Until recently, vendors sold solutions. They’d identify one or more problems the customer experienced and offer a way to solve those problems. Both customers and vendors understood the approach. The customers would describe the problems. The vendors might also offer insight on problems. The vendor would then show the customer how to solve the problems using their products.
A few things have changed –
- The pace of change of business – business changes faster and faster. This presents a problem for customers. Solving current problems is too slow. It takes a long time to identify and agree the problems, come up with requirements, look at different vendors, install a solution and wait for the benefits to flow. By that time, a whole new set of problems has arisen. The customers are always in catch-up mode.
- Lots of information – customers now have access to much more information about solutions to problems. They don’t need vendors for most of what they need to know.
- Late engagement with vendors – in the technology buying cycle, choosing a product happens very late. And it’s getting later because of the amount of information available. Customers will engage as late as possible with a vendor that concentrates on selling product.
In response, an outcome-based approach has emerged. Customers and vendors focus on future outcomes, not current problems and solutions. And this has created a unique opportunity for customer engagement.
Enabling a future business outcome is more complex than implementing a software solution. Existing processes will change. Staff will need new skills and to maintain them over time. Change management is needed. And the changes may affect business partners.
In the past, technology vendors left most of these other elements to the customer. They saw their job as getting the software live. The vendors could provide some advice and guidance on these other elements, but in the end, they left it up to the customer.
Customers often struggle with these other elements. They don’t do this type of project very often. They don’t have much experience. In the past, they had to struggle along by themselves. But, a new generation of technology vendors has seen this as an opportunity. The vendors have realised they can help the customer with these other elements.
These vendors accept that product will be considered very late in the engagement cycle. To engage early, they focus on business outcomes. The business outcomes are ongoing outcomes the customer executives regard as success (Success Outcomes). The vendors and the customers jointly look for opportunities to improve the success outcome. They jointly analyse different approaches to improvement and jointly develop business cases for projects. Both bring expertise. And that’s important because enabling business outcomes is more complex than implementing software. The joint engagement brings the knowledge and skill of both customer and vendor to bear. And that increases the chance of enabling the success outcome.
Some vendors have embraced an outcome-based approach but haven’t yet made the full transition. They focus on the outcome from using their product (Product Outcome). Their central focus remains the product. But the customer doesn’t care about product until very late in their buying cycle. So, these vendors haven’t seen a significant improvement in customer engagement.
It’s the vendors who understand the need to enable the success outcome (the ongoing business result customer executives regard as success) who see the significant improvement. Their periodic business reviews don’t involve product at all. They meet with customer executives and discuss the success outcome and how to improve it. They’re involved at the very beginning of the technology buying cycle. Often, they can trigger a buying cycle. But they don’t talk about the product. They talk about the success outcome.
As the technology industry transitions to an outcome-based approach, we have a unique window of opportunity. We can recast the way vendors and customers engage. We can move past offering solutions to current problems and pushing our products. We can embrace the complexity of enabling business outcomes and the benefit for customers of joint engagement. And that will make us closer to the customer than we have ever been.
It’s a unique opportunity.