Industry Insights from FinListics Newsletter March/April 2009

Can you Solutions enABLe a Powerful Value Proposition?

By Dr. Stephen Timme, President of FinListics Solutions

Reducing operating costs in these tough times is a top priority for many companies—and for good reason. A recent study by FinListics Solutions reveals that, for a sample of approximately 1,500 companies, plummeting revenues combined with rising costs and other factors resulted in an enormous decline of $262 billion in operating profits.

No wonder organizations are applying tactical actions like reducing headcount and discretionary spending. They’re also exploring more efficient ways to manage business processes. Improved efficiencies promise near-term benefits, although typically not as immediate as tactical actions. They also deliver long-term benefits, making them more financially viable when economies begin to recover.

One of the most critical components to selling efficiency-improving solutions—and for that matter, all solutions—is a strong Value Proposition. This especially holds true today, since many companies scrutinize all investments more closely than ever due to deteriorating liquidity and cash flow positions, as well as access to credit. A robust value proposition answers an important question: Can your solutions enABLe a powerful value proposition?

Alignment – How is your solution aligned with the client’s key goals? This typically requires a deeper understanding of a client from a business-financial perspective as compared to, for example, only a technological one. And this often entails talking to others outside of IT, like the CFO and business process owners.

For example, Wal-Mart has announced to investors goals to keep corporate expenses and inventories at lower rates than revenues. How would your solutions align with these kinds of goals? And who would you need to explore your solutions with that you typically aren’t engaging?

Business logic – What is the business logic of how a solution improves performance? This goes beyond the worn-out references to the “tion” words: optimization, integration, collaboration, etc. It requires translating a solution’s feature/function benefits into a practical explanation of how they help a client better manage the activities within business processes and, in turn, how they strengthen key performance indicators (KPIs).

Suppose you sell business intelligence solutions that not only increase the quality of data, but also make it more readily available, perhaps in minutes instead of days. This may sound interesting, but from a client executive’s perspective, the real question is: How are these solutions going to help me better manage my business?

Lasting benefits – Building on your solution’s business logic, what are the lasting cash flow benefits and overall value to the enterprise? Answering this requires building a business case that includes the solution’s total cost of ownership (TCO), the lasting benefits in the area directly affected by the solution, and the solution’s impact on other areas of the enterprise. TCO is important. But for a solution to deliver an acceptable payback and ROI, especially in these times, the business benefits must far exceed the TCO. How often do you work with the client to build a business case? And if you do, is it truly from an enterprise-wide perspective?

Bottom line, a strong value proposition presents greater motivation for change. And remember, your greatest competition typically isn’t another vendor selling a similar product or service. Often, it’s the client’s other internal projects. That said, your value proposition must be stronger than your direct competitors—and the often even more formidable internal competitors. So, can your solutions enABLe a motivating value proposition?