Prof. Bob Kennedy argues that offshoring of IT services cannot be regulated for two reasons:

- Inability to observe the actions firms are taking.
- Any proposed policy must be credible and enforceable.

Thanks to Bill Ferhst for posting this. 

Do you agree with Prof.Kennedy ?

Gary Hamel of 'Core competence of the corporation' fame says "The Facebook Generation….. At a minimum, they’ll expect the social environment of work to reflect the social context of the Web". He goes on to layout web 2.0 practices that are most at odds with current management practices for large companies.

 I am listing these down below with my thoughts in italics on how it will affect Indian outsourcers:

1. All ideas compete on an equal footing.
Idea sharing itself is currently contained within well defined teams. Any sharing beyond these established boundaries happens as a result of management intervention or through rigid, formalized mechanisms like a KM portal. Fast forward 2020: Employees will expect organizations to encourage them to be part of virtual teams, freely contributing outside defined boundaries. Problems will be posted for anyone to attack and solve. Solutions generated in project X would be instantly accessible to someone in project Y leading to greater productivity. Web 2.0 technology would allow it!
2. Contribution counts for more than credentials.
Pay would get linked not just to designation as it currently is, but to your ability to contribute to the organization outside of your project. People on the bench would be expected to contribute to projects as part of virtual teams. Why can't it happen today ? Because the technology does not allow it. Technical problems that do not require the client or project context can easily be attacked by anyone in the organization. Future IDE's would allow this to happen. Metrics would be tracked around these and compensation linkages established.
3. Hierarchies are natural, not prescribed.
More power would flow to the developer on account on her increased ability to contribute. The power a given project manager has over her developer would decrease as multiple peer projects managers would have an 'indirect' relationship with the developer by virtue of virtual teams. The same would apply at all levels.
4. Leaders serve rather than preside.
I would modify this clause as "Managers would falter. Leaders would flourish". Getting things done through positional authority would take a back seat and skill would become central. Web 2.0 enabled virtual teams would make everyone stand naked. Measuring contribution would be easier and leaders would be forced to contribute as individuals and not just as 'bosses'.
5. Tasks are chosen, not assigned.
Virtual teams attacking problems would naturally allow individuals to choose tasks. People would gravitate towards tasks they are more skilled at doing. Individual work packets would get disaggregated into project contextual tasks and generic tasks. Generic tasks would get attacked by virtual teams who would choose the tasks they wish to do. I also envision a kind of 'competitive bidding' among employees for tasks.
6. Groups are self-defining and -organizing.
You won't always know who your project mates are. Skill and dynamic matching of those skills to tasks would define which group you belong to, who you work with and what you do.
7. Resources get attracted, not allocated.
Smarter projects run by better managers would command the best resources. People would have the freedom to choose.
8. Power comes from sharing information, not hoarding it.
Keeping knowledge to oneself and applying it to one's own task in one's own project would still be good. But applying that in a virtual team to a dozen projects would get greater visibility and recognition.
9. Opinions compound and decisions are peer-reviewed.
Web 2.0 allows you to be anonymous. This would allow real time review in virtual teams and poor decisions would get a public roasting.

Is any of this any good for us ? Well, there is good and bad in everything. :-)

How do you think Web 2.0 would affect the work force ?

I have been following this campaign closely over the last year or so. It has been as educative as it has been entertaining. Although the American political system is identity based, it is interesting that the character, track record and public perceptions of the candidates themselves are considered extremely important. The candidates need to sell themselves to the electorate. Just like clients in our world examine contracts and ask probing questions, presidential candidates are put through the fire by the media. They are forced to explain their strengths and weaknesses and need to answer questions about their abilities just like we field objections about our services. BO has proven himself to be not just a great leader but also a super salesman. Here are the top five sales leadership attributes that I learnt from BO:

Mapping your strengths against customer needs: The most explicit 'need' in this election has been the need for change at a time of turbulence. Both the candidates realized this. Both campaigns focused their fire to varying degrees on President Bush. The crucial difference was how the candidate's demonstrated strengths measured up against explicit need. BO's perceived strengths were a). Sharp intellect b).Calmness under pressure c). Self made man who has middle class values d). Ability to unite people e).Great oration. These strengths, when put together, positioned BO as the candidate best equipped to bring change at a turbulent time. BO showcased these strengths repeatedly and consistently throughout the campaign lending credibility to his candidacy.
Sales lesson: Consistently and repeatedly showcase those strengths that address client needs directly. 

