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The nature of demand for software services.
A salesman's job is to shape needs and generate demand. With the economy in recession, many clients are cutting budgets. Prabhu says there is evidence that budgets are getting halved in several industries. Demand seems to be either stagnant or is taking a nosedive.
Talking of demand, there have been very different times too. Most people of my generation (read oldies!) have seen the Y2K boom followed by the rollercoaster dot com era - dog food selling websites getting valued at billions and then getting dumped at values lower than even their tiny dog food inventories would command. The dot com era also saw the demand for skills like 'digital strategy'. You could download a few articles on B2B and B2C and take a month rehashing them into a nice looking ppt titled 'Monetizing Eyeballs', replete with clouds and arrows and bill at $250/hr while you are at it. Oh! Did I mention fat perdiems ?
Most attempts to understand demand are done from a vendor's perspective. Starting with staff aug and ending with consulting. Co-sourcing and managed services bring up the middle. Makes perfect sense. The only problem I have is that this is a very inward way of looking at demand, it's demand from a vendor perspective. The client simply does not think on these lines. From a client's perspective, there are two broad classes of demand a). Steady state demand (SSD)-The keep-the-lights-on part that is responsible for keeping the business running and b). Transformational demand (TD) that seeks to change the business. Steady state demand, while being unglamorous, provides much the needed revenue stability that comes with an annuity business. It allows you to meet your numbers, build operational relationships and acts as a backbone during tough times. Transformational demand has peaks and troughs, is sometimes based on the whim and fancy of client execs. Tapping into transformational demand needs a different style of engagement, centered on thought leadership and the business domain. It demands that you take a point of view when you talk to customers instead of just asking them "I have great people with me. How can I help ? ". What makes transformational demand most critical is that today's TD is tommorrow's SSD. Here are some key differences between the two streams of demand and some thoughts on how to engage.
| Steady state demand | Transformational demand | |
| Demand Visibility | Typically of an annuity nature and has long term visibility. Visibility is often tied to related transformational initiatives. | Visibility depends on the level of client engagement. Lower levels of engagement limited to operational staff renders poor visibility while a strategic engagement approach leads to much higher visibility. |
| Demand Volatility | Low to medium volatility compared to transformational demand. Downturn in budgets could see positive or negative spikes depending on the client's propensity to right size his own IT organization. | Highly volatile as demand is often discretionary. Economic cycles drive budgets and spending. Clients often prefer to have a greater proportion of internal staff do the work. |
| Strategic importance | Adds revenue predictability and acts as a backbone during lean times. Helps build strong operational relationships. | Best way and often the only way to dislodge a deeply entrenched SSD competitor. TD manifests as future SSD. |
| How to Pitch ? | Commit productivity improvements year on year and lock up demand in the form of multi year annuity contracts. | Do not focus on cost or productivity as a value. Instead, demonstrate thought leadership through a 360 degree approach encompassing domain, people, processes and technology. Key message :"You are at point A now, but need to be at point B and here is how we can take you there". |
| What the client looks for in a partner ? | Flexibility and demonstrated value that goes beyond cost arbitrage. | Thought leadership and business value. |
| Keys to shaping demand | Early entry into the sales cycle. Strong operational relationships and the ability to link cost savings through offshoring in SSD to investments in TD. | Strong strategic relationships and the ability to lead the thought process. |
What are your thoughts and experiences with various demand streams ?
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