A Must Read - Speech by Mr. Mahindra

I have never heard a speech like this, where Mr. Mahindra brings an interesting reference of the current India IT industry to an old India Mythology at the recent NASSCOM leadership Forum. This is the first occasion where I have been a part of a speech that relates market situation to mythology. Its great. 

Defeating its own Hiranyakashyaps (Courtesy - NASSCOM) 

Reinvention, regrouping and re-thinking its ways out of challenges is the way to go for the IT-BPO industry.Innovation was the theme that laced the keynote by Anand Mahindra, vice chairman and managing director of Mahindra & Mahindra, who, in an interesting twist, led the discussion on “Building a Knowledge Economy for Growth,” with references to Indian mythology instead of technology!

In this article, we capture some of the innovative ideas that Mahindra presented at the Conclave, for the IT-BPO industry to combat its Hiranyakashyaps.

“I think there are some urgent pressures and imperatives the industry has to deal with at this point, which need different answers. Therefore, I'm going to talk about something completely different: I will talk about the Trimurti.

Most Indians will know the Trimurti–the trinity in Indian mythology including Brahma the creator, Vishnu the sustainer and Shiva the destroyer. There is a wonderful depiction of this in stone, just ten kilometers across the bay, at Elephanta. Both as a businessman, and as someone who tends to see life in visual images, the Trimurti reminds me of India's IT industry. Think of it.

The Indian IT industry has gone through a stage, where like Brahma, it created something out of nothing. It created a new and global industry. It created a service sector that is today, a major pillar of our GDP. But most importantly, it created a perception of a new India, both in the world and in Indian hearts and minds.

But creation is only the first phase. The industry has to move on to the next phase of sustaining that creation—move to the realm of Vishnu the preserver. Creation is a one-time affair. Sustaining that creation is obviously a longer haul, subject to many attacks and crises. Perhaps that is why Vishnu comes not in one, but in ten incarnations.

Every time there is a new danger, he changes his avatar to a form best suited to meet that danger. At various times he has come as a fish, as a tortoise, as a dwarf. But his most interesting avatar came when he had to fight the demon Hiranyakashyap. Hiranyakashyap was a bad guy, who had obtained an amazing boon from the gods. Neither man nor beast could kill him; he could not be killed by daylight or at night-time, within his home or outside it, on the ground or in the sky. All this made him pretty invincible–he went on a rampage, and only Vishnu could tackle him.

The IT industry today faces challenges every bit as complex as those Hiranyakashyap posed for Vishnu. It is hit by a macroeconomic tsunami of adverse currency changes, rapidly escalating costs in both salaries and infrastructure and inadequate talent pools below the Tier 1 and 2 institutions.

At the Company level, firms are begin to feel the penalties of poor differentiation and lack of focus (trying to be all things to all people); and an over-emphasis on high volumes and price competition. Suddenly, the industry seems to have fallen off its pedestal; You are facing your very own Hiranyakashyap.

It's interesting to see how Vishnu dealt with him. The demon pretty much had all bases covered. So Vishnu took on the avatar of Narasimha to bypass the boon. Narasimha was a hybrid creature, half man half lion, and therefore neither man nor beast.

He killed Hiranyakashyap at twilight, which is neither day nor night. He killed him in the courtyard, which is neither inside a house nor outside it. And he killed the demon by placing him across his knee and tearing him apart, thus circumventing the terms of the boon that he could not be killed either on the ground or in the sky. Now that's what I call an innovative algorithm!

So what are the lessons for the IT industry in this story? Well, the first thing Vishnu did was to reinvent himself. It was not the gentle and contemplative Vishnu who fought Hiranyakashyap–it was the fearsome Narasimha avatar. Vishnu reinvented himself to suit the circumstances. The circumstances have changed drastically. The IT industry must reinvent itself.

Do I have all the answers on the modes of re-invention? No, obviously not, otherwise I'd be out there filing patents, although I can suggest two broad approaches.

First, why don't we design business models that challenge traditional industry approaches and then transform our organizations, people and processes to execute. If we simply keep knocking on the doors of clients with our traditional offshoring options, we'll meet the fate of hearing aid salespersons: our best customers won't hear the doobell!

A few weeks ago, an Indian car company made a game-changing move. Maybe the Nano will ultimately not retail for a hundred thousand rupees. Maybe it won't have great margins, or replace as many motorcycles as it would like to, but it was a game changing move; it fired a shot that was heard around the world. Can the IT world make any such claim?

There was an old saying, apparently adopted by the IT industry, that the secret of success is to jump every time opportunity knocks. And how do you know when opportunity knocks? You don't, you just keep jumping!

So when are we going to stop simply jumping every time a client seems to sneeze, and actually create products and IP that become their own opportunities?

Let's look at new areas where India may have natural advantage. I remember C.K Prahlad telling us that we didn't realize how important it was to leverage emerging innovation ecosystems in our country. He gave us the example of how, due to a fortunate coincidence, India's IT and automotive industries were situated in roughly the same geographic clusters. So why wasn't, according to Michael Porter's competitive theories, a world beating automotive telematics industry taking shape here.

Why aren't IT companies using the massive potential of India's soft power, the film and TV business to exploit technological dominance of what Telcos call the “last mile” but is actually the “first mile” in the brave new interactive world?

Secondly, why don't we try to focus on a vertical industry (e.g., telecom) or horizontal domain (e.g., supply chain management) selecting the key dimensions of competitive differentiation–product versus service, breadth versus depth, speed of delivery, customer service responsiveness, fixed or outcome-based pricing, proprietary technology or intellectual property, and so on.

And let's be prepared to make hard decisions along the way–change people who don't fit, walk away from businesses that doesn't fit.

Along with re-invention, during the course of reinventing himself, Vishnu figured out the loopholes in the boon, and regrouped his physical and mental aspects to take advantage of these loopholes. That's something the IT industry can do as well. It has often been pointed out that the Chinese word for crisis is also the Chinese word for opportunity I love that mindset. I truly believe that the adverse rate of the dollar can be viewed as the glass half empty or the glass half full. Sure it affects margins. But it's also a chance to take advantage of the loophole and buy the IT industry what it doesn’t have, so it can regroup its structure to meet the challenge.

To me, the fact that our currency is more valuable and our price earnings ratios are still higher than average, means that we can acquire the front-ends and the large IT businesses that we never thought we could before. And the bigger the better. If people are egging us on to leapfrog, then they should also cheer the IT companies bidding for organizations bigger than themselves. It's happening all the time today in the manufacturing sector—Tata Corus being the stellar example—and we at Mahindra, while starting from scratch, have inorganically compiled together a portfolio of acquisitions that make us the fourth largest steel forging company in the world today.

This is not without historical precedent. If you look at Japan and South Korea, both of them went through a phase of enduring the worlds' skepticism, then painstakingly building strong and competent domestic businesses, and then on the back of global liquidity support and strong price earnings ratios, compressing time by acquiring global firms and their customer credibility.

In effect, by acquiring the strengths and skill sets needed, the IT-BPO industry can regroup its profile and create a new entity, which can vanquish challenges as effectively as Vishnu vanquished Hiranyakashyap.

And finally, while reinventing itself, the industry will have to bring in some of the aspects of the third element of the Trimurti–that of Shiva the destroyer.

Destroy for example the premise that cost arbitrage is the way to go. Recognize that the low cost, high volume offshore outsourcing battle has already been fought and won. Often, when strategic frames grow rigid, companies, like countries, tend to keep fighting the LAST war. If the industry I not already on the winners list, it needs to think of other ways to compete on value and differentiation, rather than price and scale.

Destroy the premise that success comes only from size, and desist from comparisons with other Indian companies. There are still many IT companies in India who define success as "we want to be one of the top ten Indian IT companies." Why not, for example, "we want to be the world's #1 banking back office solutions provider?"

And lastly, perhaps the time has come to destroy the notion that the world may be its oyster but India is not. There is a huge domestic market in middle class and corporate India that has not been plumbed. Even selling to the bottom of the pyramid is profitable today. But it needs a creative destruction of the current mindset and a re-think on many of the assumptions we hold dear.

Therefore, in conclusion, it can be said that perhaps there really isn't that much distance between avatars in the mythological sense and avatars in the technology sense. Perhaps they are both symbolic expressions of the same reality. In their different ways, they both underline the same message–that it is necessary in any situation to reinvent, regroup and re-think our way out of whatever challenges confront us. It’s time then for the Indian IT-BPO industry to wake up and make the world different.”

You Go And I Go, There Should Be No Ego

The sub-prime situation in the US is far from over and Indian companies which get business from US clients stand to be impacted. If companies are not placing orders to manufacture things like cars or PCs out of China, then it is bound to impact their economy. By June 2009 the US would be back on its feet.

