Conference ilbbak::us_sales_service

    The answer on how to get sales to sell service is really quite simple
    
    	o make it EASIER to sell services
    
    		&
    
    	o change the metrics that sales (& support) are measured by 
    
    It doesn't matter WHAT is said about changing conditions until the
    above two things happen.....

Re: -1 ... you've got it backwards.

	- Change the metrics first.  This is what drives field behavior.
	- Change the pricing so that ALL our services are competitive
		with "market".  (ie we can't sell "programmers" for
		$110 / hour when "market" is less than $75)
	- then we can work on making it easier to sell services

-- gerry

	I agree with .1 as to what should be first.  It is DIFFICULT to sell
	services.  I have been trying to for many years.  But it get very
	frustrating to try to get an estimate for budgetary purposes into
	a proposal.  I used to work in delivery, so I understand the process
	and all the reasons for making a good estimate, ad infinitum.

	However, whenever we have to put a response together that includes
	EIS, I cringe.  I know I am going to have to spent most of my time
	trying to get them to give me an estimate (with a caveat on every
	page).  And then they must have a workstatement, and all the SSDs (the
	content of which is 95% duplication), plus Ts&Cs, etc.  The poor
	customers, when they see all this legalese coming at them, get scared.

	Then, after going through all this to get a response to a proposal,
	we have to try to justify the much higher than market rate.  And, yes,
	I know all the arguments about value-added by Digital so it justifies
	a higher rate.  However, when I know that the EIS folks that will be
	delivering the project might be excellent programmers, they are still
	just that, and often they do not have previous training on the
	technology they are being sold for.  For example, we sent out a person
	as the VAX9000 support person and this person had never even installed
	a VMS product until on the customer site, let alone managed a large
	system or done performance analysis.

tgc

    re: .3
    
    Seems pretty consistent with my experience.  The EIS approach to
    business reminds me of an attorney - minimizing risk is central to
    everything. A businessman's approach would be to recognize risk
    as an opportunity to make money and to evaluate it in the context of a
    business deal.
    
    And Digital specialists are NOT worth the extra money.  All that
    added-value talk is mostly bunk.  Yes, they are worth a little more than 
    the average bodyshop, no they are not worth 2-3 times as much.  To suggest
    otherwise is to call customers stupid.  I don't think so.  The main
    reason Digital T&M consulting is so expensive is not the added value
    (and I will resist the temptation to recite a LONG litany of real value
    items we could add but don't) but the high overhead costs.
    
    Al
    

For anyone just joining this topic, allow me to explain why there are replies
to a basenote which does not exist.  This discussion began in the
VAXWRK::ALPHANOTES conference, Note 135.  I suggested that we bring the
discussion here since the exchange was straying from the base noters original
question of how Alpha will change the way Digital does business.  What ensued
was a discussion of commodity sales, distribution channels, and the problems
with selling/delivering Digital Services.  I suggested we bring the discussion
here since ALPHANOTES is intended as more of a technical forum.  Someone not
familiar with Notes etiquette and P&P 6.54 extracted 135.0-135.13 and reposted
it here as the basenote.  I sent this individual mail to inform him/her that
although I did not take exception to having my comments reposted here since I
had suggested the move, others might take exception and in fact, the reposting
constituted multiple violations of 6.54 in the Orangebook.  I suggested
writelocking until he/she got the permission of the contributors to the
original discussion.  Apparently they misunderstood me and deleted the
basenote.  135.0 has given permission to repost here, but at this point it
would be messy to try to fix, so anyone that wants to participate in this note
might want to read 135 in ALPHANOTES for background. 

    Got news for'ya, the p&p are not procedures & policies anymore, they
    are 'guidelines'.  A recently TFSO'd employee, who tried to use the
    orangebook in his defense was told that in 12/90 the rules were
    basically rewritten so that the p&p could not be used to defend
    anyone who was TFSO'd, thereby creating guidlelines not policies.
    
    PLEASE, PLEASE, PLEASE.. anyone who knows the TRUTH of this matter,
    respond and let the general public of digital know...
    
    						Ds.

Among other things, note 135 in ALPHANOTES included discussion of selling 
services, including: why we don't sell more services, how hard it is to sell 
services, how hard it is to deliver when it is sold, etc.  I would like to 
pursue this topic, not only here, but as a company wide forum.  I propose the 
following:

	o Each account group establish a sales team and a services team

	o Each AG team would individually discuss, in person, in a special
	  notes conference, con calls, by whatever method they choose:

		- Why it is hard to sell services
		- How services should be sold
		- Why it is hard to deliver what we sell
		- How to be more competitive in our pricing

Note that I said discuss, not necessarily solve.  I don't believe the solution
will fall out of these discussions.  This will probably result in identifying
many issues, and probably few solutions, or few solutions which may be
implemented locally.  Then each AG selects a sales and service representative, 
and all the AG sales representatives meet, call, note, to exchange their views 
and the services representatives do the same.  Then each region sends one or 
two sales and services representatives to a corporate level meeting where they 
spend two or three days trying to come up with recommendations and solutions
which would be presented to the executive committee or the respective VP's. 
The recommendations would then be implemented company wide. 

