Describing the recent recession as a complete economic “reset” Ballmer covered two areas in his lecture that are of interest to IT marketers.

The drive for a “new efficiency”: automation and information are critical

Ballmer commented that the number one objection he gets from CEOs about the IT industry is ‘I spend a lot on IT but I still can’t seem to lay my hands on the information I want, when I want it.”

Making a strong plea for further information and automation to drive out of recession, Ballmer said that the trick now is to identify things that will generate real productivity and innovation growth. H said that companies would need now, more than ever, to do more with less.

Arguing that whilst many businesses claim to be automated, incredibly few actually achieve it in any way that sets them apart meaningfully, Ballmer stressed IT’s role in turning paper processes into digital ones.

He commented that there was an accepted wisdom that new technologies had 40 year “innovation run” before they became mainstream. He used the example of the steam era. He said that he felt the computer world had seen a 60 year run to date, but that he could see more opportunity for innovation in the next 5-10 years than ever before. Ballmer put this down to IT’s ultimate flexibility – from PCs that will physically become ‘digital paper’ in the next few years through to PC applications that revolutionise paper-based processes and will allow pertinent information to flow to us when we need it.

Microsoft’s main measurables during the downturn

Most interestingly for us marketers, Ballmer told the CBI that Microsoft is focusing on market share and customer satisfaction as the two major measures of its success for the foreseeable future. Ballmer made the point that in a volatile market, revenues are no longer a “controllable” factor whereas market share and customer happiness are.

Along with the recession has come much advice for businesses to focus on keeping their existing customers. Perhaps this is a golden opportunity for marketers to demonstrate to the board exactly how much marketing programmes can protect and extend those key customer relationships.

The Forrester blog for CIOs is arguing that “old IT” (famous for one size fits all and blowing the budget according to Forrester) is dead. The new IT (from a silo mentality to a cross-functional business technology enabler) is apparently gaining ground rapidly.

But Forrester still perceives a gap between the business’ expectations of IT, and the perceptions of IT in the enterprise. It thinks this gap stems from a lack of decent IT governance (meaning CIOs are playing catch up on expectations) and that IT-to-business relationships are not as solid as they could be (highlighting that IT is not actively managing its clients). The author claims that “defining and marketing the portfolio of business technology services are critical competencies, as they set the objectives for the business-IT communications.”

This chimes with a point that Wyeth’s CIO made at our recent S&M Forum event - that she has funded post-project internal marketing activity to ensure a wider understanding of that project within the business and celebrate the success of the newly implemented technology. Certainly worth building in to every post-live ABM plan.

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.

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…

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.

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.

More than 90 percent of UK finance directors in the B2B sector support the idea that companies should ‘market’ their way out of the recession, according to new research by WPP Lightspeed reported by B2B Marketing magazine.

When surveyed, most finance bosses said they believed undertaking such action would help their company to gain market share as the economy recovered. 84% of FDs favoured the idea of further investment in marketing and customer analysis as a way of countering the downturn.

Sectors that exceeded this national average included; banking, insurance and finance at 89 percent, travel and transport at 90 percent, utilities and telecommunications at 91 percent and, crucially, IT communications and hi-tech at 93 percent. Respondents from larger businesses were significantly more supportive of investment than their smaller business counterparts.

So it appears the potential for maintaining and even increasing marketing budget remains. But marketers will need to demonstrate prudent choices, healthy pipeline and ultimately a superb return on investment.

If you don’t already subscribe to Techmarketview’s daily email service, I can’t recommend it highly enough. Daily news and great insight into the tech market with brilliant commentary. All that, and it’s free! You can sign up here, using the blue box on the homepage.

The article suggests that this year will see IT and corporate finance converge (CFOs using IT assets to leverage cash); tension around IT budgets increases (CIOs with newly limited budgets will need to be honest brokers between different departments demanding IT resource and spend); the “last” IT project (companies are shutting down discretionary spend); regulators demand more from IT (IT systems will need to gather more and better data to manage risks); offshoring and outsourcing landscape shift (vendors are in for big change, there’s a need for CIOs to manage their vendors carefully).

