Cloud PLM and SaaS sales mindset

May 22, 2015

cloud-plm-sales

I want to talk about PLM sales today. If you want to succeed in sales, a mindset is a right starting point. But, enterprise sales needs a special mindset. PLM sales is very special case. These days SaaS / cloud software is setting new rules for enterprise software. How does it influence and change PLM sales? What advantages cloud PLM can get compared to a traditional PLM products and sales model?

Few days ago, I posted about how to stop blaming engineers for PLM sales problems? In my view, engineers are on average bad sales people. Therefore, to put engineers in the spot of selling PLM and blame them for wrong articulation of PLM value is a bad idea. There are thousands of books and article on the topic of how to sell to enterprise organizations. It is a good reading for coming Memorial Day long weekend. Today, I want to talk about cloud PLM sales – a new category that has a chance to change the way we sell PLM.

I can see two aspects of cloud PLM sales. First is related to a new reality of our world – internet, online connectivity, social networks, virality. How does it help to sell PLM? It certainly helps to create a new level of awareness about what your product does. If you didn’t setup your product twitter account, blog and other social channel, do it now! But, it doesn’t change a fundamentals. Despite all social channels, selling to enterprise is still very much old-schoolers game. In my view, there is no PLM vendors that discovered a new way to sell PLM until now. You can read more in my earlier post – PLM, Viral Sales and Enterprise Old Schoolers.

Second aspect is related to the fact how PLM companies are managing enterprise sales process and new business models. My attention caught the A16Z blog post – If SaaS products sell themselves, why do we need sales? The article gives you an excellent perspective on the details of sales process. I like the comparison of enterprise sales to the process of getting a bill passed in Congress. Certainly true. Although PLM is not a new category in the market, I would consider PLM sales challenge to create a unique value for every customer as something real PLM vendors are facing every day. PLM sales are competing with many other activities in manufacturing companies and it is literally hard to take it through the all three steps of decision process – why to buy PLM, why to buy PLM from a specific vendor and why to buy PLM now.

SaaS sales are facing the same level of sales difficulties. At the same time I’ve been thinking how cloud PLM can get some advantages over a traditional PLM product sales. And the point of "customer facing activity" form A16Z blog is clearly resonating here. This is a passage to pay attention in my view:

SaaS is a winner-take-all market involving a “land-and-expand” sales strategy. However, landing doesn’t necessarily mean expanding and winning. Staffing your startup with customer-facing resources — professional services, customer support, etc. — at this stage is an investment that will pay off not only in expanding your footprint inside that account, but in building the most powerful sales tool there is: a good reference. And while new clients are great, the best place to sell something is where you’ve already sold something.

You may ask me how is that related? Here is the thing… Landing should be an easy process in SaaS PLM compared to a traditional PLM sales process. And this is where cloud PLM can provide a clear differentiation. A traditional PLM approach is to sell on a premise of changing the way customer is doing business and manage product development processes. When it is done, you can setup PLM system and prove it. But it is a very lengthy process. Opposite to that, you can think about cloud PLM first sale as a "land" process. Do it for the most painful problem customer has. This is why PLM sales should be more technical. Land it to the customer for a cost of zero dollars. After all, you can leverage elasticity of the cloud as a biggest advantage. After you done, work on expand option. New subscription business models will help you to provide a new way for customer – pay per use.

What is my conclusion? Moving to the cloud, doesn’t mean PLM can sell itself. After earlier attempts, it looks like wrong sales strategy. At the same time, landing small feature to solve the most painful problem for a customer can be a right step to start. The challenge is to have enough customer facing resources that can help to discover it and land an initial solution with very low cost and super fast ROI. In my view, it is a completely different mindset from what we had before in PLM and enterprise. It is a time for PLM vendors to retool sales teams with new skills. Just my thoughts…

Best, Oleg

Image courtesy of Kittisak at FreeDigitalPhotos.net


How to stop blaming engineers for PLM sales problems

May 16, 2015

Plm-technology-matters

It is hard to sell PLM. Sigh… Even today. Even with all modern open source, cloud, browser, web, mobile, big data, SaaS, PaaS, IaaS and other cool product and technological buzzwords. How to get PLM right? Startups and large companies are trying to bring new ideas and products to the market in hope to make it different. I certainly can confirm that modern PLM systems are better in many ways than what we had 10-15 years ago. They are nicer, faster, more flexible, better integrated and better equipment to deal with problems manufacturing companies have today.

