We’ve established that few value-added resellers (VARs) just sell technology anymore. The transactional nature of money for servers and software is a thing of the past.
Coinciding with a move to cloud-based services, VARs have evolved into solution providers. Now, with clients even more interested in what those solutions can do for their business, everyone’s focused on outcomes. Increasingly, VARs have skin in the game, committing to delivering measurable value through the implementation of IT solutions. These days, I like to think of them as outcome providers.
Mind you, it’s not an easy transition, but it’s what clients demand. In my time helping companies achieve business outcomes, the hardest part has been zeroing in on those outcomes—what they are, what affects them, how they’re measured.
It’s a hugely rewarding process that creates beneficial, long-term relationships between client and VAR, not to mention real business value for each. But like any healthy relationship, it takes effort. Delivering measurable business outcomes through IT solutions requires communication and planning and a few difficult discussions.
Establish a Realistic Baseline
Before you can agree on outcomes, you need to agree on a baseline above which you’ll deliver greater value. If the solution is intended to boost sales, what are the sales today? This is Difficult Discussion #1. After all, a baseline’s a baseline. Current sales are current sales. Why do you need a “realistic” baseline?
I’m reminded of a joke about a contractor who wants to buy an engagement ring. He starts to shop, believing the ring should cost three months’ salary. But he and his future fiancée can’t agree on which three months’ salary to invest. He picks January, February, and March (his slow months); she argues for August, September, and October (his busy months).
Ultimately, a realistic baseline needs to be representative of the client’s performance. It’s rarely one month’s worth of results—a month in which sales may have been through the roof or in the tank, favoring the interests of the client or provider, respectively. Maybe it’s a quarter or a year. And mind you, even the baseline may not be set in stone. If the solution has a major impact out of the gate, you might agree that a higher baseline is appropriate.
Identify Competing Priorities
With a realistic baseline in place, it’s time to consider outcomes, or how much extra value your solution is going to deliver. But chances are if a client is looking for a solution to better manage inventory, for example, technology isn’t the only way it’s tackling the inventory challenge. As a provider about to propose a measurable outcome from controlling inventory levels, you need to know what other inventory priorities are at work.
Welcome to Difficult Discussion #2. What you’re trying to avoid is a situation in which you promise an inventory management solution that trims inventory by 10 percent, only to find that the client attributes a 5 percent reduction to something out of your control, like a planned reduction in SKUs.
It’s been my experience that 90 percent of the time I work with clients on a technology solution, other priorities or initiatives influence the business case. Knowing what they are helps identify the technology solution’s value and contribution to the outcome.
Agree on Outcomes That Are Unambiguously Measurable
Similarly, in light of competing priorities and initiatives, it’s important to come up with value drivers that are clearly attributable to the solution. It’s one thing to promise a manufacturing planning solution that results in 1,000 additional units per month, which is clearly measurable. It’s another to put a dollar value to that outcome without a clear understanding of what else might influence it.
Often, this is where work you’ve done with similar clients can help. You’ve seen, for example, that a particular solution can lower inventories by 10 percent, and your current client can expect the same. But this is Difficult Discussion #3—agreeing how you’ll measure outcomes—and perhaps the most important. But getting this one right makes all other discussions easier.
Revisit Value Targets When All Heck Breaks Loose
Of course, sometimes the best implementation plans take a beating. You’ve heard of “force majeure”? Imagine rolling out a new supply chain management solution in the months leading up to March 2020.
When crises affect planned outcomes, there’s no getting around Difficult Discussion #4. Everyone must sit down and figure out if the baseline, competing priorities, measurable outcomes, and value targets are still valid. If they’re not, how do you revise the plan to reflect new realities? Equally important, how can you add new value as an outcome provider?
During Covid, some supply chain management vendors began developing algorithms to predict the flow of goods so when demand kicked back in or when regional economies reopened, they could help their clients get on track.
But chances are, compromises will be required on both sides. The client’s time to return on investment (ROI) may be prolonged, and the provider may have to invest more resources to achieve even revised targets. These discussions are never easy, but they usually go better between providers and established clients: teams with strong working relationships. Not surprisingly, they’re not as easy to have with new clients. So learn what you can from the good discussions—how you arrive at an agreement, what metrics are most effective, what compromises make the most sense—and apply that to newer clients.
Celebrate Quick Wins
When the solution goes live, it may deliver positive results quicker than anyone expected. And while it may be too early to collect on the outcomes you’ve provided (it was, after all, a more long-term implementation plan), the team should take credit where credit is due. Not as an end, but as a learning opportunity.
There’s a tendency when things go too well, too fast, to explain away quick wins. Maybe one of those competing priorities moved the needle. Maybe you just got lucky.
Whatever the case, it’s important to examine these quick wins as important milestones in a project. They’re positive indicators that you’re moving in the right direction and should be able to achieve the outcomes you’ve agreed to.
No difficult discussion here; it’s just too early to declare victory. That will come soon.
Anderson Campana is the digital supply chain planning practice lead at Tata Consultancy Services, an IT services, consulting, and business solutions organization founded in 1958 with operations in 46 countries and 600,000 employees worldwide. Campana has more than 33 years of experience, working in companies like Accenture, PepsiCo, Cognizant, and Syngenta.