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Candyce Edelen brings more than twenty-two years of experience in launching and managing technology companies and founded four companies prior to PropelGrowth. She has a background in product and company launches, developing successful go-to-market strategies and building sales, marketing, and... More
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  • Why IT Buyers Don't Trust Technology Vendors

    by Candyce Edelen

    Finding Technology for Market Surveillance

    Last year, the CFTC (Commodities, Futures and Exchange Commission) had to find or build technology to surveil the swaps market. But they ran into a host of problems in trying to find the right technology solution. In essence, they felt that vendors were not being completely honest with them. A transcript of a CFTC Technology Advisory Council meeting contains some interesting commentary by Hugh Rooney, who is in the Division of Clearing and Risk.

    Hugh's team was tasked with finding a technology solution. This was a difficult task.Swap Execution Facilities (SEFs) are brand new, and swap trading workflow doesn't match that of other asset classes. So any existing solution will need to be customized to accommodate the SEF workflow. It will also need to integrate cleanly with CFTC's existing infrastructure.

    Vendors Will Promise Anything…

    Rooney's team had trouble finding a solution, partly because of the complexity of the functional needs, and partly because, in his opinion, the vendors were not being honest and forthright. He says "…vendors will promise you anything; there is nothing they can't do. And that's very difficult to evaluate. [They say they] can build you a system that will do that, and when the day comes, they can't." Later in his commentary, he essentially says "talk is cheap" (scroll to the bottom if you'd like to read his testimony).

    Minimize Pain, Maximize Value

    Any implementation of a sophisticated technology solution will need to meld cleanly with the client's existing environment - usually a complex infrastructure of in-house and third party solutions. Before they make a purchase decision, the IT team needs to be able to evaluate what it will take to integrate the new product into that environment. They need to know what limitations to expect, what workarounds to plan, and what best practices they can use to extract the most value out of the new technology. They want to minimize pain and maximize value.

    Clients Need to Believe and Trust Their Vendor

    As a technology vendor, your goal should be the same, and your marketing content should support those needs. But in many cases, vendors' marketing literature is virtually inscrutable. Most of the content I come across is too light in how the technology applies to business problems, is vendor-focused instead of customer-centric, and provides little insight into how the technology will fit into the client's workflow and infrastructure.

    I regularly interview bank technology buyers about their buying processes. In these interviews, I hear over and over again how TRUST is a key driver for selecting one vendor over another. In many cases, the losing vendor promised more functionality, more bells and whistles, lower latency and lower price. But the buying committee went with the vendor they BELIEVED and TRUSTED.

    Customer-centric Honesty Builds Trust

    I've experienced this myself. When I was selling financial technology, I consistently won clients when we were transparent about how the technology worked, honest about our limitations, and enthusiastic about committing to building out the system to meet requirements where our functionality fell short. I saw many competitors try to pull the wool over a customers' eyes or sell something that didn't exist yet. In many cases, customers saw through this BS.

    But let's be honest. Often, lying or stretching the truth does win sales. I've talked to many companies who had to rip out technology after a long and arduous implementation process - because it didn't perform as expected and the vendor couldn't deliver on its promises. Anyone who has gone through this painful process is likely to be very gun-shy. Which is why a transparent, honest approach is both refreshing and trust-building.

    But We Need to Protect Our "Secret Sauce"

    When I encourage transparency, I always hear about the need to protect intellectual property, trade secrets, or the "secret sauce" that makes a company's products unique. I don't disagree. If you've got some unique approach for how you leverage an FPGA card or get a message to pass through risk checks 30% faster than your competition, you probably need to keep that close to the vest. But most of your technology is NOT secret sauce. And generally, the information that a client needs to be able to understand and trust you has nothing to do with your trade secrets. They need to trust that your team knows what they're doing, has experience, and can deliver on company promises.

    So How Can You Be More Transparent In Your Content Marketing Without Giving Away All Your Secrets?

    Here are three suggestions:

    Answer your customers' common questions in your blog

    Every vendor gets a consistent set of questions during sales meetings. Some are business oriented, and some are technical. So be customer-centric and answer the questions - even those that might place you in a poor light. You get to control the conversation in your blog, so you can be transparent, but also steer the reader to the more important issues. Here's a great TEDx Talk on this topic. While the discussion in the video is targeted more at a B2C audience, the strategy applies just as much to a financial technology provider.

    Write about use cases with specific implementation problems

    Prepare customer-centric use cases that tell stories about implementation problems and how clients worked around them. Show where problems can occur and explain the best practices that can help ensure a client's success. You don't need to name your customers in these use cases. Anonymous use cases that are HONEST and TRANSPARENT are very valuable for future customers and can also help retain existing customers.