First a bit of background… Tom didn’t take a traditional route to CIO and Executive Committee member at Egg. He started his career in deep technology, as an Assembler programmer at British Airways. He then became a business analyst at the London Stock Exchange. After that, Tom took time to do an MBA and then undertook roles as a management consultant at CGEY/Hoskins and Coopers & Lybrand. He then started his own software company, which he ran for six years, during which time he was involved in the launch of Egg.

A few years later, when Egg was looking for a new CIO, they approached Tom. He sold his stake in the software company and took the role.

It was something of a leftfield appointment: Egg wanted an entrepreneurial CIO, a hybrid character – someone who could fill the role as a businessman as well as in a technical capacity. At this point in his career, Tom had a myriad of useful experiences to bring to bear – from raising funding, to management consulting, to running marketing and HR, as well bringing the deep understanding of technology that was needed.

As a Chief Executive in his own software company, Tom had learned to make quick decisions and live with the consequences. He learned to get decisive, and Egg at that time was looking for someone to take on big change decisions within the business.

As you would expect, Tom was responsible for all things technical within Egg. However, his remit was also to oversee change more broadly within the business. He had 500 staff in the IT department, across multiple locations, a number of which were international.

Tom is now the Chief Executive of Garlik, a venture capital backed technology company specializing in protecting identity and personal information online. I met Tom in London last week – here’s a write up of the interview.

What were your main challenges in the CIO role at Egg?

My main challenges were twofold:

1) Egg has always been an innovative user of technology – it saw the opportunity presented by the rapid emergence of the internet alongside the need of consumers to bank in a different way. Technology had been its point of leverage, its strategic driver, in the early days. As a result, technology had always had a big voice on the executive committee.

However, as the company became bigger and more mature, it had lost some of this strategic view of technology, and had pushed IT back into the role of driving operational efficiency. My challenge was to bring IT’s strategic voice back.

2) As with any rapidly-growing organisation, Egg had become a victim of its own success in some regards. In trying to manage its fast growth, it had layered on too many processes. In some cases these processes had taken over and were slowing the company down. My remit was to bring the nimbleness and agility back to the business.

What did you most enjoy?

What I most enjoyed in the CIO role was the opportunity to get very technical, and yet be able to mix this with the very strategic. As CIO in that kind of technologically-savvy environment, one can impact the direction of the entire company. The variety was fascinating, as was the opportunity through links in the IT industry, to see what was coming over the horizon, and to be able to translate that for the organisation.

Being a target of IT marketing, what were you most interested to receive from suppliers and potential suppliers?

I was most interested to receive updates from suppliers on things that were genuinely relevant. Almost all the material I got was too generic. I would think, “these guys could have done a bit more, they could have tried to understand Egg rather than banking in general.” It wouldn’t have been hard to do – just a bit of research for example – before targeting me.

In what way could suppliers target you better?

Because of its reputation as a technological innovator, Egg attracted smaller, cutting-edge technology vendors. There was a continuous wave of them wanting appointments. These guys universally misunderstood the scale of the business, they would offer solutions that could affect only a tiny proportion of my customer base. For a CIO, that falls into the hassle category. I needed ideas that would have an impact on 20%+ of my customers at the very least.

In general, suppliers need to have thought about my customer base – I want them to have researched the company, or at least have been bothered to ask.

What’s the job of a CIO like, day to day?

A CIOs job is hassle in a lot of ways. 50-100 suppliers, 1000s of people and another 200 suppliers trying to get appointments. The diary was always booked up completely, 2 months in advance.

IT companies need to think, “Why would a CIO even bother to speak to me?” A CIO will be immediately attracted to something that will make their lives easier, but it needs to be genuinely relevant.

Did the timing of the marketing materials you influence the attention that you gave them?

Yes, timing is very important; and for 2 main reasons.