Here is the point. They are better…. Which brings me back to the the sales dispute about difference between vitamins and painkillers in PLM. Analysts and industry pundits are trying to find the reason why is so hard to sell PLM. A very respectful PLM analyst and my good blogging buddy Chad Jackson of Lifecycle Insights came with an interesting research related to that. Navigate to his article to read more – Engineering’s struggle to justify technology. His main point – engineers aren’t good at justifying technology investments. As a result of that, engineers just cannot sell these great technologies to CxO executives. Here is the passage from Chad’s blog:

Engineers aren’t good at justifying technology investments. I wish it wasn’t true. But in my mind, the findings prove it. The technologies aren’t lacking. Otherwise, technology capabilities would rise to the top of these lists. They don’t. If there was a problem with the underlying value proposition of these technologies, then that would bear out. However, as seen in a post I published last week, the value of some of these technologies is high. To me, the failing lies in the inability to justify these tools.

chad-jackson-plm-challenges

In the conclusion, Chad stated clear that price is also not an issue with regards to the problem related to engineering software sales. It all connected to the ability of engineers to justify the value of the technologies.

Pricing, in my opinion, is not the culprit for these issues. It lies in the difficulty that engineering has in justifying the technologies they need. Engineer’s decisions directly affect company profitability ever single day. Understand that connection and engineers should be able to easily justify their technology needs.

Well… I feel bad for engineers. At least for some of them that struggles to implement complex PLM systems. Certainly, if technological value is clear and price is not an issue, then to sell PLM should be an easy deal to make. But it is not… Which takes me back in my mind into product and technology. I’m sure you remember an earlier attempt of Microsoft to develop tablet computer. If not, the picture above can remind you Microsoft tablets circa 2002. The technology was right and all buttons were in place. However, something was missed. And Steve Jobs iPad circa 2010 confirmed that it was about technology and products. And Bill Gates confirmed Apple did something different. Here is a passage from BI article:

Last July, during an interview with Charlie Rose, Bill Gates explained that Jobs “did some things better than I did. His timing in terms of when it came out, the engineering work, just the package that was put together. The tablets we had done before, weren’t as thin, they weren’t as attractive.”

What is my conclusion? Engineers are easy target to blame. It sounds like product and technologies are right, price is perfect, value proposition is articulated in a most clear way, but… customers are not buying. Yes, it could be about market and prices. Maybe market is not ready for PLM or many be prices are too high or too low. I was in the situation once when customer didn’t recognize the value of PLM product because price was too low. But I doubt, this is a case with PLM systems today. Getting back to the product, we need need to think how to make it more attractive? It is certainly the moment to look again on product and technology. Just in case. Maybe there is still a small chance PLM vendors missed something. Just my thoughts….

Best, Oleg


How to sell PLM to big companies

April 14, 2015

plm-sales-meeting

PLM sales is not an easy job. PLM is usually “sold” to companies…. or actually sold to people running product development and manufacturing in these companies. I shared some of my thoughts about PLM sales in my previous posts – PLM Sales Cheat Sheet and Why hard to sell PLM ROI?

However, I want specially reference the following article – How to sell PLM to enterprise IT, which is setting a stage for my thoughts today – how software vendor is selling PLM to big companies. In my view, this is probably encounter for 99% of PLM business as of today. In most of situations, PLM software vendor, business unit or organization is selling to much larger businesses – manufacturing OEMs and suppliers.

