08.10.06
Solution Selling
For a hardware equipment vendor like HP, one of the most important challenges is to understand and apply solution selling vs hardware selling strategy. When I started in Cisco in 1998, Cisco was facing a similar challenge: most of its sales relationships were with the IT department vs CIOs or CxOs of customers. Customers did not view network as strategic nor understand the impact of networking architecture in the Internet age. One of the brilliant moves John Chambers made was to create a pure cost center called IBSG (Internet Business Solutions Groups), which grow from less than 10 in 1998 when I joint that group to 250 in 2000 when I left to be part of Cisco’s M&A team. IBSG’s mission was to help engage and build relationships with CxOs of the fortune 1000 companies, and help sales team on a global basis with reusable solution and knowledge so that they can understand customers’ business problems and carry on a business dialogue with top management vs a technology conversation with IT department. IBSG was formed with top external business consultants from McKinsey and big 5 (at that time) who can provide either horizontal technology expertise or domain vertical industry expertise. In parallel, Cisco started change its sales force DNA to shift sales force from channel sales experts to solution sales experts who know how to partner with SIs and ISVs. Typically, a customer would define a business problem and start engagement with large consulting firms such as Bearing Point or ISVs like SAP before providing RFP to equipment vendors to get the fastest or cheapest gears. Through solution selling and IBSG, Cisco lifted itself from the bottom of the food chain. It partner with SIs and ISVs and position itself as the “trusted advisor” to its customers. This inner circle relationship and trust with customer started with free consultation on customer business planning and strategy development, and eventually influence real dollars from RFP to budget allocation. This helps Cisco maintain its high margin, and more importantly, visibility into the customer demands before its competitor moves in. Again, I got to give John Chambers top credit for his vision and commitment to fund such a large “cost center”. Now, when I look HP, I think this is a company that needs to have this thinking and approach in order to fight well with its competitors…
