Re-Imagining the Vendor-Customer Relationship: Sales enablement via Asset Management

© Ron Brill & Jeff Gustafson

Re-Imagining the

Vendor-Customer Relationship:

Sales-enablement via

Asset Management

By

Ron Brill (Anglepoint) & Jeff Gustafson (EMC)

June 2013

Sales-enablement via Asset Management Page|1

Executive Summary

Those familiar with the IT sales process know only all too well that it typically involves a myopic focus on making the next sale before the end of the quarter, and that the process is often ill-suited to supporting the (mutual) long-term interests between vendor and its customer. Rather, negotiations take place – and decisions are made on both sides – based on inaccurate and/or incomplete information. Such a scenario is usually the result of a “death by a thousand cuts” in the business relationship relating to various parameters including the purchase history between the parties, the current baseline deployment within the customer’s IT environment, the existence of ambiguous or disputed contractual language, and even material misunderstanding regarding relevant unit(s) of measure in question. This lack of complete and accurate information leads to suboptimal outcomes including but not limited to customer dissatisfaction, inefficient procurement processes, misallocation of scare resources, lost revenue, and wasted energy.

Asset Management (AM) is a leading edge sales-enablement competency that

IT companies are adopting for competitive advantage. The advantage is grounded in reframing the application of available skill-sets for the purposes of adding value to the business relationship on a forward-looking basis. In that vein and leveraged as an enabling competency, AM provides sales with accurate and complete information and positions sales to better serve its customers. With a customer-centric focus, AM could be tailored to a more relevant application either as an internally-focused engagement or as an externally-oriented one with appropriate customer-facing elements. Internally-focused AM work could involve taking data that the IT vendor already has available through myriad systems and convert it into meaningful, actionable analysis and deliverables. Externally-focused AM work could involve direct support for the customer in collecting complete and accurate information about the customer’s IT environment, the customer’s usage and (current/future) use-cases, or other requirements.

Contrary to first impressions, AM programs are relevant to both hardware

and software vendors as a means of establishing a holistic, objective understanding of those assets in the IT environment. Hence AM should be viewed in the context of an evolving interaction between the parties as distinct from Anti-Piracy, Audit, Compliance, or Go-It-Alone strategies – admittedly utilizing similar skill-sets and methodologies but reframed in a sales-driven context as opposed to one purely grounded in revenue recovery.

In summary, the proper implementation of an Asset Management program is

the key component to solving a fundamental challenge underpinning the business relationship – that of buyers and sellers both making significant monetary decisions based on missing and/or inaccurate information. We believe that AM will become a must-have enabling competency for IT companies to thrive in a highly -competitive marketplace.


The Problem – A Broken IT Sales Process

Large IT sales transactions between a vendor and its customer – whether inclusive of hardware and/or software and corresponding maintenance information – are, in theory, the result of negotiations based on a common understanding of several parameters. The basic relationship is visually captured in Figure 1 below. The commercial negotiation is grounded in knowledge of six parameters, which include the existing assets in the customer’s IT environment, the purchase history between the parties, the vendor’s licensing and pricing rules, the customer’s use cases and future growth, any relevant competitive information, and the customer’s expected and actual budget.

Figure 1: Information and the Commercial Negotiation

The vendor and customer both have independent – but imperfect and mutually influenced – assessments of the negotiation based on their respective (perceived) understanding of the highly complex parameters involved. It is perfectly understandable for each party to derive separate conclusions based on an equal set of facts. However, it is almost guaranteed that those conclusions will diverge when the commercial negotiation is based on a perceived separate set of underlying ‘facts’. For example, one might think that a purchase history would be mutually known to both sides and that current usage and future needs would be well defined between the parties. However, the reality in many (most?) transactions is that the underlying facts across any individual parameter are rarely objectively known, and this statement is almost never true to an acceptable level of


precision when taken in aggregate across all six parameters. Therefore the respective parties are negotiating in an environment where logical assessments and

corresponding assertions are, in fact, driven by an erroneous and incomplete foundation of information on both sides.