1) Banks’ financial years are critical – if you catch me during a financial year, the most a supplier is likely to get is a pilot project. Suppliers need to be conscious of this and how budget cycles work. If the pilot works, then I’ll put that supplier into the budget for the following financial year but that process can’t be expedited. Especially now, in these economic conditions. Getting anything material in terms of IT spend is going to take at least 18 months.

2) Mostly for CIOs, new needs don’t emerge suddenly from the business. If they do, the CIO will probably be irritated about it, and will need to ask himself what he’s going to stop, or who he’s going to shift around to accommodate the request. When things happen at a time not of his choosing, it will be frustrating. At the same time, it does offer opportunities for the IT supplier, as long as they are in the right place. If a new need comes along that the CIO needs more knowledge of, typically he or she will use his network of advisers. This is typically trusted lieutenants will pop up after the new CIO gets the role, along with some long-standing consultants. If there’s a new need, or the pressure is on, this group’s opinion will be sought. It is possible for suppliers to get into this trusted network over time.

It’s worth mentioning that the CIO may well delegate the “scanning” of this group’s input to someone trusted in his or her team.

What’s a typical CIO “lifecycle”?

CIOs probably last 3-4 years on average. Typically year one is “sorting out the mess from the last guy” – even if there’s no mess to sort out, there is usually that organisational view. Years 2-3 are the years where delivery is all important. Big things are always delivered cautiously by CIOs – they need to trust that it will work. They want to make sure they’ve seen it all working before proceeding.

Ed – it’s worth noting that Tom had a view that CIO headhunters would make an interesting pairing with IT suppliers – people like Spencer Stuart, Russell & Reynolds – these companies know who all the CIOs are and have a database of people who run the UK’s IT. They know what type of people they are and what kind of companies they will fit well at.

Who were the most memorable IT suppliers; who did good marketing whilst you were in the role?

Sun was always excellent – both in terms of what we received from the company, and the quality of the relationship itself. They talked to us about our business in detail – they had insights that we sometimes hadn’t quite thought of ourselves. AIT was always good – its culture came through in its communication and gave you a view of what they would be like to work with.

Culture is extremely important, and therefore a big selection criterion. In an organisation with such as strong cultural identity as Egg, supplier culture needed to be aligned.

Style, content and tone are therefore all very important, as they convey that culture. I would want to know, could I see these people working with my team, with my company?

What role did the PA play in filtering marketing material?

I gave guidance to my PA on what I wanted to receive direct marketing-wise. Anything that didn’t fit the description, or unless the PA knew I was wrestling with that particular challenge, was binned or redistributed to the relevant person within the company.

I would get 3-4 event invites a week, often a number of suppliers would invite me to the same rugby match. But what if I was someone who didn’t like going out much? Suppliers needed to ensure they had the bases covered.

Was it easier for existing suppliers to get to you?

No, existing suppliers don’t get any easier ride – they still have to have something worth saying. In some ways, it might even be harder for them, as if what they were trying to see me about wasn’t around the specific challenge I was working on, my PA would probably send it to the person in the company she knew was dealing with that area.

What role did telemarketing play in getting to you?

It would have been extremely difficult to get through to me on the phone. If the CIOs PA had been PA to the CFO before becoming the CIOs PA, they saw a huge difference in their call-managing role. Literally the phone would ring every 10 minutes. If suppliers did get through to me, they would need to be careful, CIOs don’t like getting jumped. The relationship would have to be there first. I’d rather that suppliers dealt with members of my team for specific and point solutions.

Is networking valuable?

CIOs like to network, but in a controlled environment. It has to be small, private. CIOs want to know there isn’t a threat of getting sold to, of spending the evening with a salesman on each side rather than meeting their peers. They also want access to high value content.

Never assume all CIOs want technical content at events. They want to be able to contribute at the executive table too. Current affairs and themes are always of interest – ie. right now a supplier-run breakfast briefing on the credit crunch given by a noted economist would have got my attention.