Bala V Balachandran, the 71-year-old distinguished professor with Kellogg School of Management goes by a simple philosophy - In the long run, you go and I go, there should be no ego.

The first Indian to be hired by Kellogg three decades back, the outspoken professor is concerned about the way the Indian and US economy seems to be heading. Add to that he laments about lack of leader and visionaries in India.

"The sub-prime situation in the US is far from over and Indian companies which get business from US clients stand to be impacted," he told HT on the sidelines of the opening of a new campus of his business school, Great Lakes Institute of Management, Chennai. His statement rings a loud bell considering that he has taught a lot of students who have now gone on to become key decision makers in financial companies in the US and the world.

According to him, the first signs are evident from IT companies who are reporting lower than expected net profits in the last two quarters and have given muted business outlook for the rest of the year.

"This fact is evident by the retrenchments that a few Indian and global IT companies made recently," he says.
According to him it is not services companies (like Infosys or Wipro) but even Chinese companies who are feeling the impact of the sub prime situation.

"If companies are not placing orders to manufacture things like cars or PCs out of China, then it is bound to impact their economy," he says. Ask him about when the US will come out of a recession and he assures that by June 2009 the US would be back on its feet.

While he is convinced that India's economic fundamentals are strong, he is concerned about the rising inflation. "A huge chunk of the middle class has moved up thereby making more money available, creating more demand, thereby resulting in this inflation scenario," he explains.

According to him, this rising inflation is a global problem and not an Indian one and he is convinced that the FM is addressing it in the right manner.

Courtesy - The Hindustan Times

Cincom Smalltalk Releases ObjectStudio 8.1 and VisualWorks 7.6

Cincom Smalltalk announces the release of ObjectStudio® 8.1 and VisualWorks® 7.6, each with a number of significant improvements, including support for Seaside 2.8--the high-productivity web application development system. Seaside is open source and portable across multiple Smalltalk implementations. 

Cincom ObjectStudio 8.1 is the first Vista-certified Smalltalk available. It now uses the industry-leading VisualWorks VM and has access to all of the standard VisualWorks components--including Seaside. Cincom has also updated its Sybase and ODBC support.

Cincom VisualWorks 7.6 has enhanced integration and revamped and refined browsing tools. Along with a greatly improved MacOSX VM, Cincom VisualWorks 7.6 also supports Microsoft Vista, OSX Leopard and MySQL, and includes a supported object-relational mapping framework (GLORP).

For further information, please visit the Cincom Smalltalk Product Manager’s blog,

the Cincom Smalltalk Product Evangelist’s blog, and the Cincom Smalltalk website.

Related links:

Screencast: Introducing ObjectStudio 8.1

Screencast: Using VW libraries in ObjectStudio

Cincom Smalltalk Screencast archive

The newest Cincom Smalltalk podcast

Cincom Smalltalk podcast archive

About Cincom Smalltalk

Cincom Smalltalk is a cross-platform development technology that helps developers build applications quickly and efficiently from highly scalable web applications to classic client/server systems. Cincom Smalltalk brings better productivity than Java, Ruby, Python, C# or VisualBasic. Bring your products to market faster with Cincom Smalltalk.

A Blink is Just a Blink

An interview with Kevin Clancy and Peter Krieg, co-authors "Your Gut Is Still Not Smarter Than Your Head"

A "Blink" Is Just a "Blink"

Why is the tenure of CMOs depressingly low? Instead of popping Alka-Seltzer, Kevin Clancy and co-author Peter Krieg offer an alternative prescription to relieve marketing performance anxiety.

Is marketing really all about the "blink" as Gladwell might have us think? Or can companies truly put into place a successful marketing strategy founded in discipline and a fact-based approach? Is there a way that 2008 will truly be the year that CMOs don’t take flight and companies boost both brand and market performance?

Interview Kevin Clancy and Peter Krieg:

Nettie (NH): While CMOs are popping Alka-Seltzer and trying to increase their now average tenure of less than 22 months, what are the top three things they can do today to get a handle on their marketing efforts?

Clancy: We get this question from folks, a lot—what are those three critical things I can do today to dramatically improve marketing performance tomorrow. I always give the same answer. It’s not exactly a well-kept secret that most executives—marketing and otherwise—have no idea who their most profitable and least profitable customers are. And forget about prospects! It’s a drag on performance to waste time and resources on buyers who offer little in the way of economic value to a company, so the first thing CMOs can do is to filter out the chaff and find a target worth targeting.

Next if you don’t want your brand to be a commodity, don’t treat it like one. CMOs need to find a positioning based, not on what everyone else in the category is doing, but on real buyer problems.

Finally, no matter how dead-on the targeting and positioning, if they get lost in the shuffle during implementation of the strategy—in an ad campaign, for example—there’s no effect. So treat implementation as a priority, not an afterthought.

NH: You say relying on gut instinct to make decisions is dangerous and that it should not be the determinator for marketing programs. In the world of instantaneous "gut-check" marketing and the hub-bub about "Blink," what do you think CMOs should be utilizing instead of gut?

Clancy: In marketing, as in life, the best approach rarely lies in the extremes. Yes, relying on gut instinct and intuition alone to make a marketing decision is foolhardy. But we’d never say all you need are numbers and data to make a decision either. There is plenty of suspect data out there that can lead CMOs in the entirely wrong direction. When it comes to making marketing decisions, nothing beats a balance of personal judgment and seasoned experience with careful analysis of unimpeachable data.

NH: You've said CMOs should "lose their fear of numbers"—what does that mean and why is it important?

Clancy: At most companies today, market researchers and marketing managers are about as close to a productive working relationship as the Democrats and Republicans in Congress. Researchers very often talk in terms of analysis techniques that mean little to marketers and the data they tend to present rarely provides a clear course of action. So like kids and spinach, marketers know they need the research, but they don’t want to eat it—it’s too complex, not really helpful, and who knows if it’s even any good to begin with? In lieu of buyer research, marketers rely on competitive information and their own sense of what customers will or won’t like to make a decision. Given that the average ROI of most marketing programs these days is zero or negative, this approach doesn’t seem to be working very well. CMOs need to take steps to address their current issues with research, otherwise they’ll be left having to explain to the CEO and CFO why he or she has nothing but his or her good name to back up a major marketing decision.

NH: You advocate that marketers should "start buying media by hearts and minds, not numbers." Explain?

Clancy: The only way to buy media these days is by the number of people exposed to commercial message. You can imagine how frustrating this is for marketers who are spending millions and would like to know that target buyers not only see their ad, but also pay attention and respond to it. There’s plenty of talk about coming up with metrics and ratings systems to capture levels of "engagement" in different media such as TV. The theory goes the more "engaged" or involved a viewer in a program, the more likely he or she is to tune into the ads during the show. Our own work at Copernicus in this area has found program involvement accounts for half of the attention paid to an ad and casts a long, positive shadow on persuasion among those aware of the ad. But CMOs need to get serious about tracking ad response by level of engagement to establish exactly what the added investment that will likely be required to secure ad time in a highly engaging program, magazine, radio show, website, billboard, etc., will return to them to move the dream of more impactful media buying closer to reality.

Do Sales and Marketing Really Have to Collaborate?

NH: Why is it important for marketers and sales folks to get along?

Clancy/Krieg: Here’s another flashpoint for marketers—their relationship with the sales team. They just don’t get along and, unfortunately, too many companies just accept this as the natural order of things. Marketers can’t afford to let this continue. I said before that implementation of strategy is just as important—if not more so—than the strategy itself. If you can’t get sales on board with a marketing program, marketing performance suffers.

CMOs would do themselves a big favor if they took the first step toward detente and tried to patch things up. Start with a new mindset—treat sales as a client instead of a competitor. Have your team find key targets for them in available sales databases. Come up with different scripts for different targets. Show them the money—in other words, how the information you are giving them will help make more of it—and they will show you the love.

NH: Why is 100% customer satisfaction unprofitable? And how should that determine where companies should spend their money in marketing?

Clancy/Krieg: Throughout the 1990s, management consultants preached the virtues of 100% customer satisfaction. Many companies—Xerox for one—made this their overarching corporate goal. And even with all that push behind it, the average cross-industry customer satisfaction score still hovers just below 75%. Now, obviously there’s plenty of room for improvement, but the question is how much and where exactly to improve. True, profitability rises as satisfaction increases, but only up to a point. After that, the cost of delighting the customer by delivering ever-increasing satisfaction rises faster than the payoff in profits. The key is to identify critical drivers—the things customers truly want in a category and what they are or aren’t getting from your brand and competitors—and rough out the costs to find the optimal point for improvement. Throughout the 1990s, management consultants preached the virtues of 100% customer satisfaction. Many companies—Xerox for one—made this their overarching corporate goal. And even with all that push behind it, the average cross-industry customer satisfaction score still hovers just below 75%. Now, obviously there’s plenty of room for improvement, but the question is how much and where exactly to improve. True, profitability rises as satisfaction increases, but only up to a point. After that, the cost of delighting the customer by delivering ever-increasing satisfaction rises faster than the payoff in profits. The key is to identify critical drivers—the things customers truly want in a category and what they are or aren’t getting from your brand and competitors—and rough out the costs to find the optimal point for improvement.