If the underlying knowledge of each party to the negotiation is in question –

due to the prevalence of erroneous and inaccurate information across each of the six parameters – then a ‘meaningful and informed’ commercial dialogue is highly likely to result in a sub-optimal transaction due to poor decision-making. Relationships and anecdote may take primacy over fact-based assessments. One way to describe the process of professional negotiation is as an impenetrable “black box” or perhaps alternately described as ‘The Fog of Business’ as shown in Figure 2. Due to the uncertainty and imprecision of the underlying six parameters, the parties engage in a sales process to synthesize their understanding which inexorably leads them away from an objective, fact-based commercial negotiation.

Figure 2: 'The Fog of Business' and Decision-making

An incomplete and inaccurate baseline between the parties compromises the

efficiency and efficacy of the commercial negotiation. Consequently, the current IT purchasing process often ends up resembling the old game show “Let’s Make a Deal.” Either the vendor or the customer will initiate an opportunity means of a solution presentation or a buying request respectively. The parties will discuss the opportunity as presented and then engage in decisions that improve (or detract from) their opening position without precise – and often even with inaccurate – information. The issue is compounded when decisions must be made quickly due to high priority purchasing needs or pressure stemming from quarter-end urgency.


The only reason either side tolerates this sales methodology is that by not having an

Asset Management process, neither side is effectively able to assess the underlying merits – and corresponding quality – of the potential transaction.

Take for example the case of a purchase involving a large Enterprise License

Agreement (ELA). Software companies and consumers alike have increasingly favored this type of purchase structure allowing more flexible consumption of software across an enterprise. In most situations, the transaction is completed without either party understanding how much software had previously been purchased, how much software is currently in use, and therefore inherently cannot accurately size the deal going forward. When the ELA expires, the situation will repeat itself during the course of discussion regarding the subsequent potential renewal. It is perhaps apparent, but worth noting, that the foregoing effort will result in a sub-optimal outcome either for the vendor or for the customer … but more likely for both parties to the transaction.

Five Types of Industry Response

Both parties have continued the search for effective responses to the challenge of the broken IT sales process. For context, it is helpful to frame five specific waves to better understand why the fifth wave is a materially different competency than its predecessors – and represents a new opportunity to truly reframe the vendor- customer business relationship.

Figure 3: Mapping the Five Types of Industry Response

The graphical plot of the five competencies in Figure 3 focuses on the relative value proposition for each discipline. It is worth noting that the five responses are not sequential but co-exist in parallel within the industry with each being a


legitimate activity. However prior to addressing these five competencies at a more strategic level – along with the four categories of evolution they embody – it is useful to first provide a brief re-cap for each competency at a more detailed level:

1) Crime & Punishment (Anti-Piracy): The focus here is on illegal and/or otherwise counterfeit

software. This wave is exemplified best by the Business Software Alliance (BSA) and the Software Industry & Information Association (SIIA), which promise financial rewards for employees who provide incriminating information about piracy within their employer or partner organizations. Anti-Piracy efforts typically involve the software publisher working alongside law enforcement agencies, and filing lawsuits that typically invoke the U.S. Copyright Act or similar legislation in other countries. Resolution often includes penalties in addition to forcing the customers to purchase any pirated assets.

2) Atonement (Audit): This approach typically does not engage law enforcement agencies and does

not typically impose legal penalties. Rather, publishers involve their own staff or leverage third - party firms – invoking the Audit Clause in their software license agreements – to audit the customer’s IT estate against their entitlement. In the event of an over-deployment, the customer is typically required to ‘true up’ using list prices, back support, interest, and the cost of the audit – all in accordance with the audit clause in the underlying agreements.

3) I’m Ok, You’re Ok (Compliance): Publishers again use their own staff or leverage third-party

firms to conduct license reviews of their customers. However the audit clauses in software license agreements are often not formally invoked though may be referenced. The review is performed in a more amicable manner than an audit with consideration given to the customer – including potential deference on the timing of the work or the reliance on data provided by the customer. In the event of an over-deployment, the customer is often given the chance to true-up without penalties, leverage existing discount levels, or even offered the opportunity to de -install the over-deployed software.

4) Rugged Individualism (Go-It-Alone): Both vendors and customers have increasingly

experimented with utilizing technology to address their respective challenges in the face of the broken IT sales process, although these efforts have largely been atomizing – not unifying – to the relationship with each party going-it-alone in an effort to individually tackle their uncertainty and risk. While many tools are valuable, there is often no single tool that provides a complete and accurate assessment of an IT estate nor will it apply all the necessary knowledge vis-à-vis a purchase history to tame uncertainty and hedge risk.

