskyns (now Capgemini) and worked his way up to the board, where in the late 70s/early 80s he was group marketing director, having run many of Hoskyns’ larger profit centres and divisions along the way. He sees this as having been an extremely good grounding – meaning that by age 37 he was on the board of what was at the time the UK’s largest software & services supplier.

In 1986 Richard formed his own tech analysis company, collecting and analysing data, and providing reports, on what was happening in IT software and services in the UK. In 1995 he launched the first UK technology blog – HotNews.  In 2000 Richard accepted an offer for his business from Ovum, which itself then accepted a bid from Datamonitor. Since then he has set up TechMarketView with colleague Anthony Miller – a firm which offers opinion-oriented research on the UK software and IT services scene. Its superb daily insights are already read by more than 6,000 subscribers.

Richard believes that despite having started working life as a programmer, his particular bias has always been towards sales and marketing. He is that rare animal who loves technology, but is not myopic about technology for technology’s sake. His focus is always on what technology can do and the advantages it brings.

Richard, what are your views on the major trends for the coming years that marketers and sales people should be looking out for, particularly in the enterprise space?

The fundamentals as I see them are as follows:
1. From a business point of view, the biggest factor has to be the general economic situation. This is the worst downturn I’ve ever witnessed. I’ve seen three, and this is the worst of them. My first message is that if you are involved in going out there and helping your clients to save money and be more efficient or gain competitive edge, there is no reason that you can’t not only survive this recession, but do very well. There are many companies I see that, because of their emphasis on these areas, are doing good business.

You only have to look at the Operational Efficiency programme that came out from the government last night to see the huge savings being demanded in IT by the public sector. And 33% of IT spend is in government (it’s the largest single market place, bigger than financial services, which is clearly now declining). The whole emphasis from customers is “how can I shave money off the cost of my back office/front office team etc.?”. If you are able to support those goals, now is a good time. As I’ve written in TechMarketView a number of times, Capita is a classic example of this. Their chief executive has told me that for his customers, it’s all about cost saving. He said the new project work has just disappeared. No one wants a massive new build or installation, it’s all “how can you save us 10/20%?”. So the first point I want to make is that the downturn is the biggest pressure and a huge opportunity.

2. My second point is related. Product suppliers, and those focused on selling new products into new customers, are simply going through the worst time ever. You’ve only got to look at the results of suppliers like SAP and others to realise that people are not putting in new systems at the moment. That market is, to all intents and purposes, dead at present. That’s the reason why at TechMarketView, we’ve reused the old wartime slogan, “make do and mend”. Again the businesses that are flourishing are those who are helping clients to keep their old systems on the road for another couple of years. Suppliers should be looking to extend maintenance or licence contracts, or add additional functionality to existing products right now. People who have those sorts of businesses are doing well. Take Microfocus as an example. It’s been the best performing share in the whole of our sector; you could have doubled your money in the last year by investing in them. What do they do? They provide tools to help people maintain their COBOL systems. That was the first programming language I learned in 1966!

3. Every previous downturn in the IT sector has accelerated the pace of change. It’s accelerated the take-up of new ways of doing things and therefore new technologies. Large market leaders have to lay off people, cost-cut and naval-gaze – the last thing on their minds is doing something new. What happens is the younger, newer companies come in and take advantage of that. Before the last downturn in 1999/2000 for example, Google or Salesforce.com were simply not known. But when the downturn came,  their new models cleaned up against the likes of Microsoft and Siebel. I believe the same thing is happening at the moment and will happen in three major areas:

How might the way the consumer is driving this change impact IT companies’ sales and marketing strategies?

In my life I’ve been used to the IT department as being the forerunners of technological advancement. Now I see them as being almost the people that are slowing down the implementation of new techniques within their organisations. I think that users (and we are all users) are saying “why should we use a worse interface at work than what we use at home?”. IT departments are facing simply overwhelming demand for IT – first it was laptops, then Blackberries – all being demanded by the workforce. I think this will be the case for Cloud as well. Users want to be able to sit on a train, or on their iPhone, or in an internet cafe, and do their office work.

This necessitates a radical change in the way IT marketers need to look at the market. I believe most of The Marketing Practice’s clients do understand this, but getting there in their own businesses is extremely difficult. First, there’s an economic downturn taking hold – so it’s not a time to make bold and massive investments. But at the same time, Cloud and mobile means a lot of businesses need to change from an upfront licence fee to one where you pay per user, per month – and that’s such a massive change. Whole business structures need to change. It’s worth noting that Salesforce.com is 10 years old – the most successful SaaS company that has ever been, and they only just broke into profit in the last year. Traditionally, software companies have been 20, 30, even 40% profitable. The average for an IT services company is 6%. The maximum I’ve ever seen is 12%. The hit in all this comes from the last “S” in SaaS – these software companies are becoming more like services companies as they move forward. That’s a pretty difficult thing to come to terms with.