NH: What are companies missing out on if they're not pushing a full marketing effort to "those who already love their products"?

Clancy/Krieg: They are missing the opportunity to foster loyalty and grow an existing business relationship. The cost of sales to folks who are already familiar with your brand and already predisposed to buying it are so much lower than the cost of finding and wooing an entirely new customer who may already be loyal to a competitor.

Is Data the New Black?

NH: Data, data, data—why is data so important and how can companies get better at collecting it and using it for marketing decisions?

Clancy/Krieg: Very few marketers complain that they don’t have data—most are overwhelmed by the reams of information they have warehoused in various databases. What they complain about is having data that they can use to make decisions about who to target, how to differentiate their brands, how to reach them with media, what new products will be of interest, and much more. In order to get the kind of information and insights that you need, you need to start by understanding who in the marketing organization will be using the information and how they would like to use it—what decision are they trying to make. Marketers should also understand what some of the limitations of different research exercises are. Ethnography is a "hot" research technique, for instance, but you can’t project findings onto a larger population.

Q: Is there a tip or two that you have for marketers to stave off the recession blues?

Clancy/Krieg: A typical gut reaction in a recession is to cut back marketing budgets dramatically. Tough times, the belt gets tightened. We understand the sentiments. Just consider that all ofyour competitors are also likely cutting back—so why not buck the trend and increase your share of voice in the marketplace? Another typical gut reaction is to assume buyers are much more price-sensitive during a recession, meaning marketers cut prices. During tougher economic times, price becomes a more important consideration, but not necessarily—not even customarily—the most important consideration. In fact, our research suggests that price is the primary consideration for only 15%-35% of buyers in most product and service categories, so even in a recession there are a multitude of other compelling ways to differentiate your brand other than through a low price.

by Nettie Hartsock, Cincom Expert Access

Are You Ready for The 'R' Word?

Rather than view a potential recession as something you can only “ride out,” seize the moment to drive changes that will reduce operating spend and free up cash for projects that will create competitive advantage.

A slowdown in economic growth normally means weaker customer demand, lower margins, reduced profitability, and lower free cash flow. Your industry sector, global revenue diversification, and capitalization strategy will dictate your individual circumstance and corresponding actions. As a global strategic advisory firm, The Hackett Group believes the following actions are critical considerations, whose priority will be determined by circumstance.
The Hackett Group’s recommendations fall into two general categories:
• Inefficiency kills competitiveness. In order to maintain profitability and cash flow in times of weaker demand and margin pressure, it is imperative to understand and target inefficiencies throughout the organization. Some combination of both rapid and strategic cost reduction initiatives is critical to short-term results, as well as long-term competitiveness.
• Cash is king. Freeing up unnecessary working capital is the cheapest form of financing. During periods of economic growth, the focus on the balance sheet wanes, leading to increased inventories, receivables, and inefficient management of sourcing relationships and payables.
Rather than view the current economic downturn as something that you can only “ride out,” seize the moment and use the sense of urgency created by it to drive changes in the organization that will quickly reduce operating spend to appropriate levels and free up cash, which can then be invested in projects that will create competitive advantage. Change usually happens on the back of a major disruptive event, like the housing meltdown, and we are generally in a recession long before it is acknowledged in reported GDP data. Seize this moment, and use it to drive change. It is amazing how many improvement initiatives have their origin in a compelling event that forces buy-in from executive management, line workers, and other stakeholders.

World-Class Operation

The best preparation for being able to recognize and exploit opportunity is to implement world-class performance programs. When times are good, it is easy to overlook many cost-saving opportunities in back-office functions, since many of the changes required to harvest these savings are challenging and far from sexy, compared with other core business opportunities. We continue to see the gap widen between the industry peer-group averages and those companies that perform at world-class levels (Fig. 1).

A combination of rapid and long-term strategic cost-reduction initiatives can yield hard dollar savings that drop almost immediately to the bottom line and represent permanent cash/profit savings.
• Identify immediate opportunities for near-term cost reduction by taking a fact-based approach to what other leading companies have achieved. This is not sitting around the conference room determining what across-the-board costs you plan to take out. Rather, this is a thoughtful exercise based upon reliable performance metrics, by both function and process, which illustrates where you have excessive cost.
• Up the ante on shared services. If there is any single business practice that has
resulted in dramatic cost savings for G&A functions, it has been the implementation of the shared services business model. The shared services model leverages two sound principles in effective cost reduction: scale leverage and standardization. Our 2007 Global Shared Services study found that 65 percent of firms implementing shared services achieved savings in excess of 20 percent of costs, while 27 percent actually achieved savings in excess of 40 percent.
• Recognize the implications of the services globalization mega-trend on all back-office processes, and implement strategies to move this work from high-cost to low-cost regions. Globalization of work is no longer a leading-edge strategy; it should be considered a best practice for any company striving to achieve world-class performance. The Hackett Group has determined that the typical, $22-billion Global 1000 company has a minimum of $120 million in labor arbitrage savings if it were to fully implement a globalization strategy in its core G&A processes.
Next, take a long look at tackling the more strategic transformation projects. Focus on projects that will ensure that the company’s G&A functions are operating at world-class levels in both efficiency and effectiveness. This strategy will yield a greater payoff than simply reducing labor costs. World-class performers can eliminate labor when processes and technology are optimized and complexity is reduced. Hackett research has shown that the typical Global 1000 company can save $189 million when globalization efforts are combined with world-class transformation initiatives.

In These Times of Financial Uncertainty, Cash Is King Again

Freeing up excess working capital is the cheapest form of financing. Therefore, know where the hidden piggy banks are buried within your organization. According to REL, the working capital division of The Hackett Group, there is a tremendous amount of cash unnecessarily tied up in the typical company’s working capital. Indeed, the typical $22 billion Global 1000 company has an average of $2.9 billion in excess working capital, compared with companies that have achieved upper-quartile performance in their industries (Fig. 2).

Start by looking at cash flow opportunities presented by inventory, payables and receivables. This is an area of almost unlimited possibilities, many of which can produce very actionable items for improving cash positions. Even modest adjustments to cash payments can help stabilize an organization.
• Perform a detailed analysis of the entire customer payment process, beginning with the initial terms and conditions that were established during the sale. It is critical to understand the gap between when customers should pay and when they actually do pay. You need to fully understand the root causes of why customers pay late.
• Review your inventory and inventory strategy. It is startling how quickly slow-moving items can escalate the level of inventory and resulting cash tied up in an unproductive use. Establish a process to systemically review the inventory turns of key products.
• Review your existing supply base, and look to consolidate your spend and increase your buying power. Then leverage this to negotiate more favorable costs, terms, discounts, service, lead times, and quality.
Next, review your sourcing strategy. Any organization that must compete globally must make its sourcing strategy a top priority. The global market is changing so fast that a thorough evaluation of your supply chain done just two or three years ago may be out of date today.
From a sourcing perspective, it is very difficult to ignore the cost savings available from sourcing products/parts from low-cost regions, especially Asia. However, a word of caution for this strategy: REL’s research has shown that companies that have successfully reduced their cost of goods sold (COGS) and attained their desired gross margin improvements have also experienced increases in inventory levels. In other words, companies are buying/making cheaper products, but due to the massive increase in distance and lead time, have many more units of product in their supply chain.
Globalization from both sourcing/making products in low-cost countries to ship to major western markets as well as supply a fast-growing new base of customers in Asia will be a significant challenge. This is not just from a quality-control perspective, but it is also difficult to reap greater rewards from this sourcing opportunity so that you do not just pick up gross margin gains. It can simultaneously reduce inventory levels and improve order fill rates to your customers. The challenge can be boiled down to three broad areas: demand forecasting; speed across the supply chain, including physical manufacturing, shipping, and planning lead times; and supply chain flexibility.
Another equally rewarding theme of advanced working capital optimization involves collaborative working capital. This is where there is a much closer relationship between your company, your customers, and your suppliers. The basic premise of this approach is getting the best possible visibility of “true demand” – something that in most cases is nothing like the ordering pattern that you receive from your customers.