5) Renewed Partnership (Asset Management): This sales enablement approach is the most recent

wave and offers the opportunity to reframe the value delivered and to enable improved decision- making. The approach here is to provide timely, complete, and accurate information in relation to the IT estate, the purchase history, and customer’s business requirements (past, current, future) for the relevant IT Assets (hardware and/or software and related maintenance). The point of the engagement is to underpin a more complete foundation on which the parties can discuss the relationship but not be limited in context to enforcement. Rather, the objective is to arm sales with information to better serve their customers.

While perhaps haphazard at first glance, there is a pattern to the evolution of

these competencies within the industry. The first category (Anti-piracy, Audit) stemmed from the vendor’s response to tackling the broken IT sales process in order to protect their interests. The second category (Compliance) arguably represents vendor’s response to evolving maturity within the IT industry and their adaptation in the face of growing customer objection to the perceived ‘one-size fits all’ nature of strict revenue recovery activities. The third category highlights growing customer frustration in tackling the broken IT sales process by


taking matters into their own hands, even if their activities are often largely defensive in nature to (partially) hedge against risk from vendor enforcement efforts.

It is in this context that we can understand the differentiating value of the

fourth category (Asset Management) to the other three. From the vendor’s perspective, the engagement brings Sales to the table in a more informed capacity and establishes an accurate, complete foundation expressly for the purpose of supporting better decision-making between the parties in a wider context. From a customer perspective, the experience with Asset Management is collaborative and done in the context of ongoing sales discussion(s) – with a view to providing both parties with better information thereby enabling the customer to make informed decisions – and supporting the vendor in presenting more relevant proposal(s), which are based on the customer’s precise business requirements.

Sales Enablement via Asset Management

Asset Management (AM) is a service provided by a dedicated and specialized group within the vendor. The objective of this service is to provide relevant, complete, and accurate information upon which a meaningful commercial discussion may occur between the IT Vendor and its Customer. Therefore, AM operates in an interdisciplinary context to support the composite sales team (e.g. sales, technical consultants, deal teams, sales management, executives). The access to present information provides a significant advantage to the vendor, particularly in competitive scenarios. In addition, it often leads to identification of additional sales opportunities that were only partially framed, were not previously known, or were sub-optimally sized. Having good reliable information can also significantly shorten the sales cycle via more credible, defined proposals.

Asset Management should be viewed comprehensively across all offered

product categories. For vendors who are pure software publishers or hardware OEMs, AM will focus on software or hardware only. However, vendors who provide both hardware and software should ensure their AM program focuses on both. Combining hardware and software – and corresponding maintenance – into an AM program is challenging but when both hardware and software are in scope, the benefits of AM are multiplied dramatically given the relationship between the two and the valuable information that could be gained from analyzing both together in a more holistic manner where appropriate.

Given the customer-centric focus, Asset Management is not a static activity.

There is a premium placed on continued innovation of new deliverables to drive additional value into the sales process. In addition to evolving qualitative elements on the value proposition and scoping, the engagement model is dynamic as well. Asset Management may be tailored to support the objectives and scope in question and is not a ‘one-size fits all’ mode. For example, it could be an internally-oriented support activity, an externally applied support activity, or both.


Customer Benefits from Sales Enablement/Asset Management

The immediate benefit to the customer is the ability to negotiate a deal from a position of knowledge and through making informed decisions. This process is done entirely in a collaborative fashion and towards a deal or deal(s) that the customer has a vested interest in making.

As part of an Asset Management exercise, the customer benefits at an

aggregate level by the vendor investing time and resources in their success but also by way of the vendor providing the ultimate level of expertise regarding analysis of both entitlements and deployments of its own products through the expertise of its 3rd-party partners. Equally at an individual level, each unit actor on the customer- side of the equation (e.g. the C-suite, Business Stakeholders, Procurement, SAM team, IT team, Legal) can derive direct and indirect benefit via the interaction. Taken as a whole, it is akin to the vendor making an investment in the customer’s success by driving value back into the business relationship while additionally assisting in mitigating the customer’s risk profile.

Moreover, this exercise can have a positive long-term impact on the

customer’s level of IT Asset Management maturity. Best practices for software asset management (ISO 19770-1:2012 amongst others) include requirements for effective business processes for the management of software assets and call for the customer to maintain a complete an accurate picture of both its entitlements and deployments. This can be a complex and time-consuming exercise for a variety of reasons that are beyond the scope of this paper.