If you were back in your old job now, as Marketing Director at a company like Hoskyns/Capgemini, what would you be doing?

Well, for a start, a company such as Hoskyns/Capgemini would be well positioned in the current market because Capgemini is involved in outsourcing and saving people money. What everyone is suffering with now is in new business, new projects. What I would be doing is:

• 1. Hopefully I would have said this for years, rather than taking sudden action to do it – but I would be looking after my customers and understanding their current and future needs. I would do absolutely everything to keep customers happy. It’s so much easier to keep a customer than to get a new one. It sounds so obvious that it seems it’s not worth making the point. But I am constantly surprised by the companies who don’t have that mantra.
• 2. I would be ultra-efficient. I would look at costs and take out the inefficient programmes. You have to be cruel to be kind.
• 3. This stems from point 1. If you know what is happening to your market and what your customers want, then you just have to provide it for them. NetBooks, smartphones and the Cloud are perfect examples. Moving to these technologies is expensive and damned difficult for companies to make with established markets in laptops (e.g. Dell, HP), vanilla mobiles (e.g. SonyEricsson, Motorola) and software products (e.g. Microsoft & SAP). If you don’t make the move into the new areas then customers will go and buy Acer NetBooks, iPhones and Google. Be highly aware that if you don’t provide what your customers want, then someone else will.

This month, a marketing professor weighed in on an online debate I was following, over how aligned sales and marketing should be. He claimed that marketing should actually own sales, based on the fact that sales is simply the personal arm of the “promotion” P of the marketing mix.

To me, this debate goes right to the heart of the fact that there’s a fundamental misconception about whether lead nurturing in the high-value sales environment is something that marketing can do without sales involvement.

So many people talk about needing to align sales and marketing. Market what you’re selling. Sell what you’re marketing. Work together to define ‘leads’. Develop a proposition with sales…

Which is why it’s strange that marketing is so frightened ofhanding an ‘unready’ lead to sales. You can understand where the fear comes from: years of sales complaining (and then ignoring) as unqualified leads are tossed over the fence. So it may be a natural response that marketing shouldn’t be allowed to mention a lead to sales until the prospect has identified a budget and timescale for the decision.

What the smart companies are doing (at least, when it comes to complex high-value sales) is to realise that the answer isn’t either of these. Yes, lead nurturing is the future. But lead nurturing isn’t just about emails, webinars, phone calls, whitepapers, events. Sometimes, a meeting with a salesperson is actually the best nurturing tactic. We need to be careful to use the tactic sparingly, but once you say it, it sounds obvious: sometimes the best way to make a prospect ‘sales-ready’ is to actually have a salesperson meet them. Marketing can still own the relationship with the prospect if there’s no immediate action out of the meeting, but 9 times out of 10 an initial meeting will drive the relationship forward and the prospect further down the sales funnel.

When we use this idea of an initial meeting as a call to action in a campaign (usually as a follow-up to other campaigns we’ve contacted a prospect with), it tends to be one of the most successful things we can do. The trick is to be very careful to show the value of the meeting, explain why it won’t be a ‘sales meeting’, and even to visualise the agenda we’ll be discussing in the session. When you put this alongside a personal approach to the right prospect and a carefully thought-through ‘provocation proposition’, that’s when the magic happens…

John Quelch’s article for Harvard Business Review this month (How to Market in a Downturn) features his research into patterns of consumer and corporate behaviour in a recession; focusing strategies that either propel or undermine performance.

Quelch argues that in a recession, traditional segmentation approaches can be dangerous, and that you should segement psychologically based on consumers’ likely emotional reactions to your offer(s) in the current climate. He goes on to outline how you should consciously emphasise different aspects of your proposition depending on those reactions.

He frequently emphasises that marketers should frequently examine their core customers’ changing needs in a recession, calling on marketers to “put customer needs under a microscope”. He also stresses that your core, loyal customers are “the primary, enduring source of cashflow and organic growth” saying that marketing to these isn’t optional – it’s a “good cost”. Many B2B marketers feel the same way, and this is certainly a major factor in the increase in account-based and industry-focused marketing programmes that we are currently undertaking on behalf of our clients. 

