Learning from the Supply Chain
Selling complex products is as involved as the back-end supply chain process. But selling has not yet evolved into an optimized business process like supply chain, organizing all the parts to reduce costs and create greater customer value. Like back end inventory and logistics systems a decade ago, selling is typically a compilation of discrete activities and supporting technologies, beginning with receiving a sales lead and ending with placing an order.
This disconnected and often manual approach to selling drags the sales cycle, irritates prospects and top sales talent, consumes time and energy from engineering and other parts of the organization, and is rife with costly errors.
"Every business struggles with the task of keeping its expanding price list from overtaxing inventory and service costs," explains author and technology marketing expert Regis McKenna, "but the bigger and more powerful the customers, the more options and variations they demand." Fragmented selling systems can no longer handle these requirements.
Like supply chain, the eventual business gains of developing a lead-to-order business process are great, but creating the process is not easy. It must be viewed as a corporate strategic priority to be successful. Anyone who tells you otherwise doesn't understand complexities of selling complex products and services.
"Reengineering has broken out of the back-office box and is now being widely applied to more knowledge-intensive, front-office processes, such as demand creation [marketing], order acquisition [sales] and product development," explains Dr. Michael Hammer, author and noted reengineering consultant. "Applying reengineering and the discipline of process in these domains has not meant de-professionalizing salespeople, marketers and scientists, stripping them of their affiliations and turning them into automata following the iron rules of process. It has meant putting their work in the context of the big picture and ensuring that all necessary tasks are done in the right order...Without a well-defined and well-designed process, people's talents are wasted and unleveraged. Process provides the structure into which practice fits; without process, practice can spiral into random improvisation and inconsistency," he explains.
Over the past few years many companies have invested in software programs to help automate discrete selling activities. But the sum of these parts has not added up to a business process, which experts define as an organized group of related activities that together create customer value.
To achieve customer value and quantifiable operational benefits, companies must identify the ideal selling process that meets the customer needs, and then map technology to the process in order to create an automated system. Process design must lead technology system investments. Companies too often are left trying to manipulate the process to meet the software requirements, which inevitably ends up in failure.
Consider that approximately 70 percent of all sales forces are not using the multi-million dollar sales force automation and CRM software that their companies spent millions purchasing, customizing and installing.
CRM software was never designed to support the actual selling process. The sales reps' indifference is often attributed to lack of training or management mandates requiring sales to use the software, which are, of course, critical. My view, however is that most CRM and sales force automation systems have not been designed to support how successful sales reps actually sell complex products, nor were they engineered to be the backbone of a complex, intelligent lead-to-order business process system.
Most CRM, SFA and sales configuration software products fail to:
* Shorten the sales cycle, which would allow a company to gain competitive advantage, accelerate revenue, reduce costs, and faster adoption of the technology by everyone involved in the selling process. If sales reps can sell more in less time, they will learn how to use the technology.
* Support the complexity of industrial and technology oriented products, which would ensure that the software system can scale to support the enormous demands of technology and industrial product companies -- multiple complementary product lines, with tens of thousands of product options and pricing variables, with a host of warrantee and service variables. And do so across multiple sales channels and geographic regions.
* Provide an automated, front-end selling process that links with back-end order management and supply chain systems, and supports each selling activity in the process with automated, intelligence driven knowledge bases that optimize the process. Only with an automated front-end process can companies significantly reduce business cycle costs, improve customer responsiveness and tackle thorny, costly problems like order inaccuracy.
So if CRM has failed on its promise, what should companies do? They should look for technology solutions that address the core business process and actually optimize that process by automating it with best practices. This will require traditional CRM software solutions to "morph" into process optimization solutions. In sales, this is already happening with the advent of software designed to address the lead-to-order process. We're still in the early going, but here are the five main reasons why selling solutions are beginning to morph into true business process optimization systems.
As the CRM hype settles, companies are gaining a more realistic understanding of the value and costs to create a critical new business process. They're also under pressure to keep up with competitors who are selling process innovators. "No single topic regarding sales reengineering seems to be more misunderstood than the cost of automating the sales force," explains Jim Dickie of the Insight Technology Group (ITG), who reviewed over 1,000 sales reengineering initiatives. "The need to fundamentally change how we sell to and service customers is being fueled by the success of firms who have already done so." But Dickie warns that these improvements do not come cheaply. To be successful, companies are looking at a multi-million dollar investment in creating a true selling system that provides quantifiable top and bottom line results and competitive advantage.
CIOs, today's business architects, are just now completing enterprise architectures that can support a lead-to-order business process system. Over the past five years CIOs have been consumed with architectural, supply chain, customer service oriented CRM systems, and basic ebusiness priorities. With key infrastructures in place, CIOs can now more easily oversee the development of other important business systems, like lead-to-order, that integrate with other enterprise (and extraprise) systems.
Sales executives are becoming more accountable for top and bottom line results. Once it was just about closing the big deals before the end of the quarter. That still matters, but the overall profitability and long-term value of the account matters more, which requires sales execs to address ways to reduce sales operational costs and improve key customer relationship factors, like reduced order errors and more consultative needs analysis systems. The days of bringing several sales engineers into every sales meeting are no longer realistic due to cost constraints.
The technologies and professional service expertise to support a true lead-to-order system are maturing, alleviating risk. Creating a lead-to-order system requires savvy business process planning and systems integration expertise. But there are software systems that are becoming sophisticated enough to handle the demands of a true complex selling process while meeting enterprise technology standards and integration requirements. These systems are also focused on: providing sales reps with deep intelligence and selling functionality they need; making it relatively easy for the sales rep to learn and use, and for non-technical sales administrators to support; and having standard application program interfaces (APIs) to easily connect with the most popular enterprise management software programs, such as SAP.
As the economy begins to bounce back, companies that are prepared to accelerate their sales cycles with a streamlined lead-to-order process will outperform their competitors.
[Klaus Besier is chief executive of Firepond Inc.]