Creating the caseBy Channel Insider Staff | Posted 2008-05-05 Email Print
Return-on-investment calculations may have been more about marketing than substance in the past, but increasingly customers want solution providers to produce provable numbers.
Moving the ROI conversation from best-case hopes to real-world expectations can be hard work, but solution providers and distributors say it’s possible with help from customers.
The first key is using actual figures from the the customer’s environment rather than averages. "When we do an ROI study, we can show exactly how much power current the environment is using and how much we could consolidate it," Avnet’s Hayes said. It’s also possible to figure out what the resulting power is to the kilowatt, he said.
If customers don’t want to take time to provide data as a first step in the discussion, some solution providers use similar clients as real-world examples.
"We have a wealth of information from past engagements so that we can find a client in a similar situation with the same technology and same number of users, and we can talk to them about how they are supporting their technologies," said Jamie Kustak, an account executive at IT services company NGen. The company uses Autotask service automation software to track business metrics from its clients, Kustak said.
It’s also important to concentrate on hard-dollar savings rather than soft savings because the latter varies widely depending on the customer and factors such as labor costs, HP’s Sinclair said. These more nebulous costs can be mentioned as a bonus but should be left out of the discussion initially so that customers can build realistic expectations of how much a solution can help, solution providers said.
When selling services, providers should help customers understand the impact on accounting. "In many companies, capital dollars are more readily available than operating dollars," Cowie said. "The CFO has different buckets of money, and they tell us that they have all sorts of capital. For them, at the end of the day it is not so much about reducing expenses as it is about increasing service levels and shifting those operational expenses to a capital expense."
For an MSP, then, the ROI discussion becomes a critical part of the sales cycle. MasterIT uses a full network assessment and TOC analysis to determine where the customer is spending its IT dollars. MasterIT then highlights for the customer the advantage of a service purchase over adding infrastructure.
MasterIT typically produces savings of 20 to 50 percent for customers while helping to identify operational headaches. The company presents its findings in a 60-page document that provides best-practice recommendations and outlines potential cost savings, Drake said. For top management, a 15-slide highlight presentation is prepared. Clients that participate in this ROI process are much more likely to sign up with MasterIT, and 90 percent of them do, Drake said.
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