    Create videos talking about implementation approaches

    Interview your implementation team about what approaches have worked with recent customers. Again, you don't need to disclose your client's name to make this a helpful video. But make it specific to a particular situation and keep it very brief. It's better to do five 5-minute videos than one that lasts 25-minutes.

    I'll bet you have several other ideas. So please share in the comment section ("Speak Your Mind").


    Mr. Rooney's Testimony

    In case you're interested, here is the full quote from Hugh Rooney. This is a transcript of a live meeting, so ignore the grammar issues.

    MR. HUGH ROONEY: I would like to say that, Greg, I was very sensitive to your comments about vendors because internally we are dealing with the same sort of thing. It hit home with me with our risk surveillance for swaps. And we are having a very difficult time melding our technology with what is available from vendors. And vendors will promise you anything, there is nothing they can't do. And that's very difficult to evaluate.

    We can build you a system that will do that and when the day comes they can't. And I'll certainly express your concerns, all yours, but I'm very sensitive to the one about use of vendors and having it integrate with the technology you already have on board. Which I'm not going to talk about today, but the CFTC system for risk surveillance, we are having a difficult time in the swaps world bringing a product that will help us do what we do in the futures.

    It's very challenging and very difficult worlds and vendors are promising. And sometimes their promise is very cheap and sometimes there is no way you guys can have that. This is very productive and I like hearing this. Like I say, we will bring back your concerns.

    CHAIRMAN SCOTT O'MALIA: Any further thoughts?

    Hugh, this is a vendor conference, by the way, so when you exit, good luck. (the event was held at the FIA conference in Chicago - October 30, 2012.)

    http://cftc.gov/ucm/groups/public/@newsroom/documents/file/tac_103112_transcript.pdf pp. 217-218

    May 28 11:29 AM | Link | Comment!
  • Technology Buying Process – What's Really Happening

    There has been a great deal written about the sales process, the customer buying cycle and how to align selling with the customer's buying process. But most of what I've seen is still written from the seller's point of view. What's really going on behind closed doors when customers are making decisions?

    We have interviewed countless senior technology and business executives in tier 1 and tier 2 sell side banks, brokerages and exchanges to better understand their internal buying processes. Here is a summary of our findings, along with some tips for how you can use marketing content to help influence each stage.

    To simplify understanding, we've broken the process down into stages, but it's important to understand that the customer does not necessarily view their buying process according to these stages. They may see only 3-4 distinct stages in their buying cycle - awareness, evaluation, commitment and implementation.

    Awareness

    The buying process generally begins as the client becomes aware of a problem or need. This generally starts with one or two people and gradually bubbles up in the organization. Individuals might begin an independent analysis of the problem and possible solutions, but this approach will not yet be institutionalized. Here, your content plays an important role in helping different parts of the organization develop awareness - help them identify and understand the problem from their perspectives.

    Research

    As the early individuals gain enough understanding of the problem, they'll start sharing their thoughts. Once enough people are aware of the issues and generally agree with the business impact, the organization will assign resources to better research both the problem and potential solutions. This may be informal in small organizations, or a formalized process in larger enterprises. But in all cases, a team is formed to research the problem and figure out how to solve it. In some cases, a consultant may be engaged to help define the problem and recommend solution alternatives.

    Vision of a Solution

    Gradually, individuals in the organization will begin to gain a vision of how the problem can be solved. This vision will generally need to include one or more vendor products, internal development and integration with existing infrastructure and systems, plus an understanding of the need for internal or external resources to implement and run the solution. Usually, the vision will be vague and heavily influenced by one or more vendor solutions. Different individuals and different groups will be arriving at different conclusions, and opposing visions are probably developing.

    Evaluation

    Generally, a team will be asked to shortlist 2-3 options (may include both vendors and internal development). To do this, they may issue RFIs or RFPs, they will meet with sales teams, review product demonstrations, and try to come away with a clear sense of how each option would work in their environment.

    Writing RFIs and RFPs is difficult and time consuming. Often, teams will look for ways to simplify this task. If a vendor can offer a template RFP as a starting point, teams will often use it, customizing and adding functionality based on their understanding of the requirements. But obviously, the RFP will be skewed to the vendor that provided the information at the beginning.

    RFPs are generally designed to accomplish 3 things - evaluate the options to see what functionality can be included, understand the relative strengths and shortcomings of options based on the team's understanding of the problem, and gain a better sense of the costs. The team will use the RFP to create a short list of options.