The following article by Mark Andreesen gave me a big chunk of inspiration – The Mobi Dick theory of big companies. The article is worth reading. It helped me to identify and articulate 5 guidance principles of how to sell PLM to big companies. These are absolutely necessarily to keep in your mind if sell PLM to large OEM and just big manufacturing companies.

1. Set yourself for a very long sales cycle (months or even years).

Be extremely patient. Big companies play “hurry up and wait” all the time. It is probably going to take a lot longer to put together than you think.

2. Hire real sales people.

If doing deals with big companies is going to be a key part of your PLM business, be sure to hire a real sales pro who has done it before.

3. It is not done unless company is using PLM in production.

Never assume that a deal with a big company is closed until the ink hits the paper and/or the cash hits the company bank account.

4. Try to avoid bad deals

Selling to large companies can often require development of additional features and long pilot projects that will involve best product and technical sales people. It will suck the energy of your organization.

5. References from another big company.

Don’t sell to large OEM by referencing small tier-n supplier. It won’t work. Be aware that big companies care a lot more about what other big companies are doing than what any small company or startup are doing.

However, my absolutely favorite passage from Marc Andreesen’s post is the following one. It gives you a good picture of what will influence PLM sales decision process :

The consensus building process, trade-offs, quids pro quo, politics, rivalries, arguments, mentorships, revenge for past wrongs, turf-building, engineering groups, product managers, product marketers, sales, corporate marketing, finance, HR, legal, channels, business development, the strategy team, the international divisions, investors, Wall Street analysts, industry analysts, good press, bad press, press articles being written that you don’t know about, customers, prospects, lost sales, prospects on the fence, partners, this quarter’s sales numbers, this quarter’s margins, the bond rating, the planning meeting that happened last week, the planning meeting that got cancelled this week, bonus programs, people joining the company, people leaving the company, people getting fired by the company, people getting promoted, people getting sidelined, people getting demoted, who’s sleeping with whom, which dinner party the CEO went to last night, the guy who prepares the Powerpoint presentation for the staff meeting accidentally putting your (company) name in too small a font to be read from the back of the conference room…

What is my conclusion? Selling PLM to big company is more science than a procedure. The way current PLM paradigms and technologies are set, company is buying PLM and defining the way to manage product development processes using PLM technologies. It is painful, because this process is supposed to change the way people do business. However, in a big company you are dealing also with extreme level of organization complexity. We cannot change big companies, but we can change PLM paradigms to convert PLM sales into repeatable process. Just my thoughts…

Best, Oleg

Image courtesy of stockimages at FreeDigitalPhotos.net

 


How to sell PLM to enterprise IT

October 31, 2014

Enterprise IT adoption cycle diagram made by Simon Wardley made me feel sad and funny at the same time. I found it one of the best visualizations of many situations I’ve been in the past when working on PLM sales and implementation situations. This is a brilliant reflection of technology adoption route for IT department – ignore, prevent, tolerate, allow, integrate (credit Joe Drumgoole tweet).

enterprise-IT-adoption-cycle

It made me think about how to prevent a conflict with enterprise IT earlier in the PLM sales process. Today, I want to share some of my recommendations. These steps helped me in many situations. This is not a silver bullet, but I found them useful. PLM system and implementation cannot live in isolation. It has to be integrated with many other systems and processes in organization. Therefore, to learn them early during the sales process can be very beneficial.

1- Learn about enterprise IT

You need to make yourself familiar with basics of enterprise IT. You can bring engineering people to help you at this stage, but you need to get basic information about company enterprise infrastructure, data centers, data management. You need to learn how IT is managed. Is it local team? Does company use outsource IT consultant and service company, etc.

2- Get information about related enterprise software

PLM system cannot live in isolation. So, it will use databases, connect and use variety of application services, integrated with ERP and CRM systems. It will help you a lot to gather information about enterprise software. More specifically, you need to learn about fundamentals of how company is doing item master management, material planning and manufacturing BOM.

3- Find matched solutions

Do some homework and research to find similar solutions and/or references to products already used by a company. It will help you to find precedents and patterns you can refer during the review with IT organization.