Predicting client objections and turning them around into needs: Several times during the campaign objections were raised on the BO ticket. Lack of experience, the race card, the fact that his father belonged to a minority religion are some examples of these objections. BO masterfully predicted these in advance and turned them into 'needs'. His 'inexperience' got transformed into a necessary attribute for bringing about the much needed departure from 'business as usual' in Washington. The fact that he belonged to a minority race was repositioned as something that can help him unify the country by cutting across demographics at a time where unification is clearly needed. The fact that his father practiced a different religion was positioned as something that would help him 'understand those people better'.
Sales Lesson: Predict customer objections and weave your story proactively to turn these into needs.

Really, really understanding the customer: BO really understood the electorate. Not just from a needs perspective but also from a more strategic demographics perspective. He realized that the American electorate had become too diverse for traditional republican versus democrat, left versus right segmentation. He segmented his electorate differently. Realizing the latent potential in younger voters and the crucial nature of independents, he crafted a message that attracted these segments in droves and in doing so has built a foundation for 2012. Brilliant!
Sales Lesson: Be prepared to think about your customer differently. Understand the changes her organization is undergoing and craft your message accordingly. 

The urgency factor:  How many times have we faced a situation where the client loves a solution but thinks it can wait? This happens when the problem has not been built up to the point where the urgency of the problem has become an issue in itself. Some people hinted that BO was too young and that he needs to wait. The message was "Great guy, great candidate but it's not yet time". BO handled this by falling back on not just the importance of change but the urgency of bringing about change. "I can take four more weeks of attacks but you can't take four more years of the same" was his masterly retort.
Sales lesson: Don't just focus on the value in your solution, also focus on the cost of NOT having your solution NOW.

One consistent message instead of several: Too many dimensions to your value proposition and lurching from one message to the other can confuse the customer. The republican campaign did precisely that. It started with a message centered on superior experience, shifted to a message of maverick change, degenerated into attacks and finally ended up confusing the electorate. The BO campaign always had one consistent message, the message of change. Virtually every single ad and campaign tactic centered around change and why BO is best equipped to bring about change. This consistent message centered on the most important need ultimately carried the day.
Sales lesson: Focus on one or two critical value messages and build your brand around these messages. Make sure whatever you do is consistent with this message.

Shefaly blogs about the importance of keeping promises to customers. Drawing largely from the consumer product world, she paints an argument for timely delivery and the serious costs of messing up. In the highly transactional world of consumer goods with large volumes of relatively lower priced goods getting sold to the masses this is very true. You absolutely have to tie in your suppliers, manufacturing, marketing and sales to a tee.

Move to software.

Nick Carr talks of commoditization in the hardware and software product markets: "It's typical when industries mature and buyers start focusing on prices rather than features…. They're competing on cost rather than innovation and features."

What about the world of software services? Firstly, we deal with 'clients' and not 'customers'. Dawud nails the difference. With clients, the 'when' of delivery is important, but the 'how' of delivery is even more important.

When was the last time you had a large, complex program delivered perfectly on time? Let's face it. Slip ups happen. Unlike a P&G shampoo, each project is 'manufactured' to order and there is too much magic in the process for things to be perfect. What saves the day is relationships and the trust that comes with it.

So, how do you build trust while you deliver?

Honesty: Many delivery issues have two sides to it. Both the vendor and the client could have done things different. One way to open up clients to do their bit is by being honest about one's own mistakes. When clients see that they you are your own devil's advocate, they will stop feeling compelled to attack and will instead be open to meet you half way.
Honesty is also in being open about what is good your clients. Say you are trying to sell a rewrite of a large legacy mainframe application. There are two options in front of you.
Option a). Keep the backend as it is and rewrite the UI alone in a new technology. Price: $5M
Option b). Rewrite the whole thing lock stock and barrel.  Price: $12M.
Based on your analysis you are sure that Option b would be too high a risk to take and would likely lead to failure. Option a, though far from ideal would more than meet the needs and has a high chance of success. Which one would you recommend? If you put down the pros and cons in all honesty and recommend option a, this would lead to a high trust partnership and if you land up with downstream issues in delivery, you will have the client on your side. Joe Ippolito has some good tips on honesty in sales.

Communication: Communicate both the good and the not so good at the right time using the right tools. Often, bad news is bottled up and hidden away from the customer until it is too late. The reasons? Hope and fear. On one hand, people hope that somehow the problem would vanish and on the other hand they fear that bringing things out into the open would spoil relationships or make them look incompetent. Often, bad news is brought up through emails. Big mistake. Face to face communication of bad news allows appropriate communication of the context and ensures you have better control on the situation. Communicating bad news early and in a face to face discussion builds trust and shows the client that you really want to solve problems.