Strategic Implications
The Hackett Group’s message of the power of world-class performance, always important in times of economic growth, has even more applicability during market downturns and in times of economic uncertainty. The best companies not only survive during these times; they position themselves to take advantage of opportunities as the market improves. As the data from our benchmarks and other studies shows, top-performing companies consistently invest in their people, processes and technology to differentiate themselves from the rest of the pack, in good times and bad. In an increasingly competitive global environment, the margin between winners and losers might well come down to the efficiency of the G&A areas as well as the effectiveness of these groups and their ability to positively impact the overall business. FAO

By Bryan Hall, Michel Janssen, Stephen M. Payne, & Wayne Mincey. Bryan Hall is practice leader, finance executive advisory program, The Hackett Group. Michel Janssen is chief research officer, The Hackett Group. Stephen M. Payne is president, REL, responsible for all aspects of The Hackett Group’s global business. Wayne Mincey is president, The Hackett Group. Courtesy  - FAO Today

Permission to Get Dirty

Imagine finding underwear in the dryer at a New York City Laundromat-with a Web address and company slogan printed right on it. That's the creativity behind an advertising campaign called "Permission to Get Dirty" that Miguel Zabludovsky developed for his "eco-luxury" laundry and dry-cleaning business, Slate NYC.

Zabludovsky, a 26-year-old budding entrepreneur, introduced his target market to Slate's services right inside the "do-it-yourself" competition. The campaign was cheap and potent, he says, realizing a nearly 10 percent response rate.

Zabludovsky is turning the 50-year-old laundry service industry upside down with his innovative approach and environmentally friendly perchloroethylene-free solvents. His eco-friendly cleaning business targets the busy, fashion-conscious professionals who want their clothes taken care of with perfection-and are willing to pay for it.

Customers in the New York City area schedule pickup online, cram as many clothes as they can into a Slate hamper, and pay a flat weekly fee for unlimited laundry service and a monthly quote of dry-cleaned items. Slate returns laundry folded and wrapped in a fashionable shopping bag.

Zabludovsky manages the 3,000 customer names in his database and scheduling system with Microsoft SQL Server. He captures contact information, scheduling requests, and any specific instructions, such as hang versus fold.

Despite a sagging economy that might prompt less luxury spending, Zabludovsky is not seeing this effect with his clients. In fact, he's seeing growth.

"I think the people who pay for convenience offerings are cutting back in other expense categories or are not feeling the impact in their wallets," Zabludovsky says. Slate NYC is diversifying its customer profile and adding new products to the mix over the next few months, he says, including partnering with area hotels, restaurants, and high-end residential units as their dry cleaner of choice.

Growth also has required Zabludovsky to find alternative delivery methods within the city. His one van is reaching capacity with current deliveries. In the next few months, he will finalize a strategic alliance with FedEx for delivery service.

"We are working with the packaging engineers on how to deliver clothes without being wrinkled," Zabludovsky says. "This not only will provide reliability and tracking but also increase our reach and capacity in the region."

By Vicki Powers / Microsoft / Perfect CEM

Attention : Is Your Call Center Ready for a Disaster?

Hosted contact center solutions help to insulate small to medium-sized businesses from disruptions – and offer additional benefits as well.

Hurricanes, tornados, earthquakes, storms, power outages, terrorist threats … you never know when or how your business might be disrupted. But you do know that you must have a business continuity plan because customers don’t stop calling and e-mailing when you have an outage. In fact, volumes may increase. Your agents need to be available to customers. One negative experience with your company and you could lose that customer forever. Add the average number of customer contacts you have in a given time period and it is easy to see how quickly the damage to your business can multiply with any outage.

Large companies with established national or global operations typically have the resources to create redundant systems to overcome a local or even regional outage. If there is an outage or problem at one location, contacts are simply routed to the other open sites. However, small and medium-sized businesses (SMBs) typically don’t have the resources to build comprehensive disaster recovery plans and are left with few options other than rebuilding the system as quickly as possible.

Hosted contact centers to the rescue

Hosted contact center solutions provide SMBs with a cost-effective and reliable solution that minimizes business risks during an emergency by enabling agents to work from virtually anywhere. The latest hosted solutions require only a web browser, phone and internet access to provide the same complete contact center functionality as if the agents were actually on-site. Because all software and hardware are housed off-premise in a secure hosting facility, the “contact center” can continue to operate without disruption.

In fact, a hosted contact center can provide even greater flexibility and security than redundant physical contact centers. For instance, even if a company with multiple contact centers were able to re-route incoming contacts to one of their other centers, the remaining locations may not be able to handle the increased volumes or have the proper training to adequately handle the re-directed calls. A hosted solution enables you to automatically route communications to available agents wherever they might be. And if employees did have to be evacuated, re-establishing operations is quick and inexpensive, since agents only need a web browser, a phone, and access to the internet. This makes nearly any home or hotel a potential temporary outpost. The end result is the business continuity that your bottom line and customers require.

A virtual contact center for real-world events – and a global economy

Because the hosted solution places the hub of the contact center outside of the organization, it makes the virtual contact center a reality. By strategically locating agents in geographically diverse locations, you can dramatically reduce the impact any single event could have on the business. Far greater than even multiple contact centers, this can make the business nearly immune to local outages or disasters.

Fine Art By Hyatt is one company that can testify to the advantages of a hosted solution in an emergency. When Fine Art By Hyatt made their original decision to go with a hosted solution from Cincom Systems, Inc., a lot of factors other than emergency preparedness entered into the equation. However, when Hurricane Wilma stormed ashore less than 20 miles from the company headquarters in Naples, Florida, this ability moved to center stage. Larry Block, president of Fine Art By Hyatt, says “our agents in the Midwest and western states were able to cover the phones while we were covering our heads to protect from Wilma. We never missed a beat as far as taking customer orders was concerned!”

Under non-emergency conditions, a hosted solution can provide unmatched scheduling flexibility for agents and managers. It enables the business to employ the best agents available worldwide – creating a virtual contact center for businesses of any size.

The flexibility of hosted solutions also offers advantages during call spikes. Because no special hardware or software is required, you can quickly engage non-contact-center personnel to take customer calls. In essence, your entire organization can become a pool of backup agents for unforeseen load conditions.

The importance of multi-channel capability

A key component in the success of hosted solutions when addressing business continuity planning is the ability to integrate multiple channels. For example, if your customers’ phones are out of service due to an outage, they will try to utilize other channels of communication, such as e-mail, until they reach you. During Hurricane Katrina and the 9/11 attack, this situation became reality as millions of telephone lines and cell phones were inoperable; yet e-mails could be sent from many locations. The ability to substitute contact channels proved vital in this situation.

Also, if your business involves utilities, certain government agencies, and other organizations, call volumes are likely to increase during emergencies. The ability to direct customers to alternative communication channels that are operational or to agents located outside the affected area could be critical. Today's hosted solutions make all of this possible.

Hosted contact centers on the rise

The business continuity and global business advantages of today's hosted contact center solutions haven't gone unnoticed by businesses. According to Datamonitor, hosted contact centers will be the fastest-growing sector of the market, and by 2008, will account for 38 percent of the global market. Additionally, DMG Consulting reports that by 2007, 20 percent to 30 percent of all new contact center seats will be hosted. By providing an economical and viable alternative to the on-premise contact center, a hosted solution enables SMBs to establish business continuity capabilities and global customer service that was previously not feasible. The end result is a leveling of the playing field for SMBs and minimized exposure in the event of a disaster.

Key business continuity advantages of hosted contact center solutions

Some of the key benefits of the best hosted contact center solutions in a business continuity plan include:

• Agents anywhere – Agents and other knowledge workers can log in remotely and receive phone, e-mail, chat, and fax interactions.
• Minimal capital outlay with no hardware or software investments - Typically a simple monthly per-seat licensing.
• Inherent security with off-premise hosting that places your contact center infrastructure in a secure, redundant location.
• Eliminates the expense and time-consuming process of buying, installing, and maintaining a backup site.
• Quick, simple, and inexpensive relocation with only a web browser, a phone, and access to the internet required.
• Enables non-contact-center personnel to take customer calls as backup agents to accommodate unforeseen load conditions.

By Randy Saunders

What to Look for When Selecting a Hosted Contact Center Solution

According to Datamonitor, by 2008, the global market for managed and hosted contact center services will have more than doubled, reaching a value of more than $5 billion. So the odds are good that if you haven’t already implemented a hosted solution in your contact center, that you will soon.

But once you make the decision to implement a hosted solution, finding the right service provider is critical. What should you look for? Here are five areas to investigate:

1. Experience and capabilities

The vendor’s ability to provide a complete solution is as important as its ability to execute the solution.