All CIOs understand the game – they know that if they attend the event and get value from it, that they would give value back to that supplier by giving them some time face to face later on.

How did you view email marketing?

I got 100-200 emails per day. Due-to-back to back meetings, most would be handled in bulk. Therefore anything from someone I didn’t know or recognise would probably be deleted. Most times the PA would go through and delete marketing emails before I got to them. Sometimes the PA might forward them on to others if they are relevant.

Email works better to other areas of the organisation and my team, where they are responsible for dealing with specific issues.

If someone in my network forwards something on then I’ll read it, or if it’s a recognisable name in the industry, I’ll take a look. But it has to come across as personalised, and I don’t just mean “dear Tom” at the top of it. It needs to be relevant and genuinely applicable to my company and my situation.

The job of suppliers with the CIO in my view is to raise awareness, then market specifics at the budget owners. The CIO of any reasonable-sized company has delegated budget responsibility to people like the Development Director or the Operations Director. The CIO’s job is to create context and then let people get on with the job.

What would you do if you were selling IT to a CIO yourself?

I would do an awful lot of thinking first on what his context is. That particular bank, this particular time. What’s going on in the market? There really isn’t a generic CIO – age, ambition, stage of career, history, their team – it all plays a role. Branson’s CIO will be different to the CIO at the Pru. Suppliers need to understand that to market effectively. It’s about the specific person and their specific environment.

I would assume from the start that the CIOs life is hassle – meetings, emails, cost pressures etc. I would want to believe I had a way of making their life easier in a material way. I’d then look for a relationship or a referral – I’d do something for the CIO that they would then reciprocate.

I’d get an hour at that point, get to know them even better. I’d take time to turn it into business. Discretionary pots of spend are still available for pilots, even in this environment.

If I was a CIO right now, in this climate, what would I be doing?

I would know that I am, or will be, called on to make cuts. I would be proactive about looking at the organisation, seeing where there is flexibility. I would be talking to suppliers, thinking about what is possible, putting together a plan.

I would speak to my colleagues, especially in marketing in finance, to understand their priorities – how are they adjusting their costs and how can I support that? CIOs can easily get trapped fighting a rearguard action against cost-cutting. Once the CEO comes to you and asks you for savings, you’ve had it. You should already have a plan. That way you keep hold of the cards.

I’d want to keep innovation alive, that’s important. Due to budget restraints, it would have to be targeted innovation – a cut here, but perhaps a pilot there. It’s no time for pet projects – I’d want to try and find where my colleagues were putting the emphasis.

If a supplier came to me now, before I’d gone to him, and said “here are some suggestions , some ways I think that we can cut costs for you”, I’d be extremely impressed and want to work with that supplier. What goes down always comes up again, so that supplier might take a short term hit, but they’d hold onto the relationship and would be in pole position with me as the budgets took an upturn later on. If my budgets are being cut, I’m eventually going to have to haul suppliers in and ask them to cut costs anyway. The company who comes to me now, and thinks, “I’m going to pre-empt this, I know that it will come back to me” would be looked on very favourably.

“We can save you X million if you just spend Y with us” offers would not get a look-in in this environment. I would be looking for savings from what I’m spending now. Plus, I would want cuts that will deliver back to the CFO and the company in the current financial year.

What will happen to the CIO role in the next couple of years, given the economic turbulence?

I think the risk is that it might regress back to the traditional CIO for a while (if not in character then in the day to day operation of the role). The focus will be on cutting costs, and/or running IT programmes that support the cost-cutting of other departments in the business. There will be a focus on operational efficiency again.

However, the CIO’s challenge is to stay strategic, keep one eye on the horizon, try to spot the next big technology shifts and in the background start to guide his organisation towards them. For example, over the next couple of years the web itself is changing shape rapidly from today’s web into the next generation “semantic web”. This will impact all businesses that leverage the web quite profoundly and is the sort of fundamental technology shift that CIOs can highlight and spot strategic opportunities for their company.