Now, as to my opinions on the above topics:

1) Why it is hard to sell services

   a. see #4 below
   b. selling of services is a different beast and requires different tactics,
      methods, etc.  Training might be an answer.  We have DS4's now and I
      believe they are responsible for helping to sell services.  But services
      has been here all along and we could have helped out with the sales, if
      someone had bothered to bring us in early and let us work with them. But
      they often don't know that, or don't think of that, which brings me to,
   c. communication and cooperation are lacking - which could be solved by
      new methods, bring in your DS4 early, penalties for selling services
      if you don't follow the rules (i.e., it doesn't count in your budget
      unless you play the game right).
   d. risk avoidance by services - I contend we don't know how to bid projects
      because traditionally we haven't been in that business (yet we are said
      to be #3 in SI, and the scary part is some people in this company 
      believe that).  Digital (and others I'm sure) used to give away services
      to make the hardware sale (when h/w margins were high).  Then we
      discovered we could charge for a system manager or programmer for six
      months or a year, so we started selling short term, onesy, twosey
      services.  Now we are asked to bid (and deliver) projects which involve
      multi-year efforts, deliverables, performance penalties, etc., and
      without the experience to do so confidently, most people will walk away
      from the opportunity.

2) How services should be sold

   a. by those who know services
   b. as an integral part of the solution, not an afterthought because a VP
      said, "You will have a services budget of X."
   c. competitively priced, and fair to Digital, in that this is probably our
      highest margin product and discounting will help make the budget, but it
      kills our revenue and profit

3) Why it is hard to deliver what we sell

   a. because they are sold incorrectly
   b. because we don't know how to bid/estimate properly
   c. because this company has become so fragmented by all the little empires
      that no one is willing to cooperate for the good of the company unless
      their individual interests are met
   d. because there are organizations that should be chartered as pre-sales
      support activities but COMPETE with the field as a profit center
   e. because we are penny wise and pound foolish (lack of proper equipment,
      access to the tools needed to do the job, etc.)
   f. related to 3c, I believe we are organized incorrectly to perform
      efficiently.  We are collecting groups of employees with similar skill
      sets, i.e., networks, TP (sorry, PS/IM), and that's good.  This
      allows those with stronger skills the opportunity to coach those not
      as proficient, provides an immediate network of support for the
      individuals, allows for "osmosis" so that learning occurs as a matter
      of course.  It may limit cross-over, but we need depth now, not breadth.
      
      But we separate them from the delivery units and that's bad.  Digital
      Services should be 3 groups at most, hardware services (maintenance),
      software services, and integration services (only because this group
      probably is the least available resource and currently we simply could
      not spread them among the delivery units equitably, so they should be a
      central group within the region).  A district (in some cases, i.e.,
      integration, this may only apply at a regional level) is composed of
      speciality units.  The district identifies the opportunity (in
      cooperation with sales), defines the requirements, then procures the
      talent from the units.

4) How to be more competitive in our pricing

   a. I have heard over and over that the cost to Digital of a software
      specialist is $XX/hour (I don't think we want to reveal our cost, that's 
      why we only bid fixed price, and this conference is subject to subpeona,
      discovery motions, etc. so I can't say).  If we were real generous,
      salary would be $25/hr, benefits would be another 50%, company car is
      $1.50 (assuming it is 100% utilized for business and the employee pays
      nothing), and profit is 40%.  So that works out to:

		$25.00/hr salary
		 12.50/hr benefits
		  1.50/hr car
		 -----
		 39.00
		 x 1.4
		 -----
		$54.6/hr

      Let's add training and equipment, $10,000/year = $2/hr., so we are
      up to $60/hr, and then overhead is $37/hr. = $97.  Oh, I guess $XX/hr
      isn't that far off.  So, let's cut the training, equipment, and car, 
      reduce the benefits, and pay less than the industry, and we are down
      to $79/hr.  I think I just figured out how to get our prices closer
      to the industry, but we still cost 1.5 to 2 times the competition.
      I'm stymied on this one.  Can anybody figure this one out?  EXCOM,
      can you help?

    re .8  . . . "how am I doin' so far Greg?"
    
    I guess you did OK - most of your reasoning makes sense.  What is a
    DS4?
    
    - Greg  (am I the "Greg" you meant in .8?)

