Tech Vendors Are Disconnected From Customers' New Reality

It's a shame to get old! My oldest child recently announced that he and his wife are having a child themselves. On one hand, I am thrilled at the prospects of having a smiling infant in the family - that I can hand off for unpleasant tasks. On the other hand, I am in complete, 100% denial about the word that will define my relationship with this child - the "G" word - shhhh, don't say it!

This made me reminisce about work. I remember my years in marketing at Sequent Computer Systems. The sales organization sold products based on "feeds and speeds" that became possible from "symmetric multi-processing." It was exciting stuff. We lived on the cutting edge of technology. Customers bought "products."

My next move placed me in the outsourcing industry. Rather than buying products, customers looked for solutions - usually a functional combination of hardware and software to solve a technical problem. Acronyms such as ERP and CRM were common, and the services industry exploded. Customers bought "solutions."

Now I am at Forrester and witnessing another fundamental change in the market. The financial pressures of the recent (and continuing?) recession changed customers. They now align business investments with technology costs. Customers want "outcomes."

The problem is that tech vendors are going to market the same way that we did 20+ years ago. In today's market, vendors must understand the customer - not in the abstract - but understand current problems and desired outcomes. Adapting your products and messaging to a customer point of view is called "portfolio management." Forrester's sales enablement team would love to hear about your experiences, perspectives, or insights.

How can you get involved? We recommend three steps. First, take 10 seconds to complete the "Client Choice" poll in the right column; second, add your comments to keep the dialog moving; and, third, engage with us by an email or through Forrester client services.

Comments

Odd definition of Portfolio Mgmt

This is interesting: "Adapting your products and messaging to a customer's point of view is called Portfolio Management."

Reinforcing the addition of yet-another-meaning to an existing IT term is troubling, especially as that term is fairly well established in most IT shops. The use of the term Portfolio Management to refer to the list of product offerings by a vendor is not a good choice of terminology.

As you've been elevated to the role of Forrester analyst now, you have far more control over the "language" used by IT professionals than before. I strongly encourage you to shy away from this term, and use a different term for this concept.

I am sure that you will do a good job of covering this concept in your work. I would simply prefer that you use a different label for it.

"Portfolio Management"

Nick,

Thanks for taking time to comment on Forrester's blog over the weekend. Your point that "portfolio management" could become easily confused with "project and portfolio management" is a good point. The issue that we've been balancing is that a portfolio is also the typical word used for a collection of marketing products, including a domain for retail brands of www.portfolio.com.

Per your point, we will spend some time discussing the right title for this function so that we avoid confusion and add value as well. If you have any suggestions, I am always open to input. You can post ideas here or email me at ddavison@forrester.com.

Thanks,

Dean

portfolio management thoughts

You hit the nail on the head – that’s one of the core topics of sales enablement and you already outlined the major challenges: how to organize a portfolio to ensure that sales is able to have valuable conversations at each level and at all stages of our customers problem solving process.

First of all I’d like to comment on the current discussion on the definition because without definition we won’t be able to communicate what we mean and we won’t be able to tackle the topic.
I like the term “portfolio management”, but I think it could be helpful to add something e.g. “portfolio & offering management” or “portfolio & service management” to ensure that we are not talking about IT project portfolio management and to make sure that it’s much more than just organizing a portfolio.

From my point of view there are several critical success factors how a portfolio could be organized successfully to support our overall sales enablement objective.
First of all the design points should be customers and markets. Second, a portfolio needs an inner structure telling a story based on the company’s vision/mission and strategy. It should represent a company’s view point on hot topics (where do we come from, where do we want to go and how?). What I mean is, the portfolio is one of the artifacts that operationalize a company’s vision/mission and strategy. It is about differentiation!
Third, a portfolio should be dynamic and designed outside-in which means it should include the current portfolio elements as well as the innovations a company is currently developing and it should address a company’s point of view on hot market topics as e.g. cloud computing, mobility, sustainability etc. That’s important to create/support value propositions based on a portfolio story. Another buzzword – that's what I mean: A value proposition from my point of view is a statement - often relevant especially for verticals - that says 1) where a vendor comes from in terms of core competencies, 2) what’s the vendor’s role in a certain industry and 3) how the vendor contributes to the customer’s desired business outcome. Dynamic means also to include relationships within the portfolio, e.g. cross selling potential, relationships to alliance partners, relationships between current and future offerings, between “must haves” and optional offering elements. The portfolio plus relationships easily displayed and provided for sales on a sales enablement platform supported by corresponding content – that's a critical success factor for our growth ambitions within our strategic/named accounts.

Organizing a portfolio like this is a necessary foundation for all approaches to organize and to structure content which can easily be adapted and re-used by sales – but that's another exciting topic!

Definititions?

As a newcomer to these terms, "portfolio management", and "CRM, ERP", etc. I remain truly confused. My instincts tell me you are talking about "Branding" , but reticent to say it. Also, the real corporate world , which you are speaking from, seems to be very averse to actually "serving" its online customers, as if that would be an admission that these customers really do matter, and may have a real influence on the company and its activities. But, then again, I am new to the business terminology, and only look at the customer as , well, a real live person, even if they are online. Sales enablement means I , the customer , get treated with respect, and get answers to my questions in a timely manner. If I get the stock response of a canned text reply, with no real person response, I simply go to another company, and explore their "portfolio management".

Addressing the Customer Centric Point of View

In the IT marketing world we have been aligning product/services messaging around the client perspective for years. Case studies illustrate this by stating the client challenge, solution to challenge and end result which can be linked to a business result. Basically, voice of peer vs. authoritative voice of manufacturer or provider. Sales 2.0 (a book that came out a few years ago) shows how companies are aligning their sales processes with the customer buying process for a particular product or service. It is much easier to create messaging that resonates with the target client if you understand the stages in the purchase process that they transition through.

I think the label you may be looking for is simply "client centric messaging" because it applies to any product or service in a "product portfolio".

Client Centric Messaging

Thanks,Cammie
I find that easier to understand. And, from the customer's perspective, the organization that communicates well is the one I will keep engaging with, and purchasing from. In our current economic environment, customers are more selective than ever, and will not tolerate the companies who only offer the automated phone systems for engagement. Those companies who offer online solutions and real time response will maintain their market share, and those who do not will lose today's savvy customers.

Changing Customers

Betty and Cammie,

Thanks for the great comments today. Within Forrester's Sales Enablement team we see exactly what the two of you described:

1. Tech vendors are aligning solutions to business results, and
2. Customers are increasingly intolerant of inattentive vendors.

Too few vendors are really making the wholesale changes needed. Some are changing their marketing messages, but our research shows that this change requires selling in a completely different way. Namely, selling to a customer's business outcomes rather than pushing company products.

The term "portfolio management" is gaining traction as a framework for the products and services developed by a company. That part is not new. What is changing is that leading companies put the customer problems first, then frame the solutions needed. That framing then guides product marketing - rather than the other way around of creating products and then figuring out how to frame them to clients who might want them.

Have you seen this kind of change? Are your vendors changing? How is your company doing things differently?