• A service provider offering a hosted solution should deliver a full, robust suite designed for the hosting environment. It should include advanced analytics that track and measure all elements of the contact center at both an operational and business level, interaction channels with universal queue, and an agent desktop that provides a universal view of the customer.

• Companies can gain insight into the capabilities and support the company provides by checking customer and partner references.

• Most importantly, companies must understand the hosting infrastructure.

2. Functionality and security

As the demand for hosted solutions rises, traditional vendors have begun to retrofit their premise solutions to offer them as a service. The buyer should be cautious of these solutions, as they may not have the same benefits as a solution that was built to be both hosted and on-premise. Understanding the functionality of a hosted solution is key to understanding the vendor’s ability to customize, integrate, and provide security for your existing resources.

• A multi-tenant architecture can improve the operation of a hosted solution. It is an inexpensive and comprehensive method of providing a shared architecture down to the last table. With a multi-tenant architecture, multiple clients with distinct needs, tools, processes, customizations, and workflow can all reside in the same infrastructure – each with its own completely separate, completely unique set of processes.

• A Net-Native Java 2 Enterprise Edition (J2EE) solution can eliminate the need for client/server applications on user desktops. Additionally, it utilizes the internet as a global delivery system for maximum uptime and flexibility while ensuring full security.

• Integration should use a common platform based on open standards. This easy-to-program, goes-anywhere framework can summarize data from any system (transactions, interactions) and transmit it to agents using a single, web-based interface.

• Secure data transmission is also very important. Solutions should provide best-of-breed hardware, redundant firewalls, restrictive internet protocols, good authentication, and secure virtual private network (VPN) lines between the client and the service provider. With the multi-tenant architecture, core tenants of the security framework for hosting keep everything separate.

3. Scalability and flexibility

Having a hosted solution that can grow with your business is critical to long-range success and a long-term partnership with the service provider.

• The solution needs to be flexible and customizable to your business. The ability to configure and adjust communication channels, workflows, processes, knowledge and application access, desktop presentation, and configurations are all critical.

• A hosted solution should also offer a variety of deployment and financing options. Purchase a license and let the service provider manage the logistics and infrastructure for you, or start with a hosted version and confirm that it works for your business before investing in a licensed version. Or stay with the hosted model indefinitely.

4. Processing speed and availability

As hosted solutions physically reside outside the user’s network, companies should ensure that the service provider is able to meet processing-speed and availability requirements.

• The service provider should have a commitment to meet service-level agreements and the solution architecture and infrastructure to do so.

• To ensure redundancy, the service provider should have multiple data carriers.

• The internet service provider must provide adequate bandwidth, as well as meet latency and reliability requirements.

5. Feedback and measurement

Business intelligence functionality provides the insight necessary for managers to make informed business decisions. Thus, analytical functionality has transitioned from being a luxury to being a necessity for decision-makers in the enterprise.

• The hosted solution should provide real-time or near-real-time reporting that provides managers with immediate access to logical and intuitive reports based on the company’s operations.

• Flexibility in the controls of data manipulation is also important. Not only should the vendor offer standard reports, but it should also give managers the capability of creating custom reports that meet specific needs. Companies should look for online analytical processing (OLAP) capabilities that allow business users to flexibly manipulate or “slice and dice” operational data, using familiar business terms, in order to provide analytical insight.

If you fully investigate these five areas, you should succeed in implementing a solid software solution for your unique customer service needs.

This article is an excerpt from the white paper “The Hosted Model: Simplifying Contact Center and Agent Desktop Solutions." To download the complete white paper, go to www.cincom.com/hostedmodel

RISING EXPECTATIONS

High growth expectations for MNCs in Asia.

Already struggling with myriad concerns, CFOs of multinationals are scratching their heads over their latest worry: pressure from headquarters to wring even more growth from Asian operations to plug gaps suddenly appearing on U.S. and European P&Ls.

“We have been looking at ways to tweak our forecast this very week,” says Pascale Dillon, CFO of MVCI Asia Pacific, a Singapore-based subsidiary of the Marriott Group. “For us it’s about boosting revenue and improving margins. It’s hard because we are only 15 percent of world sales. Trying to use Asia to offset a revenue gap in a region that accounts for over 50 percent of global sales is a bit of a tall order.”

Recent conversations with nearly a dozen CFOs show that this is a common complaint. The China-based CFO of an American industrial company (who asked not to be identified) reports that he’s just been asked to increase his forecast (currently 30 percent) by another 5 to 10 percentage points. “In headquarters, they don’t really know what’s going on in China,” he says.

The notion that Asia can find the missing value appears to stack up when you look at it top-down. The United States may already be in a major recession, but China’s growth has barely been dented. As CFO Asia’s sister publication The Economist pointed out recently, most of China’s growth is now driven by a combination of domestic demand and capital investment. The worst-case impact of the U.S. slowdown is a one percent drop, from 10.5 percent for 2008 to a still respectable 9.5 percent. India also looks impressively resistant to the contagion.

But big jumps in growth are hard to achieve, even in a healthy market. “Growth comes from investment, and the kinds of investment which drive significant growth take time to plan and execute,” says Dillon. “There is a real danger that the quarterly approach to results, which focuses on the near-term, will collide with the reality of Asia, which, wherever you look, is about long-term commitments and thoughtful investment.”

Ajay Jain, the Asia Pacific finance director for Schott, a German producer of specialty materials, components, and systems, says that he, too, is in a business that requires significant lead time. “We don’t sell the types of products where you can initiate sales and get orders in the next three months,” he says. In Schott’s case, senior managers understand that increasing the rate of growth may not be possible. “Nonetheless we will be—are being—heavily challenged to capture some opportunities in the business plan that might otherwise have stayed outside,” he says.

And there’s the rub. While revenue growth in Asia is easy, profit growth is not. “In markets that are already highly competitive,” says Dillon, “aggressively looking for more growth may well result in declining margins—because the growth that’s easiest to get is probably the growth you don’t want.”

The growth that companies do want—the sustainable, profitable kind—is hard to come by. “To acquire new business faster we need investment in new capabilities,” says Dillon. “We need to know where the new business is, so we need market insight, and we need a sales process that translates our conceptual view of the market into daily activity that focuses on high-margin growth.”

But in times like these, that’s no easy sell. “I want to have sustainable growth in China,” says the China-based CFO. “But our board and CEO are out selling the same story about how great our China business is. The expectations are very high.”

By Simon Littlewood, CFO Asia

Cincom Sponsors the 2008 SAP® Configuration Workgroup European Conference

CWG Conference focuses on business benefits within the quotation, bidding and estimating processes of complex manufacturers

Cincom Systems (http://www.cincom.com) is pleased to announce that it will once again be sponsoring the SAP^® Configuration European Workgroup Conference that will be held at the Hotel Berlin in Berlin, Germany on May 5-7, 2008.

The Configuration Workgroup (CWG) (http://www.configuration-workgroup.com) is an international user group of SAP customers and partners, focused on the topic of product configuration as implemented in the Variant Configurator (VC) and in the SAP Internet Pricing and Configurator (SAP IPC). The CWG Conference objective is to facilitate the transfer of knowledge regarding SAP or third-party, configuration-related product offerings, generic methodologies and best practices.

As an SAP Certified Integration Partner, the Cincom offering helps SAP customers enhance their quotation, proposal, bidding and estimating processes. It integrates out-of-the-box with SAP and shares its customer and quotation data with the SAP system, feeding configured sales orders directly into the SAP Order Management and SAP Variant Configurator modules. It's specifically designed to assist complex manufacturers¾such as those specialising in engineer-to-order, made-to-order or configured-to-order manufacturing¾with the most complex product configurations and proposals.

Throughout the conference, Cincom will be present to discuss how Cincom’s product and sales configurator solutions can complement the SAP application environment. Cincom will also exhibit at SAPPHIRE 08 on May 19-21 (Messe Berlin, Hall 3-2, Discrete Industries, booth DI 2.5).

For further conference details and to register, please visit:

http://www.configuration-workgroup.com/publicInformation/futureEvents/futureevents.php.

What to Say When Your Prospect Only Has 10 Minutes?

Have you ever had a prospect say to you "Tell me about your products and I only have 10 minutes"? What have you done in this situation? What was the response you received?

Before we look at three ways to respond, let's look at the "I only have 10 minutes" statement.

The "I only have 10 minutes" statement could be true and/or it could be being used as a protection mechanism. Your prospects want to protect themselves from salespeople, and this statement is ideal for this. If they've told you they only have 10 minutes, then they are not being rude when they leave the conversation in 10 minutes. Bear this in mind as you read on.

There are three options for how to respond when your prospect Says, "Tell me about your products and I only have 10 minutes."