4- Ask for meeting with enterprise IT to discuss PLM values and architecture

Don’t wait until late stage to discuss architecture and specific deployment aspects with IT organization. Do it earlier in the process to identify potential conflicts of infrastructure and process implementation – security, data ownership, workflows related to manufacturing planning and supply chain. During the meeting, try to show how IT organization will benefit from adopting PLM solution. It can come in many places – better data management, process optimization, collaboration with suppliers, data integration. Very often, IT organization suffers from complexity of processes IT people need to support. Explain to IT how PLM solution can help if you will have one more vote inside of organization.

5- Make reference call with IT people

Find existing customers that you can reference with similar enterprise infrastructure and solution landscape. Nothing can be more convincing IT people, than speaking to people having same roles in another company. In many situations it can help to solve problems much faster.

What is my conclusion? Enterprise sales requires communication with IT people in organization. One of the mistakes is to think that you need first to convince business and engineering people about PLM solutions. In my view, this is wrong approach. You need to work proactively with IT, otherwise IT can destroy the deal at very last moment. To get references from existing well-known customers is one of the best ways to pass IT. To have certification and/or partnerships with vendors, which products already used and can be referenced is another complementary approach. If you see a major conflict in architecture, system approach or IT strategy, you better get an alert about that early in the process. Just my thoughts…

Best, Oleg

Diagram by Simon Wardley’s blog – Bits or Pieces? (CC BY SA 3.0)


Why hard to sell PLM ROI?

May 24, 2014

plm-ROI

In business, ROI is one of the most fundamentals principles that can help companies to make decisions. To buy a software is an investment and therefore to be able to show ROI is an important part of sales and marketing activities. Manufacturing company will be trying to evaluate and compare ROI before the decision to buy and implement PLM system will be taken. Here is the problem. Historically, PLM systems and vendors have poor record to show PLM ROI. The simplest way to show ROI is to present it in the same method of measurement – money.

PLM-ROI-CIMdata

I read Why PLM Has CFOs Seeing Dollar $igns article by Arena Solution. In a nutshell, it speaks about how PLM can show measurable ROI. It brings lot of comparison between ERP and PLM. I can see premises of the comparison – PLM is taking much broader scope of business influence – from early design and customer requirements to service and maintenance. The following passage from the article arguing about the fact PLM financial and business value of PLM is greater than ERP.

For years, a Product Lifecycle Management solution has been seen as a solution that makes the lives of engineering and operations teams easier. But more strategically minded CFOs now see PLM as a solution to maximize business results. In fact, many C-level executives are finding greater financial and business value in their PLM solution than even in their ERP systems.

Well, as I said, it is hard to judge without numbers. Article leads to white paper – Why CFO are Banking on Cloud PLM? (You need to leave your contact information to get access to the article, which is fine). White paper speaks about 3 sources of ROI from PLM implementation – manufacturing and internal operations, optimizing the supply chain, customer satisfactions.

Unfortunately, article brings many data points about %% of saving and less examples of how to convert it to $$ signs. I found two places where examples of specific $$ saving where presented – (1) $500M savings over 3 years on direct materials in supply chain in computer industry. (2) $640M in materials acquisition savings potential in supply chain in industrial products.

The comparison between PLM and ERP made me think why PLM ROI is much less visible. Why is it so hard to convince CIO/CFO and other top executives to invest in PLM programs? Here are couple of thoughts.

You need to be able to measure saving. IT efficiency, operation metrics and strategic competitiveness – these are important things. However, can you show me how companies are measuring these parameters and what systems are helping to do so? Historically, finance and accounting systems were focus on external reporting. The needs for such system arose from the need of owners (and management) for cost information upon which to base production decision. Originally (many decades ago), the objective of financial system was to provide external financial reporting (IRS, Wall Street, etc.). Even for the last 2-3 decades the focus shifted from external reporting and profit to total process efficiency, it is still not reaching much to the level of operational metrics mentioned in all PLM ROI documents. ERP is a system that mostly satisfying the needs of financial reporting. PLM is not there yet.