I believe there are some very strong parallels bewteen Quelch’s 4 psychological segments for consumers and similar segments in B2B based on company, heritage and industry, (taking into account the psychology of the decision-making unit too.) He outlines 4 consumer segments which I think it’s useful for B2B marketers to consider in their own strategic planning, so have repurposed for B2B below:

-Slam-on-the-brakes: your most vulnerable and hardest-financially-hit customers

-Pained-but-Patient: customers who are resilient in the long term but are pessimistic about short-term prospects for recovery and are therefore “making do and mending” and keeping their purse strings tight (the largest group)

-Comfortably-well-off: secure about their ability to ride out the recession, now and in the future, perhaps counter-cyclical industries

-Live-for-today: carry on as usual, probably more inexperienced or younger companies with fewer responsibilities, or those challengers in conter-cyclical industries vying for market share.

Once your customers have been segmented, you can take a look at your offers. Quelch suggests (despite which segment customers fall into) all of them mentally sort products into 4 main categories: essentials, treats, postponables and expendables. Again, it’s my belief that B2B marketers could get a great deal of strategic value from examining their own products in this way, and then adjusting the propositions to target each segment in the most appropriate way. i.e. a company exhibiting “slam on the brakes” behaviour will not respond well to an “expendable” offer. However, a “pained-but-patient” company may well buy certain products or services as a more affordable alternative to replacing something more expensive.

A final few points to emphasise – Quelch maintains throughout the piece that it’s a focus on existing customers that will see companies through the downturn. He stresses frequently that you need to research them, speak to them, understand their future needs, and how the downturn will ultimately change their behaviour, in order to maintain good cashflow, market share and ultimately organic growth. Before reaching for the marketing cost sledgehammer, instead consider a scalpel. In this environment, marketers must spend to reach their client base, bolster trust, reinforce core values and influence choices. Get it right, and you’ll protect the business through the downturn, and have great market intelligence and client relationships to be ahead of the crowd in the recovery.

I’m delighted to be able to give readers of this blog first sight of the topic and speakers for our next Sales & Marketing Forum event.

Peep Show: Your Marketing from the Buyer’s Point of View will feature real, live IT buyers speaking about what it’s like being targeted by technology and services companies.

Our panel for this S&M Forum includes Claire Myerson, Information Technology Solutions Director from Wyeth Pharmaceuticals and Keith Mitchell, former Global Head of Shared Infrastructure, Reuters. Both will be discussing the following…

If you would like to receive a formal invitation to the event, please go to the S&M Forum website and register your interest. The event is free but only open to qualifying individuals: senior marketers and salespeople in major IT, Consulting and Outsourcing organisations.

In one of this week’s TechMarketView updates, IT analyst Richard Holway predicted that we have hit the low-point in a ‘U’-shaped economy – but that we’re in for a long bottom and that when we return to growth (sometime in 2010), the market will be very different.  According to Holway, “Just surviving through to the 2010 up-tick is not enough.”  Holway has stressed the importance of preparing for the upswing and not crippling the business by adopting cost-cutting strategies that might weaken the IT department.

A recent research note from the Hackett Group underscores the importance of making long-term strategic investments during the downturn, while balancing them with short-term cost-efficiencies:

Given that most companies have sharply cut costs, there is an immediate need to realign the IT investment portfolio, understand how to define IT investment categories… and set goals for allocation by investment category.  Achieving these goals will require the development of an IT portfolio management capability comprising the processes, skill and supporting tools.

Hackett recommends allocating 60% of IT budgets to innovation and improvement, but Michael Krigsman of IT Project Failures, thinks organisations should not adopt a “cookie cutter” approach – instead, portfolios should be optimised on a company-by-company basis as a function of business strategy, technical requirements, investment capability and the features of the competitive landscape.

So, what can IT suppliers be doing now?  As the downturn has become a recession over the past 18 months, CIO.com has posted more and more articles to help CIOs demonstrate their value to the business, culminating in their article last August, ‘7 Tips to Make Your Business More Competitive’, which highlights streamlining costs without sacrificing long-term capability.

As CIOs begin to plan for the impending upturn, you can position yourself as an advisor and guide through the economic bottom and eventual upturn.  In my post, “CIO SOS: Help me influence the business“, I point out the benefits of working with a CIO, rather than just selling to them – for every IT supplier bypassing IT and trying to build a case with the business, there’s an IT department that wants to do exactly the same thing.

Another thing to try is provocation selling – identify a high-impact issue, develop an original point of view, lodge your provocation, prove your point.  CIOs are focusing on defending their value to the business, so take the time to understand what’s getting under your prospect’s skin.  (You can read what one CIO looks for in marketing direct at him in my interview with Tom Ilube.)

I wanted to share some interesting stats from a set of campaigns we are running for an IT company. This is a very focused industry campaign, and as such was targeted at the same data set over a period of months. The campaign had a very clear journey along which it drove the recipient, (a mixture of offering value and sales messages) and whilst each had different creative treatments, the messages built into a cohesive picture and were followed up by our in-house inside sales team.