Option One

You fall into the trap and tell them about your products. You talk nonstop for 10 minutes bombarding them about your products. You hope that something relevant is going to jump out at them as you talk, talk, talk and talk.

If you take this option, you've acted like a salesperson. If you're acting like a salesperson, your prospect will be counting the seconds until the 10 minutes are up so they can say, "thanks very much, I've got to go."

By talking nonstop about yourself and your products, you've committed six out of the 10 top sales mistakes, and you will have more than likely repelled your prospect.

Option Two

You ask to schedule a time when they have longer than 10 minutes to talk.

On the surface this sounds like a sensible option, but if they are using the 10 minutes as a protection barrier, it'll be difficult to get more time with them. Prospects don't want to let this protection mechanism against salespeople go.

If they really only have 10 minutes, then think of it from their perspective. They are busy and their time is valuable. In the 10 minutes they've given you, they really want you to show them why they should talk to you. So can you see that even if they don't have a real 10-minute deadline, they'll probably still only want to give you 10 minutes?

Option Three

This option is the complete opposite of Option One where you talk, talk and talk. With this option, you get them to talk, ideally for about eight out of the 10 minutes. With this option, instead of hearing, "Tell me about your products and services," you hear, "What's in it for me to talk to you?" You know you have 10 minutes for them to feel there is value in them spending their limited time having a conversation with you.

If they can see the value in talking to you, then when the 10 minutes is up, they'll probably keep talking and you might find the 10 minutes extends to 30 minutes to an hour, etc. Also, if the 10-minute limit was real, then probably at the end of the 10 minutes, they'll be the ones asking you to come back to continue the great conversation.

So how do you show them what's in it for them to talk to you? There are essentially two parts. Part one is where you set the context for asking questions and the second part is where you ask them highly relevant, targeted and short questions that get them to talk so you can listen.

Here's a very brief example of setting up the context for asking questions:

"There is so much I could l tell you, but rather than waste your time talking about products that may or may not be relevant or of any value to you, I'd really like to spend the next 10 minutes talking about your own specific issues. That way when I do talk about our products, I'll be able to show you exactly where the value is for you. You never know, we may even find that my products are of no value to you. If it's okay with you, I'd like to ask you a few questions. ..."

If you take this approach, you're not acting like a salesperson trying to sell them something, and consequently the salesperson protection barrier will come down. People are interested in people who are sincerely interested in them and want to help them solve their problems. They will want to continue the conversation as they will see it to be of value to them.

So in summary, whenever a prospect says, "Tell me all about your products and I only have 10 minutes," don't fall into the trap of talking and get them to talk instead. Ask meaningful, relevant and short questions and your prospects will want to talk to you—for much longer than 10 minutes.

By Tessa Stowe, Expert Access

Saving Lives Is the Best Return on Investment

Speed of Customer Information Saves Lives

In everyday business, the use of CRM and business intelligence can lead to higher revenues and hopefully more profits. A noble pursuit, to be sure. However, when it comes to healthcare, these tools can save lives. What's more important than that?

Integrating systems pays when it comes to serving customers, yet it took a project one of my students is working on to show how dramatically it saves lives as well.

Mention the concept of processes and systems integrated together having the potential to deliver a greater clarity of insight regarding customers, and anyone who has a customer relationship management system or sells, services or develops them will nod in general agreement.

Real Benefits

Yet this concept hit home when one of my students from Indonesia brought in the data set he is going to use for his dissertation.

The data shows the five-year investments by Indonesian hospitals and healthcare and the latest news about healthcare providers in patient information systems, including Software as a Service (SaaS)-based applications that made it possible to track medical histories for patients and their histories of successful and unsuccessful treatment.

In the same data set were disease, accident and HIV/AIDS mortality rates in addition to a series of attitudinal questionnaires completed by patients after recovering.

Speed of Customer Information Saves Lives

We're working with the data set doing regressions and correlations, and the results are fascinating.

Fortunately, we've also got a road map of when specific systems went into place, and what's becoming apparent from the data is that there is less about an eight-week lag time of when the components of patient management systems begin to make a significant impact on disease-based mortality rates, and much faster on emergency room reductions in fatalities due to accidents.

It's clear when you look at the data. Speed of information sharing and collaboration has a direct impact on saving lives in the ER. When the data is graphed in terms of lives saved, ER reductions in fatalities initially spikes way up and then is eventually passed up by reductions in disease-based mortality rates.

Additional findings from the data so far from the analysis show the following:

Within three years, the reduction in disease-related fatalities' correlation to the five-year spending on patient information and case management was 89 percent at the 0.01 level of confidence. Clearly, the consistent spending on patient information systems initially and the continual spending on services to integrate with legacy systems is having a major impact on saving people from life-threatening diseases.

Reduction in ER-related fatalities was initially more immediate and dramatic, yet over time, settled into a pattern with a 78 percent correlation at the 0.01 level of confidence between cumulative spending on patient-facing systems and processes. This was one of the most fascinating findings because it showed how much of an immediate impact having systems integrated together to give ER nurses and doctors the information they needed to save peoples' lives made a difference. The reduction in ER mortality rates needs more analysis, yet it is clear that getting the right medications, if necessary, to the right patient and prescribing the best possible treatment plan was making a big, immediate difference.

Long-term investments in patient-facing processes and systems also led to a reduction in HIV/AIDS fatalities with a correlation of 0.682 at the 0.01 level of confidence. This was completely unforeseen and was attributed to the awareness and prevention programs that the patient systems had begun tracking and reporting on. Another interesting finding emerged from this as well. When the attitudes of patients were measured relative to healthcare materials including AIDS/HIV prevention handouts and videos, those in the age groups 15-21 and 21-28 also wanted to be able to get these confidentially without even going into the healthcare facility, yet could not find them in their nature language online in PDF (Portable Document Format) or even HTML (hypertext markup language) format. Conversely, those in the 41-50 age group (parents of those looking for information) were far more aggressive about getting prevention materials in their native language, registering the highest levels of dissatisfaction across the entire sample. Call it the voice of the angry patient.

TAKEAWAYS

For hospitals and healthcare providers that adopt a more integration-based approach to managing patient information and serving them, the following takeaways emerge:

The history of successful and unsuccessful treatments made a major difference in reducing disease mortality rates. Allegorically speaking, many companies have a cancer brewing in their customer bases of dissatisfied customers; how much more effective would they be to know which experiences gave customers the chance to excel and grow? It's not about curing all that ails your company, it's all about curing what ails your customer—and this study showed that clearly. ER mortality rate drops were immediate and significant because doctors knew in seconds what treatment plan to take. Even in accidents, that information from the patient system made it possible for ER staff to define treatment strategies that had a higher probability of success.

The HIV/AIDS mortality rate reduction shows the power of a patient-facing system being able to educate and treat conditions at the same time.

What this study really shows is that when customer-facing processes and systems are integrated together to enrich and revitalize those they are designed to serve, remarkable results can be achieved.

QUESTION

It just makes one stop and think: Are CRM systems designed to serve the needs of those owning them or those they were created to serve?

Interesting question -- yet in the end the best results in healthcare come from the latter.

By Louise Columbus, Cincom Expert Access

Social Media Obsessions -- Caveat Emptor

Obsessed and Possessed

Corresponding with the rise in all forms of social media has been a growing fascination to the point of obsession on the part of some Marketing VPs to find their markets' key influencers.

I got to thinking about this after watching the movie "Elf" over the holidays -- the character of Miles Finch, who is supposed to be the key influencer of publishing in the movie, is the picture of a key influencer gone bad. If you haven't seen "Elf" and enjoy Will Ferrell, check it out; if you have kids, they will love it.

Find Me the Key Influencers

I know of a peripheral products company that put one of their best product directors on the task of tracking down key influencers -- this director is Harvard MBA no less -- and he came back with a handful of outside consultants and industry analysts who qualified for the title of key influencer.

This company next began to work with key influencers to provide them tentative product plans, invited them to speak to their resellers at exclusive events, and generally pampered them like superstars whenever they were invited to company events and yes, this included picking them up at the airport in limos. The Marketing VP felt that if they could be won over through pampering and ego-stroking they would sing the praises of the company. Trouble was, the company had serious quality product problems and a product strategy that was a generation behind the industry and only one of the key influencers held her ground and told the truth.

The results were predictable: the key influencers never turned down a paid speaking engagement or the occasional obligatory quote to the media or even in their own publications. The one troublesome key influencer that kept pointing to quality problems and late product roadmaps was never asked to present, never asked in for strategy sessions, and was mostly tolerated as the company had paid for a retainer with her advisory firm. One of the key influencers got so big headed they became the Brittany Spears of the influencer set and would skip calls, meetings, not bothering to phone ahead or send off an e-mail that they would not be there.