    Shortlisted vendors are generally asked to perform some kind of proof of concept. In some cases, this is a custom demonstration. In other cases, it's a trial. Generally, the client will go to some lengths to design tests for the functionality that is important to them. But that doesn't always mean they're testing all the functionality, or that the tests are reasonable. In many cases, they're designed to demonstrate a reasonable level of diligence in care from the decision committee.

    Internal Selling

    During the evaluation process, the champions of the various visions will make efforts to sell their ideas to each other and to decision makers. For example, one bank we talked to had opposing visions for how to automate testing of their trading technology. The US QA team wanted vendor #1, and the UK team wanted vendor #2. Both teams had compelling reasons for their choices, and argued passionately for their positions.

    During this process, champions of various options may look for ways to position their favored choice on top, they may look for ways to actively derail what they perceive as competition, or they may "lay low" and let the "cream rise to the top." While companies always try to make careful, logical decisions, it's important to understand that evaluation processes can be heavily skewed and is often fraught with emotion and conflict. This is a point where the vendor that does the best job facilitating internal selling can impact the decision, but it's important to acknowledge that the level of political influence each team has will weigh heavily in the resulting decision.

    Business Case

    In most cases, at this stage in the buying process, a business case is required. If the solutions are priced under $100K, the cases are likely to be fairly informal and may involve just a discussion. If costs swell above $500K, a more formal process might be needed. The evaluation team may be required to make some kind of presentation of the business problem, risks of inaction, costs, how the products will be used, their plans for the overall solution, results of the evaluation, and cost justification. Sometimes, they'll need to produce an analysis of the total cost of ownership.

    In many cases, the TCO analysis will win the deal if one vendor or an internal build option looks like it will have a substantially lower TCO. If your product has a higher starting price point, but you can demonstrate a lower total cost of ownership, it's important to provide content to demonstrate this.

    Risk Mitigation

    Different organizations have different approaches for risk management. Some will be relatively painless and require just simple reference checks and legal reviews. Some have an approved vendor requirement that can be a fairly involved process. Purchasing, Legal, Compliance, and Risk Management may all be peripherally involved.

    Generally, if this stage in the buying process is painful or time consuming for the vendor, it's doubly so for the client. So clients are unlikely to take a new vendor through the process unless they are convinced that the return will be well worth the personal cost. Sometimes, vendors can streamline this process by working with partners who are already approved vendors. But that also comes at a cost. Screen partners carefully before entering into these types of agreements.

    Implementation

    While the contract signing is a "closing" event for the vendor, for the client, the process is not over, and the real pain may just be beginning. Now the client has to make sure that the implementation goes smoothly, that the product meets expectations, and that customer and workflow impacts are carefully planned and managed. Vendors who make special efforts to partner closely with clients through this implementation process generally come away with the most successful and least painful implementations. If you can demonstrate your ability to reduce implementation pain, provide content to explain how. It will help prospects overcome commitment risk and may help skew a decision to your firm.

    For more information on the customer buying cycle, download "Thought Leadership to Support the Entire Buying Cycle".

    May 28 11:20 AM | Link | Comment!
  • Is Your Money Safer Under The Mattress?

    You've probably already read the news about Cyprus planning a levy against retail banking deposits. On Friday, Cyprus announced that they will apply a one-time levy against all retail bank deposits held in Cyprus. They plan to take 9.9% of all deposits over 100,000 Euros and 6.7% of all deposits under that threshold.

    The Cypriot government is in a pickle about how to rescue their banking sector and that they're trying to get EU bailout money. Where other bailouts made bank creditors and bond holders take huge hits, Cyprus has fewer options. But this draconian measure seems more like something that could tip the EU financial sector into a deeper financial crisis rather than shore up the Cyprus economy.

    There has already been a limited run on the banks in Cyprus, as depositors rushed to ATMs over the weekend trying to withdraw their cash. Most of the ATMs were emptied within hours, preventing Cypriots from accessing their money. Today is a bank holiday, so no money can flow out until tomorrow.

    It's uncertain whether the measure will actually be passed as three parties in the Cyprus Parliament have already announced that they will not back the plan, and Cypriot ministers are looking for ways to soften the blow. But the only alternative may be a default.

    But I wonder how this is going to affect the entire Eurozone banking sector? If Germany can dictate levies like this in Cyprus, what's going to happen with Ireland, Italy, Greece, Portugal and Spain? Eurozone banks are already taking a hit, andMoody's is warning that the move would have negative implications for other EU banks.

    If I stood to lose 10% of my savings overnight, I'd be looking out for alternative places to stash it. Heck, even the mattress could start looking safer than EU banks.

    Mar 18 2:15 PM | Link | Comment!
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