    RE: .3
    
    It seems that Digital sends many people out to perform contracted
    duties who are unqualified in portions of the job.  The learn while you
    burn mentality is rampant...it is the Digital way.  Field service and
    software service have allways sent people out onto customer's sites
    with no preparation.  (if you were better prepared why didn't you do
    it?) Is it a reflection on the software/hardware specialist or on the
    management?  These people usually get assigned on these kind of jobs
    because of a "can-do" attitude...the kind that made digital a
    multibillion buck company.  It's unreasonable to expect to have every
    office and every position occupied by someone who knows it all,
    yourself excluded.  Digital has the support structure to make these
    people successful despite their occasional unfamiliarity with new
    products or sometimes Digital products in general.  Some of the best
    software developers have never installed or managed a VMS system.  

      
    
    
        I have to agree with .1! People perform based on how they are 
    measured/goaled. If you're given a "number" to attain, that's what
    you do. If you're "rewarded" for bringing in revenue, that's what
    you do.
    
        If you're an EIS mgr. and you have a "number", you don't always  
    do the "right thing", because it may not be the right way to make the 
    measurements. (I'm not picking on EIS or EIS management. I'm
    stating a problem within the system.)
    
        This is something that has been an issue for a long time. Our 
    business has changed, but the way we're doing business (and being 
    goaled) has not. 

    Another thing to add to the excellent list in .8:  Sales Rep
    measurements.
    
    I contend that it takes at least as much effort, if not more, to sell
    services as opposed to product.  Yet, if the delivery spans more than a
    single year, the rep only gets partial credit in the year sold, the
    rest as it is delivered.  I know of several instances where sales reps
    sold $3M of services and got credit for only $1M.  Of course, it took
    them 3/4 of the year to sell the $3M (that's what the customer bought)
    and they had to scramble to make up the other $1.5 of budget in a single
    quarter in order to survive. And, of course, they got a budget increase
    the next year big enough to offset the residual value of the service
    delivery.  And we wonder why reps would rather sell product?
    
    Al
    

    
    RE: .8
    
    > Let's add training and equipment, $10,000/year = $2/hr., so we are
    > up to $60/hr, and then overhead is $37/hr. = $97. 
			     *******************
    				THIS is the problem!  It means every 2
    people 'delivering' have 1 person NOT delivering, much too high a
    ratio!
    
    > So, let's cut the training, equipment, and car, reduce the benefits,
    > and pay less than the  industry
    			              FOR NON-DELIVERY PEOPLE, giving them
    lots of incentive to become deliverers rather than laying back in soft
    overhead producing jobs!
    
    > I'm stymied on this one.  Can anybody figure this one out?  
 
    	I'm not sure this is any closer but it sure looks like an obvious
    target area for investigation.  
    
    	FWIW, I believe that Services pay the same 'Corporate Taxes' as HW
    & SW and they (GMA) don't provide the same level of support as are
    required for a 'product' such as a VS4000 or RDb.  WHY?
    
    Jerry

I am a DS4 - Digital Services Solutions Sales Specialist.  If you're in
need of selling Application Project Services, Digital Consulting Services,
or Custom Training, call your DS4.

Most DS4's were either EIS Unit Managers or project consultants.  We know
how to structure and sell project and consulting business.

Service business is fundamentally different from product business.  Think
of it as turning on a money tap that drips revenue every day.  Over time
it adds up to a big number.

Big projects often start with little management consulting contracts.
That's a little $20K - $30K order that provides the customer with
something like a needs analysis.  It also sells the follow on order that
sells the follow on order... that sells the big project and a bunch of 
hardware.

In the Central States Region, delivery of short term consulting services
has improved over the last year.  This is due to a number of things
including specialist mobility (they fly all over to deliver the right
expertise to the right place) better scheduling, and better resource 
sharing.  I can't speak for the other regions.

Look at Digital's Q2 results.  Services is now 44% of our revenues and
continues to grow.

Call your DS4 to help you Prospect, Qualify, Propose and Close Application
Project Services business.

If you don't know who your DS4 is ask your ASR (Account Support Rep) or
call 800-832-6277

                  I N T E R O F F I C E   M E M O R A N D U M

                                        Date:     11-Jun-1992 01:59pm EDT
                                        From:     DONAHUE
                                                  DONAHUE@SAILR3@MRGATE@MR3MRG@MRO
                                        Dept:      
                                        Tel No:    

TO: See Below

Subject: (I) Good News on ALPHA                                                 

<forwardings deleted>

From:	EVMS::NORDLINGER   "DTN 381-1637"  9-JUN-1992 17:14:52.26
To:	PROULX
CC:	EGOLF,ORGOVAN,DRAYTON,NORDLINGER
Subj:	Schlumberger Well Services is very happy with their Alpha machine

	Hi, 
	
	Earlier today I called Schlumberger Well Service's Ed Dolph
	in Texas to find out why they weren't submitting QAR's 
	(they got a Flamingo running FT1 of VMS a couple weeks ago) 

	Ed Dolph, a real straight shooter, said frankly they haven't
	had ANY problems yet with Alpha VMS to warrant 	a QAR, infact 
	he said he was "startled by the reliability" and couldn't
	figure out why we weren't shipping more protos to key CSOs. 

	happily, 

	John

Distribution: (deleted)