My recent journeys have brought me before both technology vendors and technology customers, and interestingly enough, both are asking the same question:
“How do we unleash the value of our technology investments?”
For technology vendors, more and more of their success is tied to their ability to help their customers unleash the business value of their technology investments (especially as technology vendors migrate to an as-an-service business model). If technology vendors hope to increase their renewal rates, improve upselling and cross-selling effectiveness, and acquire net-new customers, then technology vendors must take responsibility for helping their customers exploit their technology investments to drive quantifiable business and operational value.
No chart highlights the customer frustration better than this chart from Lisa Kart in a 2015 Gartner public presentation titled “Big Data Industry Insights 2015”. While I’ve not seen an update of these numbers since then, the message from Figure 1 is clear: stop selling technology promises, and let’s start talking value!
Figure 1: Source: Lisa Kart 2015 Gartner “Big Data Industry Insights”
This “Unleashing the Business Value” challenge is especially pronounced in the data and analytics space. If data is this source of economic growth in the 21st century – that is, if data is the new oil – then data and analytic vendors must do more than just sell technology capabilities; they must take responsibility in guiding their customers to become more effective at leveraging data and analytics to power their business and operational models. Data and analytics vendors must provide the framework, roadmap, methodology and services to help their customers unleash the value of their data and analytic investments.
I mean, the whole idea of applying advanced analytics to the organization’s data to uncover new sources of customer, product, and operational value seems like a no brainer, right? It should be like printing money. But it isn’t, and let’s be clear, it’s not the customer’s fault if they don’t understand how your products and services can unleash business value to them.
As a technology vendor, if your intent is to help your customers unleash the business value of their technology investments so that you can sell more technology to them, then skip the rest of this blog. This blog is NOT for you.
However, as a technology vendor, if your intent is to establish a co-creation (or co-innovation) relationship with your customers to help them realize meaningful and quantifiable business and operational value from their technology investments, then stay here because we’re just getting started. Intent is everything.
But let’s be clear, co-creation is customer-centric business model, not just a sales gimmick. As I described in “Value Chains vs Network…Make Way for Co-creation Business Models”:
Co-creation business models are a value-based relationship formed between vendor and customer that integrates the vendor’s technology capabilities with the customer’s operational expertise to create new market opportunities and new sources of value for both parties.
And the benefits to the technology vendor of these co-creation relationships are staggering:
- Improved renewal rates (why not renew if the technology is providing measurable business value)
- Bigger renewal deals (more value is more value, right!)
- Lower product development costs (because your product team is only adding, supporting and upgrading capabilities that directly impacts your customers’ value creation processes)
- Larger share of wallet (why invest in other technologies when investing in your technologies delivers more measurable value)
- Increased customer advocacy and referrals that results in more net-new customers who all want help in unleashing the business value of their technology investments
So, how do we go about “unleashing the business value of technology”? From the customer’s perspective, “unleashing value” is a 3-stage process: 1) Connecting to Value, 2) Envisioning Value and 3) Delivering Value (see Figure 2).
Figure 2: Unleashing the Business Value of Technology Roadmap
But before we deep dive into each of these “unleashing business value” stages, let’s clear the air about why so many technology companies fail – and fail miserably – to unleash business value.
So, what goes wrong with technology companies in unleashing business value of their technologies?
The first place where unleashing value goes wrong is the vendor engagement mindset.
- In a product-lead, outputs-centric engagement, sales teams lead with product and service capabilities, and “hope” the customer can leap over the “Value Chasm”. As Figure 3 says, that leads to a “Boink!” on the pathway to value.
- However, in a solution-seeking, outcomes-centric engagement, sales teams collaborate (co-create) with customers by understanding the customer’s sources of value creation, and then providing the product and service capabilities that eliminate the “value chasm”.
Figure 3: The “Connecting to Value” Challenge
The second place where unleashing value goes wrong is the false prophecy that technology companies can start with its existing technology-based relationship, and then sprinkle in more product and service capabilities to climb up the “Stairway to Value” (…and she’s climbing the stair way…to value). Unfortunately, differences in buying coalitions and buyer value propositions dooms this strategy:
- The buyers at each stair step have different responsibilities with different buying coalitions that you must persuade to introduce you to the next level of the value stairway with whom they may share little in common.
- The buyers at each stair step seek different Value Propositions and have different Personal Incentives.
- The buyers at each stair step lack the insights (and may not even care) regarding the value that is needed by the next stair step.
To be successful in “unleashing business value”, technology vendors must first seek to understand how your customer defines “value.” And as more technology vendors move to “capability-as-a-service” (Xaas) business models, the burden to unleash the business value of technology will squarely fall on the shoulders of the technology vendors.
“When you engineer a capability as a product, then it’s the user’s responsibility to figure out how best to use that product. But when you delivery a capability as a service, then it’s the designers’ and engineers’ responsibility to ensure that the service is capable of being used effectively by the user.”
So how do technology vendors go about “Unleashing Business Value” versus just peddling technology? By collaborating around a co-creation framework – the Value Engineering Framework in Figure 4 – starts by understanding where and how the customer creates value.
Figure 4: Value Engineering Framework
The Value Engineering Framework is a process of decomposing a customer’s Strategic Business Initiative into its desired business outcomes and supporting technology requirements. The Value Engineering Framework is successful not only because it starts the co-creation around the sources of value as defined by the customer, but the entire process puts customer value creation at the center of the relationship.
To summarize Part 1 of the “Unleashing Value of Technology” blog series:
- Customers are demanding help from their technology vendors in unleashing the business value of their technology investments. This is especially pronounced in the data and analytics space as companies are starting to comprehend the economics of data and analytics, and CXO suites are demanding immediate results from the organization’s nascent data monetization efforts.
- Technology vendors are struggling to help their customers to unleash the business value of their technology investments because these vendors lack a framework around which to connect, envision and deliver “value” as defined by the customer.
- This blog provides a framework (Value Engineering Framework) for technology vendors to help them research, contemplate and co-create business and operational value with their customers.
- The blogs that follow will provide an approach that 1) connects to value as defined by the customer, 2) envisions value by leading customers to identify, validate, value and prioritize customer’s sources of value creation, and 3) delivers on-going business and operational value through a strategic, co-creation business relationship (see Figure 5).
This is going to be a long series of four blogs. Sorry about that. But if these blogs are useful to technology vendors and technology customers alike in “unleashing the value” of their technology investments, then maybe I’ve found the fuel for my next book.