Listen, listen and listen: Listening to anyone provides that person psychological air and allows a climate of trust to build. Ask for ways in which your service can be improved and don't take "all is fine" for an answer. All is never fine. Probe to bring out small irritants. Nips these in the bud.

Choose battles wisely: Every client will have shortcomings. Overlook the small ones, complement the client and compensate for these lapses. Letting the small stuff pass builds trust and allows you to bring up the more important aspects where you need the client to change.

How you deliver does matter a lot.

Paul Allen, Partner and Managing Director, TPI shares his views on how the outsourcing market would evolve in 2009 given the current financial crisis. I have summarized some of the points below:

Impact for the rest of 2008:
-Budget for back office functions in most companies will get scrutinized and scaled back.

-Existing contracts maybe called upon to scale back on the bells and whistles to lower costs.

-New projects with even a strong business case would be held back.

Impact for 2009:

-2009 should see a growth in outsourcing through added scope.

-Divested operations could be a major growth factor.

-Transformational outsourcing will be put on the backburner.

-Increased government involvement in management will not lower outsourcing.

Jonathan Farrington over at the "Sales and Sales Management" blog writes about the importance of having relationship objectives for large accounts:

"Everyone in the account team needs to know what we want the relationship to feel like."

Accounts, both large and small are all about relationships. Before relationships can be built and sustained, it is important to have clear and well defined relationship goals. These goals need to be SMART - Specific, Measurable, Actionable, Result oriented and Timely and most importantly, they need to be consistent with your larger account plan. 
 

Figure out where the money is headed:  You will have a much easier time selling if you know where the money is headed - even if you are a super confident, super smart, gunslinger salesman. So, talk to your coaches and figure out where the spending is headed- which lines of business (of the client), what buying centers, which technologies and whether the spending is discretionary or non-discretionary. Knowing these details is the first step towards "SMARTNESS". It is the foundation needed to make your relationship plan Specific (Which clients to target), Measurable (How to tangibly measure relationship success), Actionable (Having an operational plan to 'actionize'), Result oriented (Ensuring relationship goals translate into revenue), Timely (Your targets are time bound, can your relationship plan be otherwise?).

Map out your relationship value chain: Now that you are done playing Sherlock Holmes, it's time to dive deeper. Knowing where the money is headed allows you to break down your overall revenue target into more detailed sub-account level numbers. It also lets you know how much can possibly be "mined" from existing buying centers and how much needs to be "hunted" from new areas. 

A single line of business might have multiple, distinct buying centers. This distinction is important as your relationship plan for a given line of business needs to align with these specific and distinct buying centers. The way the IT division that servers the treasury department of a bank ("Treasury" line of business for you) buys a consulting project might be completely different from the way it buys production support. You need to map out the relationship value chain for each buying centre that you need to engage with. By "relationship value chain" I mean mapping out the user buyer, the economic buyer, the technical buyer, influencers and gatekeepers. You can have the same person on the client side playing multiple roles, but knowing who is wearing which hat is critical. A very basic relationship value chain could look like this:

Here are a few good reads on the impact of the fiasco with some snippets below:

Investors.com 

"Hardware purchases will be postponed, software upgrades will be postponed and customer projects will slow. This is not a time for (corporate customers) to take big risks. No big spending decisions will get made."

"Total revenue for the Indian outsourcing market is down 31% this year"

"Disruptions and uncertainty for U.S. financial markets are likely to delay some new software projects until the fourth quarter or next year"

ZDNet.com

"Right now, there are four clear survivors: Goldman Sachs, Morgan Stanley, Bank of America and J.P. Morgan. Tech spending elsewhere may go kaput. "

"Infrastructure consolidation projects will last for years. In IT spending surveys demand for consultants hired by the project remains strong. "

"Project managers will be in demand. Systems integration skills will be critical and you’ll need project managers to consolidate all of those applications and data centers as well as rearchitect systems. "

Ganesh Nagarajan of Zensar.

"The preliminary analysis of the current situation indicates that the impact will be short term and company-specific and though all strategy planners will continue to keep a watch on any further downstream impacts"

Computerweekly

"Tactical software and hardware spending will be hit first, followed by the more-strategic IT services in the long run"

"Software as a service could be a winner from this as could any model where people pay on consumption rather than up front cash"



Yeah, I am lazy!