Of 100% of leads we handed over to our client:

• 40% required two campaigns to develop into a lead
• 35% required three campaigns to develop into a lead
• 22% required four campaigns to develop into a lead

This just goes to show that a longer-term, nurturing approach bears a good deal of lead generation fruit. This is especially true when you are taking complex propositions into complex organisations. It can take time to introduce yourself, educate people, and get them to take the next step.

By running one campaign and moving on you’re certainly missing out on further opportunities. Instead, focus on working the data, and building a longer-term set of campaigns that have the ability to learn from telemarketing input about what resonates and develop the recipients’ perception as they are delivered. This method of campaigning also has the added benefit of allowing you to add contacts you are passed onto during the first phase of calling into the wider campaign approach.

In a few weeks’ time, I’ll be interviewing one of the UK’s leading ICT analysts, Richard Holway. Known by the FT as the “wise grey owl” of tech, and previously Group Marketing Director of Hoskyns (now Capgemini), I’ll be asking Richard about his views on the future of the enterprise tech industry, and what that means for how marketers should be adapting their strategies and plans.

It promises to be a fascinating set of insights. If you have a question you’d like me to put to Richard, please write it in the comments field of this post.

As I’ve argued in previous posts, when one of the first places people look for information these days is the web you simply can’t ignore it. There are innumerable articles on SEO, but for me it all boils down to this – if someone is out there, Googling for a product or service, or even just some advice, in an area you can help in, they should be able to find you and want to click to read more.

Advice from author and consultant Verne Harnish got me thinking about this again. He was recently quoted as saying ”control the ink in your industry… own a word or two in your industry and then get about controlling the ink around that word – books, articles, blogs, wikis, etc. And how do you know if you’re making progress? Google your word(s) and see where you rank.”

In his email update this week, Verne shares an email from Adam Robinson, President of Illuma LLC, ”I wanted to share with you a major impact you’ve made to my business. I listened as you told us, ‘if you’re not blogging about your business or your industry, you’re losing out on an amazing opportunity. Try it for 6 months, and see what happens.’ So, I did. My company is in the business of helping companies find and select talent and since August of 2008 I’ve been blogging at http://BetterHiringToday.com. What started off as a ‘let’s see if I can do this’ side project has turned into a catalyst for a whole new way of looking at the world.
A few key results:
• the VP of Sales at a Fortune 50 company read my 4-part series on “How to Hire Salespeople” and sent me an email hiring us on the spot.
• Publishers have republished my articles, and paid me to license content that I was happy to post for free. Unbelievable!
• Web traffic to my business website is up over 300%, with inbound web leads up over 600%. Several of my posts are on Page 1 on Google for organic results (i.e. “recruiting templates”, “30 60 90 Day Plans”)
• Since I’m always looking for new things to write about, I’m out talking with more customers, and in more meaningful ways, about things that they care about. I then write about what we discussed, and send them a note telling them so. Loyalty has skyrocketed.”

Need I say more? Clearly for large firms with strong SEO programmes some of these issues are in hand, but how often do they get applied to campaign-based content? (often the very content your customers are mst interested in reading). I’m not advoating everyone should emulate Mr Robinson and start a blog, but if you can support your campaigns with compelling online content that brings the interested market to your door, then it simply has to be an essential part of today’s campaigning approach.

April 2nd’s New York Times reported the then-growing rumour that IBM was to buy Sun Microsystems for $7bn. The deal could easily increase IBM’s hold on some key hardware and software markets, especially as regards datacentres. However, reports out late yesterday suggested that the deal had collapsed after Sun’s board ”balked” at reduced offer and IBM withdrew it.

We’ve been tracking for a few weeks now the growing opportunity for propositions related to e-commerce.

The last time there was such a flurry of interest in online retailing was probably nearly ten years ago. The pace of change in e-commerce adoption seems to have been accelerated by the recession, with new research showing that 65% of UK spenders are planning on increasing the amount they spend online in order to save money.

Here are a few choice articles… highlighting e-commerce growth at many large and high profile retailers:

CIO Magazine says French Connection is losing money but the e-commerce side of the busines is growing

M&S’s results highlight an online rise in sales in their recent, better than expected, results

John Lewis to launch designer fashion web store in response to sales increase of more than 24% at John Lewis Direct

Dominos Pizza sees 74% increase in web revenue in 2008

Tesco looks to web to revive sales

…and it isn’t only e-commerce: the trouble for retailers is creating outsourcing opportunities too.

Iceland signs outsourcing services deal