I found the following passage from the white paper provided by Arena a good confirmation to my assumptions above – PLM is not measured on balance sheet.

Of course, CFOs naturally see clear ROI when it comes to financial systems, such as enterprise resource planning (ERP), but PLM – at its core – is an intellectual property management system with huge value not normally measured in a balance sheet. Simply put: CFOs see how inventory translates to dollars in an ERP system but have not considered how product quality and time to market translates to tremendous cost savings

What is my conclusion? If you want to improve something, you must be able to measure it first. In my view, this is a main problem with PLM ROI. The focus of PLM system and vendors should be on providing systems and tools that can measure activities. Companies should do the same. It is a lot of changes, but without that, PLM will remain the system with huge potential. Which gives hard time to sales and marketing to "show me the money" of saving and ROI with PLM. Just my thoughts…

Best, Oleg

Picture credit to CIMdata.


Why hard to sell PLM over the phone

February 27, 2014

plm-telesales

Life is transforming around us. Technology and communication are coming to our personal and business life. So, it comes to enterprise sales and PLM. The debates between new sales models and enterprise sales old schoolers are heating up. I posted about it last year and enjoyed many lovely conversations with sales people. My conclusion after that was – sales requires good organization and belief. Few weeks ago, I came with the idea of PLM sales cheat sheet outlining some important principles of how successful sell PLM to organizations.

Do you think you can successfully sell PLM over the phone? Personally, I haven’t heard about such examples. However, maybe new type of communication can help us. I was looking for some good examples of enterprise telesales to identify the pattern for success.

Mark Benioff is coming with some examples of CRM telesales in his book – Behind the cloud. The book is an easy read and fun – I recommend it to everybody if you have some free time. Play #41 from this book – telesales works (even though everyone thinks it doesn’t) was repeat in the following salesforce.com blog post. Mark brings top 5 points for a winning conversation in a successful sales call: Leverage the experience the prospect has had with other solutions; Introduce the value your product offers; Provide success stories from customers; Verify success stories by offering customer testimony; Provide a customer for the prospect to contact.

These points seems logical and simple. I was trying to apply it to my experience and compare to my notes from conversations with sales people to see and analyze how it can be applied in PLM sales. Why PLM sales conversation over the phone is hard? I put some of my thoughts below:

1. Leverage the experience the prospect has had with other solutions.

PLM competition (as well as previous customer experience) can be separated into two large groups – existing PDM/PLM solutions and homegrown systems. The first group is usually a result of heavy investment company made for the last 5-10 years. Second group is a solution developed by internal people (often with heavy inclusion of Microsoft Excel, Microsoft Office and other non-PLM specific tools). From my experience, it is very hard for customer to summarize main pain points. Companies are looking for more functions and lower TCO. Very often customer is not transparent about the existing PLM system situation, especially when it comes to the need to retire existing system (PLM vendor shifts to another solution/version) and existing solution is draining into problem. In a generic way, experience can be summarized as high cost, complexity and absence of specific functions. If you succeed to come to the last points, it will be clearly the success in your call, since you will be able to build your sales strategy based on these missing functions.

2. Introduce the value your product offers.

As I speak in my blog about PLM differentiation, many of them are very complicated to explain. Marketing story looks great – low cost, easy implementation, streamline your company processes, etc. However, devil is in details and the story about them is long and complicated to be told to a single phone call.

3. Provide success stories from customers.

PLM companies have large set of successful implementation stories. The problem with these stories – they all look the same on the high level – "we (company) had a problem in engineering and manufacturing process, complexity of competition, bad collaboration. With XYZ PLM solution we succeeded to solve these problems and our life is good". It is very rare (but possible) to see PLM specific examples of what process and how company improved their work environment with PLM, rather than say it is good now.

4. Verify success stories by offering customer testimony.

PLM implementation testimonial are too generic and raising too many questions from too many people in the company. It goes way beyond what is possible to answered via phone and/or WebEx session.

