Business Value Selling of IT Solutions a Requirement for 2008

IT spending slowdown increases need for improved IT selling effectiveness using ROI /TCO Analysis

FRAMINGHAM, MA and ORLANDO, FL (December 18, 2007) — IDC and leading ROI/TCO tools developer Alinean predict that the tightened IT spending environment will require IT vendors to cost-justify their solutions amid increased competition, making business value selling a best practice requirement.

IDC predicts that in 2008, worldwide IT spending will grow at a slower pace than 2006 and more recent years. Economic uncertainties and downside risk will dampen IT spending growth in the U.S. and elsewhere. As a result, worldwide IT market growth will be a moderate 5.5-6.0%, down from 6.9% in 2007. An IT budget that grows more slowly means less to spend on new projects, and a clear return of the frugal buyer.

An increased competitive marketplace necessitates that IT solution providers make a business case for change regarding new solutions and upgrades. Those IT vendors using ROI analysis to quantify the cost savings and business benefits of their solutions – compared to the required investment - will garner their share of prospective customers’ tightened budget.

IDC and Alinean see the following trends emerging from 2008 IT budget tightening:

1. Getting prospects interested in new projects will be more difficult as discretionary spending will see the biggest cutbacks - making it harder to get attention for any new proposals not already on the planning roadmap.

2. Getting prospects to prioritize proposed projects and gain economic buyer approval will rely more than ever on quantifying return on investment and proving quick payback.

3. Sales cycles will be longer for projects that lack a clear economic benefit defined by standard financial metrics.

“Since 2005 our surveys indicate that more than 90% of all IT projects required cost-justification, but with less than expected budget growth, we expect the requirements and scrutiny to increase,” said Tom Pisello, CEO and founder of Alinean. “Economic buyers expect vendors to proactively justify investments, and view the ability to provide the business case as a considerable benefit. Those vendors that recognize the changing IT spending environment and increased customer ROI analysis demand will have a clear sales effectiveness advantage.”

“Marketing and selling IT solutions is becoming more competitive each year, especially in light of tightening budgets into 2008, making improving selling effectiveness with business value more important than ever,” said Randy Perry, VP of Business Value Strategy at IDC. “IT providers must continually help their customers - the CIOs - to market and sell IT solutions within their companies.”

IDC and Alinean are recommending the following initiatives for IT solution providers to address the emergence of a more frugal buyer:

• Value oriented messaging and white papers, research and collateral to generate interest and position properly in a more competitive and frugal landscape

• Benchmarking tools to identify and quantify competitive gaps and drive prospects with quantifiable compelling reasons to change

• Capability and maturity assessment tools to identify specific prospect gaps and value opportunities/priorities, setting the agenda

• Value-oriented sales tools to quantify the benefits of proposed solutions and projects, lowering IT infrastructure and operations costs and generating business value, investment required and ROI

• Business value training to help transition the sales force quickly

• Implementing ROI SLAs with customers to track actual performance versus goals, then using this quantifiable proof for future up-sell and cross-sell campaigns

“Unfortunately vendor ROI/TCO claims are often overstated in homegrown tools and programs, and lack credibility with skeptical buyers,” said Pisello. As a result, IDC and Alinean stress the need for independent third-party validation behind a business value assessment, to add credibility and overcome this skepticism. Moving business value selling programs to a best practices leader has been demonstrated to improve the validity and receptiveness to business cases by 150% or more over in-house programs.

“Selling to the IT buyer will be increasingly difficult as we ride a roller coaster of economic confidence. A multi-faceted program that provides a tailored value proposition to meet each buyers needs will achieve the highest degree of success in uncertain times,” said Bill Kirwin, ex-Gartner research VP, renowned TCO expert and Alinean advisory board member.

IDC's predictions for 2008 IT spending and investments are discussed in greater detail in the report entitled IDC Predictions 2008: The Hyper-Disrupted IT Industry Takes Root (Doc #209776). Details on this report can be found at http://www.idc.com/getdoc.jsp?containerId=prUS20983407.

About IDC

IDC is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. More than 900 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 90 countries worldwide. For more than 43 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. You can learn more about IDC by visiting www.idc.com.

About Alinean

Alinean develops software and solutions to streamline the B2B selling process with business value selling solutions – using ROI/TCO and business case analysis to prove and improve the value of solutions to prospects and customers. The company’s founding team pioneered the concept of interactive ROI and TCO software in 1994, developing award-winning solutions for leading B2B vendors and consultants. Its research methodologies and software tools are used by analyst firms and consultancies such as IDC and B2B leaders such as Oracle, HP, Dell, SAP, Microsoft, Symantec and IBM, and have helped justify billions of dollars in IT spending and derived value. For more information, visit www.alinean.com or call 407.382.0005.
 

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