What are the lessons learned?

• First, be very careful about who you hand the title key influencer to. That is quite a pedestal to put someone on. Guy Kawasaki, who could certainly qualify as a key influencer, nails it with his http://www.esresearch.com/STVG on the subject. Going after word of mouth, as Guy mentions, is so much better of a use of time.
• Second, never trust anyone who tells you they are a key influencer in your markets. Immediately ask yourself, "So why are they telling me this?" The answer is most likely they seek a consulting gig with you.
• Third, key influencers are by nature disruptive and not affirming. Think about it; all the world's true key influencers are disrupting social, financial and even religious foundations. True thought leaders (and I would consider a key influencer a thought leader) have clear, crisp vision of the way things are and let's face it, have bigger and more expansive plans that just promoting your products.
• Fourth, take your key influencers off their pedestals and ask them to get out and push your company up the hill to its goals too. Too much pedestal polishing will create arrogance in key influencers; better to put them to work and tap their knowledge for how your company can improve. This is especially true of industry analysts; use them as strategy sounding boards and for goodness sake, do not act as if the Red Sea parted when they walked into your building. Set the tone you expect humility and hard work and get something accomplished with them.

Now, back to the scene in "Elf" that triggered these thoughts; it's the one where Miles Finch (played brilliantly by Peter Dinklage) is in the conference room of the book publishing house, just getting ready to share his insights. In bursts Buddy (Will Ferrell) and in total innocence, mistakes Miles Finch for an elf. Here's the clip on YouTube. No one needs a Miles Finch around; everyone needs more brainpower trying to solve problems though.

by Louis Columbus, Cincom Systems Senior Analyst

Cincom’s Sales Configurator Allows Self-Service Through Improved Web Accessibility

Cincom’s Sales Configurator helps complex manufacturers create effective sales configuration

Worldwide software and services provider Cincom Systems (www.cincom.com) introduces the worldwide availability of Cincom’s Sales ConfiguratorÔ for the Web, an add-on module to its standard Cincom Sales Configurator 8.0 (www.cincom.com/q2o).

The new AJAX-based thin web client makes it easier for manufacturers to provide access to their product configuration and quoting systems to dealers, other sales channel partners, and even customers.

“More and more manufacturing companies that create build-to-order products are looking to see how they can simplify their ability to make a sale,” says Jim Wilson, Product Director for Cincom’s Sales Configurator. “Delivering critical application, product, and pricing information directly to dealers and customers keeps engineers and other factory experts out of the sales process. This makes closing a sale simpler and faster because fewer people are involved.”

Cincom’s Sales Configurator for the Web comes with the ability to customize the “skin” or graphic user interface of the web application. This ensures that the pages adhere to the manufacturers’ brand standards and gives the manufacturer complete control over the experience their customers receive.

Cincom’s web module uses the same database as the Cincom Sales Configurator 8.0. Both can be run simultaneously.

AJAX, an open-source technology framework, improves performance and simplifies deployment for customers using complex, rules-based applications over the web, an intranet, or in HTML-based application portals.

Cincom’s Sales Configurator captures the product, services, and business knowledge needed for guided selling, complex product and sales configuration, and proposal management. It enables complex manufacturers to capture and deliver critical application, product, pricing, and process knowledge to the point of sale – ensuring the optimal fit between manufacturers’ product offerings and customers’ needs.

Manufacturers with engineer-to-order or configure-to-order products have successfully streamlined sales, design, and proposal processes by using Cincom to deliver critical product and sales knowledge to the point of sale and reduce “quote-to-cash” time significantly.

For more information about these products and other Cincom solutions for manufacturers, visit www.cincom.com/manufacturing.

Outsourcing Contracts: Clause Control

Outsourcing contracts can set you and your provider up for a beautiful friendship or a bad marriage. The performance clauses you put in the contract will determine your degree of happiness.

There are a host of terms in your outsourcing contract that can ensure the competitiveness of the price you pay over time. Here are some of the most important clauses to fight for, along with tips on how to negotiate them:

Benchmarking Clause
This clause stipulates that you will be allowed to compare your outsourcer’s costs with the averages on the open market and negotiate for price reductions if your provider’s costs are higher. For a full explanation of this controversial clause and how to negotiate it, see our special report, “The War on Benchmarking.”

Most Favored Customer
Often requested, but rarely granted, this clause states that charges must be at least as low as the provider’s lowest charges to other similar companies for substantially similar services. Outsourcers loathe it and some outsourcing advisers say it’s impossible to police. “It’s an administrative nightmare,” says George Kimball, a partner with Baker & McKenzie, who represents customers in outsourcing contract negotiations. “Suppliers can’t easily know or compare their rates around the globe, and each contract involves complex, individually negotiated combinations of services and terms.” The state of Texas sought to include “most favored customer” language in its seven-year, $863 million data center services contract with IBM Global Services. The words themselves were dropped in negotiations, says interim CTO Brian Rawson, but the state got the gist of the protection in there.

Cost-Plus Pricing
Some customers are willing to concede any benchmarking rights in exchange for this method of outsourcer pricing. Once a year, the supplier opens its books, reveals its costs and adds a percentage in for profit. Sounds straightforward, but it “removes the motivation for the outsourcer to increase their efficiency because their margins are [always] built in,” says Geraldine Fox, practice lead of global sourcing services for the benchmarking company Compass.

Insourcing/Resourcing Right
Lawyers who represent outsourcing customers are increasingly pushing for provisions that allow the customer to take pieces of work away from the outsourcer without triggering the normal termination fee. It’s a great tool for leverage over pricing in the long term. Vendors will agree—very reluctantly—to grant such rights on larger deals if the customer pushes for it.

Continuous Improvement
Less related to price than service, this states that the vendor will continuously improve its service levels year over year. You’ll need to specify which service levels are subject to annual improvements (some may already be at an acceptable level or may be difficult to raise). A strong clause will specify targeted percentage improvements, though service providers want to limit them.

Mandatory Reference Clause
If you’re going to fight for only one protective clause in an outsourcing contract, says Daniel Masur, who represents outsourcing customers at Mayer, Brown, Rowe & Maw, make it the mandatory reference clause. It’s got nothing to do with pricing protection directly. It mandates that the vendor use you as a reference at least a certain number of times a year. “In terms of aligning interests of parties, there is no more powerful clause,” says Masur, than having to put unhappy customers in touch with new prospects. “Do well and you can use me as your greatest cheerleader. If I’m not happy, you’re putting future work at risk.” Others argue that this clause is too easy for vendors to ignore. “It’s not enough of a lever,” says Mark Robinson, executive director of advisory services for outsourcing consultancy EquaTerra.

By Stephanie Overby, CIO

How Long Should You Talk?

Aberdeen has found a useful insight in its most recent survey: Optimizing Your Workforce/Increasing Contact Center Agent Productivity.

The Best in Class Contact Centers spend more time on the phone with their customers than laggards -- 47% vs. 6%. It was not long ago that "average call duration" was something the best run contact centers worked hard at reducing.

But get this wrinkle!

These same windy contact center agents who spend more time with customers have a 48% customer satisfaction rate compared to short-winded laggards who have a 17% customer satisfaction rate. The good agents take time to know the customer and to work hard at resolving customer issues. They know the value that each customer represents to their company and do their best to retain and motivate these customers.

Many of these best contact centers are also investing in technology to make it easier for agents to deliver a great customer experience -- such as what is known as a unified agent desktop -- a technology that puts the right information about each customer at each agent's fingertips. That means the agent is not wasting time tracking down information, but instead is talking and listening to the customer more attentively.

By Dale Wolf, PerfectCEM

Expansion in Asia to slow, says IMF

Asia is not likely to escape the impact of the US-led global downturn, the International Monetary Fund said on Friday, although it added that growth was likely to remain high relative to other regions of the world.

The IMF said it had cut its forecast for growth in Asia this year and now projected more moderate expansion of 6.2 per cent — down 1.75 per cent from 2007. It said 2008 would be a “challenging year” and that “the balance of risks remains on the downside” — lower growth — in spite of high inflation.

This view is certain to be controversial, with many economists saying that the main risk to Asian economies is inflation, not low growth, and that policymakers in the region should be concentrating their efforts on fighting price increases.

The IMF said “key activity indicators in recent months suggest that momentum is easing” in Asia, adding that “confidence indicators also point to slowing activity”.

Asian money markets had also been affected by the financial crisis, with falls in equities and increases in the risk spreads on corporate debt.

The IMF said Asia “has not delinked” from the US, and “the US slowdown could have a larger impact” than recent US downturns, in particular on China, given the increased economic integration between the countries.