5. Provide a customer for the prospect to contact.

In my professional life, I never had a problem to provide reference customer to call. However, I’ve heard that on a broad scope engineering and manufacturing organizations tendency is less speak about how their working processes are organized. The diversity of manufacturing organizations plays another role and making "apples to apples" comparison very hard.

What is my conclusion? The uniqueness of existing PLM solutions and sales is high level of engineering and technical complexity. So, to maintain a successful PLM sales conversation you probably need to bring in some specific technical / functional use cases and pain points the solution you are selling can solve in a unique way. It will help you to win over the customer mind and build a foundation to continue sales process. Just my thoughts…

Best, Oleg


PLM Sales Cheat Sheet

January 20, 2014

plm-sales-cheat-sheet

I have to admit – I don’t have formal sales education. My childhood was mostly influenced by math and tech. Technology has a smell of precision and knowledge. At the same time, sales appears to be manipulative. I can try to blame Soviet Union regime, but it doesn’t matter now. I was wrong.

The understanding of how I was wrong came later in my life. I learned to sell my software projects, application and services. I still cannot say I’m good in sales. I must thank few people in my carrier that helped me a lot to understand the nature of sales. I’m still learning.

None of recommendations I put below came from formal books. Actually, I never had a chance to read formal sales books. Probably I should. List below comes from my experience and involvement in PLM projects in variety of roles – technical, implementation, advisory, strategy, competitive analysis and more. Following these rules helped me to achieve goals.

1- Make "enterprise executives" friends and friends across other divisions in a company you are selling to. Don’t be engineering/tech buddy only. The championship in engineering system department is important, but you need to get the whole picture of product problems and profit in a company.

2- Learn to say "No" to engineers and R&D managers. Very often, PLM has engineering roots in the organization. You can easy get spoiled by engineering ideas. With all respect to engineers, these ideas are not always on the top priority list for CIO and can be far from business goals.

3- Prepare to come at least 7 times to meet your prospect customer. Sometimes you will feel repeating yourself, but in PLM implementation, it is often part of learning and convincing themselves about their decision. Also, be ready to answer on the question "what is PLM and why is it needed if company already spent million dollars to implement ERP". You need to have a good answer…

4- You need to become a source of knowledge about other PLM implementations, best practices, failures and successes etc. Make yourself a bit "techie" – it will help you to build your credit. Very often your prospect customer doesn’t know what to do and would love to learn from what you did for other companies.

5- Learn how to shutdown implementations if things are going wrong. This one is tough. Sh’t happens. You need to learn how to fire customer, even if you made a sale. Not everything depends on you. PLM touches different departments and often requires a company to change the way they do business. People are trying to manipulate and it resulted in politics influence, conflicts between management groups, implementation strategies, competitors, etc. If you see that you cannot make a visible success in 3-4 months, push the stop button and ask to "rethink what needs to be done".

6- Learn few key typical PLM implementations failures – team disagreement about product development process and data ownership, CAD integration failure, PLM/ERP integration failure. In my view, these three are responsible for more than 50% of PLM implementation failures. You need to learn how to smell it and go to option #5 with request to rebuild the process.

7- Deliver one feature from engineers dream list. Take one that will help engineers to be proud of what PLM does. Something that not on the top priority list. You will become "engineering hero".

8- You biggest win will come 3 years later from a customer you failed to sale to. Enterprise sales is a lengthy process. Companies need time to understand how they do work and how they need to manage a change. Management changes. Corporate conflicts get resolved. Remember #4 and be consistent in PLM vision you sale. Prospects will come back.

What is my conclusion? Enterprise sales is a special discipline. These days is probably one of the most interesting things in the overall process of technological disruption. Major disruption happened because of internet, cloud, mobile and other technologies. The wave seems to be going to enterprise continent. However, enterprise is first about people and second about technologies. Technologies make sense only after people can understand and use them. Just my thoughts and good luck!

Best, Oleg


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