Best Practices in Implementing Asset Management

Implementing an Asset Management competency is well worth the effort but,

admittedly, the competency is in its early stages from an industry perspective. On the one hand, most vendors currently do not have effective Asset Management capabilities. This is due to various issues including among them their underestimating the complexity and challenges associated with operating a successful Asset Management program, their reliance on automating data analytics based on inaccurate and incomplete information as the inputs guaranteeing a failed output, or even their failure to realize the importance of success in this arena. On the other hand, customers rarely commit the necessary resources to managing information that they believe vendors should already have for them.

Innovation – AM functions best as a “pull” service, not as a “push” model. The unified sales team must see value – as should the customer – and AM must innovate to drive additional value over time. This subtle but profound point has numerous ramifications for the programs evolving go-to-market strategies, business support model, and operational model.

Organization – Asset Management is a sales-related function. It should report to sales, sales excellence functions, or sales operations. This stands in contrast to compliance functions, which often report into different parts of the organization, including legal or finance.


Funding – Ideally, central corporate funding is to be provided. The objective is to make it as easy as possible for the sales organization to engage Asset Management Services at short notice and without penalty to sales so as not to introduce disincentives to engage.

KPIs – While compliance uses a “revenue recovery” metric, it would be inappropriate and unhelpful here. AM certainly results in incremental, net-new revenue, but the engagement approach requires a metric better aligned to sales enablement. Consequently, other metrics should be used in monitoring the business such as “Asset Management Assisted” revenue.

Engagement Model – AM should support the unified sales team to ensure deep understanding of the program’s capabilities, to introduce the service to their teams, and to support their on-going success. Successful adoption requires staying close to sales, identifying a number of pilot projects, and ensuring those engagements are highly impactful. Broader adoption follows success and drives evolving value to sales and the customer.

Service Provider – AM programs should leverage a competent external service provider who offers a level of objectivity, scalability, efficiency, and professionalism required in these customer engagements. However, the provider must understand – and meet – the unique demands posed by such a program. For example, beyond accurate and complete consumable analytics, the provider must be adept at both pre-/post-engagement phases of sales support.

Asset Management & Compliance – Asset Management and Compliance are not mutually exclusive activities as they leverage similar skill-sets but for the purpose of addressing different business issues. Dual programs can broaden the relevance – and overall value proposition to the firm – through a more nuanced self-selecting go-to-market strategy and can lead to cost efficiencies.

Conclusion

IT sales transactions are often negatively affected by lack of relevant, timely, complete and accurate information necessary to make an informed transaction. As a result, the transaction may not happen, may be delayed, or may be smaller than it could have been.

Asset Management is an IT Provider competency, which allows for the collection and analysis of internal and external customer purchase history, current usage, and future needs.

Having an Asset Management program can provide a significant competitive advantage to IT Providers and substantially increase sales, while enhancing the overall customer experience.

We have seen significant success stories and assert that Asset Management holds deep potential value to sales functions at the world’s leading IT Providers and their customers.


Sample Asset Management Case Studies

Providing Direct Customer Benefit: Establishing a foundation for all historic investments was a critical first step for the customer in driving toward an enterprise agreement. Procurement leveraged all deliverables for their internal recommendations and viewed the engagement as an ideal manner to establish a credible baseline and thereby jointly plan anticipated life cycles and forecast total cost of ownership, resulting in a clean ELA.

Strengthening the Business Relationship: The engagement provided the account team with an accurate foundation to pursue a more meaningful discussion with the customer, moving beyond a simple sales dialogue toward building a relationship as a trusted partner in demonstrating a desire to understand – and actually solve – the customer’s business requirements. The level of detail enabled a deeper dialogue and a more credible business proposal.

Addressing Customer-satisfaction Issues Head-on: Based on assorted challenges, the customer placed a freeze on new business. Timeliness, responsiveness, and accuracy of deliverables provided the account team with the ability to address questions that the customer had been asking for 18 month, drive the relationship forward again, and to close new business.

