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Main | Writing a Creative Brief »

August 26, 2002

Proof of Concept - a Golden Opportunity

by Sridhar Ramanathan

For every adversity there's a seed of opportunity. At least that's how I see the current challenges in the high technology sector. Keith Newman's article "Get your MoFo Rising" struck a chord with me having just finished advising my client, a collaborative services company, on how to exploit the trend towards Proof-of-Concept (POC) in pre-sales. Most enterprise software vendors see POC as slowing down the sales process and even anathema to building momentum towards closing the deal. That's the old wisdom.

Here's what I learned from interviewing 30 enterprise software vice presidents of sales. Virtually all of them saw POC as mandatory for the customer building the ROI case to purchase. It might surprise you to learn that over 75% of software buyers now demand a "try before buy" experience-not a demo but a working POC in their sandbox. This is especially true of the SMB who don't have much error margin these days for capital investments or expense items.

So why POC? From the customer perspective, the POC is used to prove ROI before buying. What do customers say they want from the numerator and denominator of ROI calculations?

Return

  • Test user acceptance; ROI is a function of user adoption which depends heavily on usability

  • Prove that the functionality will deliver the expected business benefits

  • Quantify expected business benefits (e.g. revenue impact, cost reduction, productivity, gain, etc.)


    • Investment

  • Prove that the technology will work in the customer's environment using their data and systems.

  • Address IT issues such as network security, change management, performance, etc.

  • Quantify all true hard and soft costs associated with the software deployment

    • I believe that the customers' desire to prove ROI is a great opportunity for VARs and integrators who want to add value to the customer and differentiate themselves from direct sellers. In my interviews with the direct selling Sales VP's, I heard clearly that they are very hard pressed to accommodate 30-day POCs when their sales engineering teams are already stretched thin in terms of geographic coverage and bandwidth. Furthermore, software sellers are sometimes in conflict between leveraging software sales and selling professional services. The POC can be a political hot potato. Channel players can build the POC more readily into their value delivery systems. For example, integrators are more likely to be paid for some of the POC work than a software vendor.

    And, lastly, one of the scariest parts of the POC for vendors is not knowing what the customer is doing with the software during the trial period. Channel players often have much more presence in the customer environment and visibility to intercede if the POC is off-track.

    For all these reasons, I see the POC phase as a great opportunity for channel payers to shine in an otherwise gloomy scene. Good selling!

    Posted August 26, 2002 |
    Posted to Sales Effectiveness

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