However, exports were still growing, it acknowledged, in part because of growing exposure to non-traditional markets in the rest of the developed world.

Inflation pressures were rising across Asia. Headline inflation momentum had increased “noticeably” in India and the Association of South-East Asian Nations region in recent months, and had “picked up anew” in China.

“Core inflation has also risen,” the IMF added, with signs of “second round effects” as workers and companies sought to pass on the cost of more expensive food, energy and other commodities in the form of wages and prices.

It said policymakers would face “difficult choices in this environment” with limited room for manoeuvre on monetary policy. It urged them to consider currency appreciation as a way to curb inflation while also switching production to-wards domestic demand.

The IMF also advised Asian countries to prepare contingency plans for a fiscal boost in the event that growth fell sharply — noting that many countries “have considerable scope” to do so, owing to strong public finances.

Courtesy - Business Standard

The Sales Challenges of Complex Manufacturers'

Streamlining the quote-to-order process improves competitive advantage

One of the first sales tricks you learn during your first fast-food job is the process of “upselling.” Say a customer comes to the counter and orders a soda. If they don’t specify the size, you ask them if they would like a large soda. You never suggest a small soda.

The idea is that if the customer really wanted a medium and you offered a small soda, they might take the small soda. On the other hand, if you offered a large soda and they really had a small in mind, a medium now doesn’t seem so “large.” They’ll take the medium, earning your employer a few cents. Those cents ­multiplied across hundreds of franchises add up to thousands of dollars a year.

In the fast-food business, supply isn’t a problem. Sodas of all varieties are in abundant supply. It’s how much soda you can sell that sets you apart from your competition.

Complex manufacturers by nature move products that are exponentially more difficult to configure than a large diet soda. But the order process for their products should be almost as simple and transparent to a regular customer. It is a cost-savings and relationship-building process that savvy companies are just beginning to explore.

The burden of excessive supply

Ever since Henry Ford first put cars on a conveyor belt, the keyword for complex manufacturers has been efficiency. In the past, American companies were rewarded for getting more products out the door faster to a world eager to consume their goods. As the global economy emerges as a reality - and not just a buzzword - these same companies now find their manufacturing processes highly efficient, but some of their sales processes woefully out of touch.

These sales processes need to be streamlined to reflect a new business model where it’s just as important to move products as to manufacture them. In order to remain competitive, companies must capture more market share by building relationships and being easier to work with than their competitors.

The quote-to-order process is a perfect example of an area that has not had much scrutiny from efficiency experts. In reality, it can be a serious drain not only to productivity and profitability, but it can also harm a customer’s positive perception of your company.

Getting it right the first time

Like kids playing a game of telephone, the quote-to-order process is not always a smooth path. With too many operators in the middle of the action, there is a great potential for miscommunication and error.

Consider the typical quote-to-order process. A sales rep takes the call from a customer and listens as the customer describes what they want.
Even a seasoned sales rep that has complex knowledge of the product and how it is manufactured can easily overlook a customer request that contains incompatible parts or customizations that are no longer available. The result? Customers end up with quotes that are invalid or functionally not optimal.

This situation worsens when invalid quotes are manually turned into orders with invalid configurations, incomplete information, unsatisfied product outcomes, and unforeseen price discrepancies. These can all lead to lower profit margins or even losses on the sale.

With a more controlled quote-to-order process, these problems can be turned into a major competitive advantage that will capture more market share. Instead of letting the customer drive the order conversation, new technologies present sales reps with a list of questions to ask about each order. Each question, when answered by a customer, leads to another set of questions, based upon the specifications established by the manufacturing floor, procurement and engineering.

Since the system is tied to procurement and the manufacturing floor, the sales rep can instantly give the customer a much more accurate projection of when their order can be delivered. If parts or materials are missing, procurement can be instantly (and seamlessly) alerted to the needs of this order as it is being processed.

This new emphasis puts a new spin on the customer-facing process that relies on knowledge management and rules management. What does all that mean? It means that the correct information is gathered - and quoted to the customer - the first time, every time. In a sense, the configuration is the DNA of the order. If you get it right, the results are predictable.

Efficiencies further down the line

The cost-savings of a more advanced quote-to-order system don’t end in the sales office. When implemented correctly, the return on investment can extend across the enterprise.

Many companies employ engineers who are responsible for double-checking sales quotes and orders. These engineers validate the specs in the order, search for information missing from the order and then develop schematics for that specific order.

With an advanced quote-to-order system filling the need, these engineers can use their skills more effectively for new product development. The system validates each quote based upon the rules specified and begins to create schematics for the order based upon existing knowledge. This allows the shop floor to schedule appropriate staff for incoming orders much more accurately.

Changes to orders are an inevitable part of doing business. Most changes, however, should come from customers, not from an inefficient quote-to-order process.

At multiple levels, changes are expensive, requiring time and resources to process the changes through the product lifecycle. The cost of change skyrockets as the order gets closer to delivery when manufacturers are forced to scrap nearly finished products due to misalignment with customers’ needs. This complicates build schedules, engineering, and manufacturing. The total cost of change is seldom recovered with special prices. Most companies never fully recover the costs of change and see their profit margins erode.

Planning for future demand

Focusing on the customer-facing processes within an organization may be the most important initiative a company can leverage.

Imagine how much more accurate forecasts would be if

• Quotes could be generated in minutes or hours instead of days or weeks
• ALL quotes were stored in a centralized database and available for reporting as soon as they are created
• Orders were electronically generated directly from the quotes in the quote database
• Win/loss rates were known and predictable based on the history in the quote database
• Future sales could be predicted with a high degree of accuracy several months in advance (at the time of quote instead of the time of order)

If all of this were possible, imagine the benefits to the company:

• The ability to predict labor requirements - increase or decrease labor pool based on forecasted sales
• The ability to predict inventory requirements, and stock what is most likely to sell
• The ability to negotiate purchases more effectively through more buying leverage
• The ability to offer price incentives to improve business before the end of the quarter
• The ability to provide more accurate guidance to shareholders

Focusing on customer-facing systems may be the most effective way to address the sales challenges of complex manufacturers.

By Jim Hissen, Cincom Systems

The Fifth P of Marketing - Passion

Nearly every business school teaches the traditional 4Ps of Marketing including product, price, promotion and distribution or place.  The key is to synchronize strategies to take each of these aspects into account and create results, either in terms of great channel growth or direct sales.  These are the core concepts of Marketing.

In the graduate-level courses I occasionally teach on Marketing one more P sneaks into the conversation - Passion.  Nothing happens in Marketing without passion - and that's a passion to be the change agents of a company, not the holders of the status quo or worse, the historians of the past.

As my class goes through case studies and examples of exemplary marketing one fact emerges: Marketing is as much of a calling as it is a career.  Call it an avocation. 

Marketing is an act of aggression against the status quo and it is definitely about making an impact in the market, all in the name of advancing brands, awareness and eventually Sales.

Passion truly is the fifth P of the Marketing mix.

By - Louise Colombus

Strengths and Weaknesses of Outsourcing

A recent Deloitte survey revealed many positive findings among outsourcing contract holders, including high satisfaction rates and, in general, achievement of ROI in the specified timeframe. However, a number of negative issues and trends surfaced during the survey as well, as outlined in the survey results.

"Our findings were striking -- fully 83% of all respondents reported that their projects had met their ROI goals of slightly above 25%," asserts Paul Robinson, principal global leader for technology. "Despite this apparently positive result we believe that the true potential of outsourcing is still not being fully achieved. Not only had the great majority of the respondents achieved their ROI goals, but a majority (70%) stated that they were 'satisfied' or 'very satisfied' with their arrangements -- the highest level we have ever seen reported."

However, the survey also highlighted some low lights of the global outsourcing game, among them:

• 39% of the 300 respondents reported that they had terminated at least one outsourcing contract and transferred it to a different vendor in their careers and, of those who reported that they were “Dissatisfied” or “Very Dissatisfied” with their largest contract, fully 50% had brought the function back in-house.
• 61% reported that they had escalated problems to senior management in their contract's first year, with 15% reporting five or more such escalations.
• 53% continued to have to escalate in the second year.
• Only 34% of the executives reported that they had gained important benefits from innovative ideas or transformation of their operations
• 35% of executives, including 55% of executives who were not very satisfied with outsourcing, wished their companies had spent more time on vendor evaluation and selection

Asked what they would do differently if they were able to start their outsourcing projects over, 49% of the executives surveyed said they would define service levels that aligned
better with their companies' business goals.

The dissatisfied respondents noted underestimated scope; higher-than-expected costs; and poor quality communications, service, and reporting from their service providers.

For a full link to the study, click here.

Courtesy - Industry Week