Driving Long-term Relationship via ELAs: The customer was in dialogue with the account team regarding an enterprise agreement but required a deep understanding of their existing estate, a clear assessment of their current/future use-cases, and an objective assessment of their current/projected cost of ownership. The engagement provided the account team with the qualitative and quantitative analysis to drive a clean ELA with the customer.

Defending Share via Technology Refreshes: The engagement provided a broad assessment of an extremely large and complex IT estate. The account team was working with the CTO for this global account and was now able to offer a level of information previously not available, enabling a more strategic dialogue with the customer. The CTO referred to the engagement and corresponding deliverables as providing a competitive advantage over the competition.

Taking Share via Competitive Displacement: The customer desired a detailed understanding of their IT estate with the scope specifically including competitive assets. They were comfortable working with trusted process to establish an accurate baseline for all existing assets, which facilitated a much broader deal and eliminated a competitive threat.

Clarifying Use-cases & Increasing Deal Value: The engagement provided the account team and the customer with the deliverables required to document their business case in great detail, unearthing opportunities that neither party were fully aware of but that would be of value to the customer. The key stakeholders on the customer-side further leveraged that analysis to ensure internal alignment and to justify their budget asks in closing the deal.

Documenting Baselines & Shortening Sales Cycles: The account team was able to provide the CTO with specific, credible analysis and establish relevant proposals meeting the customer’s requirements. The first deal closed significantly earlier than expected due to the depth of dialogue with the CTO and subsequent elements agreed upon over five quarters.

Cleaning up Maintenance Records: The customer was disputing the accuracy of their global maintenance renewal and would not pay. The engagement established an objective, accurate baseline for the assets in scope enabling the parties to agree on an accurate maintenance record, and the customer paid.


Ron Brill – Chief Executive Officer, Anglepoint

Ron Brill has over 18 years of professional experience in the High-Tech industry focused on assisting global organizations mitigate risks and realize opportunities in their contractual relationships with customers, vendors, and channel/business partners.

Prior to joining Anglepoint Ron was a high-performing Partner at KPMG where he served as KPMG’s global leader for Software Asset Management (SAM). Other focus areas included Royalty, Channel, Vendor/Supply-Chain, and Digital Content. Ron has worked with several Fortune 500 software companies, and led global teams in highly complex and dynamic business environments.

Ron has authored a number of publications on SAM, and frequently speaks at industry events. He is an active member of the ISO Working Group for SAM standards 19770 (ISO/IEC JTC1/SC7/WG21) as part of the United States delegation and the U.S. Technical Advisory Group (US TAG), currently serving as Software Publisher Liaison. Ron has also served as Expert Witness in Software Licensing litigation.

Ron is a member of the American Institute of Certified Public Accountants (AICPA), the Association of Certified Fraud Examiners (ACFE), the Institute of Internal Auditors (IIA), the Information Systems Audit and Control Association (ISACA), and the Licensing Executives Society (LES), amongst others.

Ron holds MBA in Information Systems and BA in Accounting and Economics degrees. His professional certifications Include: Certified Public Accountant (CPA) licensed in California, Certified Internal Auditor (CIA), Certified Fraud Examiner (CFE), Certified Information Systems Auditor (CISA), Certified Information Security Manager (CISM), Certified Information Systems Security Professional (CISSP), Chartered Global Management Accountant (CGMA), BSA Certified in Standards-based SAM Professional (CSS(P)), and Certified Software Manager (CSM).

Profile: www.linkedin.com/in/ronbrill

Email: [email protected]

Jeff Gustafson – Director, Global Asset Management Services, EMC Corp

Jeff Gustafson has 18 years o f experience in the High-Tech and Financial Services industries, with a track record of innovation, leading change, and building high-performance teams. He possesses a keen understanding of role that corporate strategy plays in creating and defining value along with the critical role that licensing, pricing, and sales play in monetizing that value.

Jeff built the Asset Management Services team for EMC (2005) and previously led global licensing and pricing for the EMC Software Group (2003) and for Documentum (2001). Prior to that, Jeff held a variety of roles driving unrivaled customer satisfaction for The Northern Trust Company (1993).

Jeff’s nomadic education took him to a number of institutions (both domestic and international) culminating in an MBA from The University of Chicago Booth School of Business, an MA in International Relations from The University of Chicago Committee on International Relations, and a BA in International Relations from Beloit College.

Profile: www.linkedin.com/in/jeffgustafson Email: [email protected]

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