Ray Wang provides an interesting perspective on what customers are demanding from ERP vendors. 24×7 support, transparency, SLA based services and better pricing are some of the factors he brings up. I can see similar demands on the services side of the business as well. Below's a list of some of the stuff I see happening:

- Pay-as-you-go pricing for "horizontal" BPO processes.
- Committed year on year productivity improvement.
- SLA based reward/penalty clauses.
- Ability to "own" applications rather that just get by the day.
- Transition at zero cost to the customer.
- Usage of reverse engineering tools to improve the quality of transition and possibly move towards "ownership" faster.
- Ability to 'transform' the shop through improved and streamlined processes.
- Quick rampup and rampdown.
- Well defined "unit of work" based productivity.
- Virtual offshore development centers to minimize security risks and lower switching costs.

The language wizards at Oxford define "commitment" as

commitment
  • noun 1 dedication to a cause or policy. 2 a pledge or undertaking. 3 an engagement or obligation that restricts freedom of action.

Let me give it a little sales twist by defining "client commitment" : Clients showing dedication to your cause. Make a pledge to give you business. Get into an obligation that prevents them from going to competition.

Just writing that sentence made me feel wishful. Getting a client to say yes, means so much for recognition hungry sales people, one more step towards that magical close. At least in the complex world of software services sales, "closing" often equates to "getting commitment". Of course, the level and the type of commitment would vary depending on where you are in the sales cycle. At the very outset, a commitment to give you a hearing is victory. At the apex, a commitment to pick up a pen and sign on the dotted line is victory. A sale is nothing but the culmination of a series of client commitments -usually of increasing promise to the seller. The specific techniques one would use to gain client commitment would be contextual, but there are some common principles that are a must to get to the magic 'Yes!'.

Show value: Whether it is an introductory call or a formal RFP presentation, never go to a customer meeting without being in a position to offer something of value. I don't mean that a fifty page formal presentation is needed every time. But there should be something you give the customer that would make him want to speak to you again. It could be an alternative perspective on the problem at hand. It could be a case study story of what the competition is doing. It could be an industry analyst's viewpoint on a problem the client is interested in. It could be anything, but the common thread is value. When you ask for commitments without showing value, you make the customer think "He wants to make me buy something that I don't even know will help me. What a looser." When you show value and then ask for small commitments, you make the customer think "He wants to give me more value. Fair enough. What do I have to loose? Let me check this thing out." When customers associate your advances with value, they will become open to commitment.

Build a personal rapport: People like to buy from people they like and that applies regardless of how good your service is or is not. Be a 'smiley', be warm and be ready to look beyond people's titles. A CEO is as human as any of us. Sometimes, especially at the outset, clients will try to rebuff your advances. They still see you as a 'salesman' and not as a human being trying to make a connection with another human being. Relax and keep pushing. Have a few conversation threads ready to go. These topics need to be light, off work, something people would be passionate about and should help you engage at a person to person level. Reading a lot about a wide variety of topics surely helps. The wider your intellectual scope, the more things you will be able to speak about and the better your conversations get, the easier it will be to build rapport.    

Focus on the context and not your expertise: Keep the focus on the needs of the clients, rather than your expertise. It is easy to think that something that your company has pioneered will be of value to the customer. You will have people in your company trying to 'push' a solution on the customer. Push them back. Yell, cajole, coax. Do whatever. But never let anyone reach out to your customers with a "solution" without understanding the context and the needs. When people see that you are genuinely interested in spending time to understand their needs, that you really feel the pain from their perspective, they will be more open to making a commitment.

Keep irritants for the SOW: One of the worst practices in this industry is mixing up proposals and SOW's. Too often SOW's try to sell and proposals try to derisk. De-risking in a sales proposal is like telling your prospective wife about all the things that can go wrong if she marries you and then hope to get a yes. Good luck! There will always be uncertainty and risks in most complex software sales situations. De-risking too early and too explicitly is the fastest way to derail your sales wagon. It will give the impression that you are too conservative, closed, unwilling to work through issues and basically make the whole thing transactional.

Be honest: Be candid about the mistakes your company made in similar situations. Show the customer how your company worked with clients to resolve these issues. This is a huge step towards getting commitment. By being honest you show the customer that you truly understand the deeper issues involved and that you have been there before. By speaking about how you solved these issues, you build client confidence in your ability to deliver despite odds. The client will see you in a different light from the run of the mill salesmen.  

What are your thoughts on getting the client to commit?