I’ve been advising software and services clients that a sea change in buyer values has occurred. Old buyer sales propositions won’t work in a business economy that’s changed. Specifically, buyers don’t have access to the cheap, unlimited credit (or equity) that they once did. Moreover, these buyers do not expect any return to the days where money was cheap and very accessible. As a result, these buyers are looking differently at:
– software decisions
– software upgrades
– software maintenance
– on-premise software delivery methods (vs. Software as a Service (SaaS))
Aravo, a supplier information management solution provider, recently announced a couple of pieces of research that back this up. In an analysis of Fortune 500 supplier initiatives, the top rated initiatives companies are interested in are those intended to increase corporate cash on hand. This is in contrast to last year when companies were more concerned with supplier viability.
Aravo backed up their findings by referencing work done by Hackett’s REL group. They found that 94% of their survey respondents consider cash flow optimization to be important or very important.
Just this last Friday, my colleague, Jeff Williams and I were at a meeting at a cool content management firm here in Chicago. Jeff rattled off several instances of significant cash losses at firms where employee expenditures were not well managed, documented or controlled.
Sloppy cash practices can be ‘forgiven’ or overlooked in robust economic situations when cash is cheap but not now. In fact, this may a really good time to tighten up all manner of cash practices. If your firm isn’t first or second quartile in the way it buys, sells, pays, remits, documents and audits its expenditures and cash receipts, it should.
Software and service vendors need to understand just how important cash is to a firm. It is the lifeblood of the firm and the one thing that permits the company to grow organically. It’s also the mechanism for keeping top executives employed. If your value proposition is devoid of this aspect, is it any wonder it is having a tough time succeeding in today’s market? Cash is king.
Whenever I hear an old-school tech provider touting their TCO (total cost of ownership) story, I cringe. This fossil of a sales person doesn’t understand their prospect, the prospect’s business or the business climate the prospect lives in day to day. No, this sales person is grossly out of touch. A ‘lower than anyone else’ TCO might work in some situations, but, what a prospect wants to really hear is how: