Archives For computer

Next Tuesday I will kicking off my late summer Making Money w/ Security workshop – virtual class.  I am excited to report that, once again this class is sold out.  My excitement is not just about getting the seats filled, but more for the opportunity that lies ahead for those invested in security.

If you read the Wall Street Journal yesterday, perhaps you saw this article on Small Firms not able to find workers.  “About 31% of 811 small-business owners and chief executives said they had unfilled job openings in July because they couldn’t identify applicants with the right skills or experience, according to a survey by The Wall Street Journal”.  This is especially true in the security space – of all the clients and prospects I work with, security is the fastest growing sector, and while every company needs a managed services offering to build valuation through recurring revenue, every managed services deal should hing on security.  In any case, every technology person should be thinking:

  • Hardware companies in general are not doing as well – perhaps a sign of the times with cloud trends
  • Sales people who don’t attend consultative type training are likely to be unemployed in the future
  • Sales people who are not reading are falling behind every day
  • Solution providers that don’t understand security will likely commoditize quickly
  • Managed services contracts not built on security will be questioned by the client in a year

© 2012, David Stelzl

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Photo taken by David Stelzl

A couple of attendees emailed questions regarding competitive advantage…following Wednesday’s Cisco sponsored webinar.  I thought it might be helpful to address this here:

(Q) Why is Operational Efficiency or Risk Mitigation easier to sell than Competitive advantage?

First, it’s important to note, I did not say you can’t sell using competitive advantage as your value proposition, but rather, operational efficiency and risk mitigation are preferable; at least to the average sales person.  Here’s why…

Companies can use technology to compete, however this type of advantage is often short lived unless the company deploys some type of unique patented technology; something their competition can’t go out and buy tomorrow.  More often than not, technology driven competitive advantage is really an operational efficiency gained by the perfection or automation of some process.  So in the end, it’s really an operational efficiency sale, that in-part, delivers competitive advantage, in addition to delivering cost efficiencies (which their competition will either adopt or find another way to accomplish).  The technology sales person’s ability to foresee such an advantage in a complex manufacturing situation (for instance) is not so likely.  (Again, speaking of the average rep calling across many verticals).

True competitive advantages are seen when a larger company has more buying power, putting others out of business by squeezing their margins such as is the case with the Home Depot stores competing with smaller hardware stores.  Wal*Mart does this by putting highly efficient distribution processes in place that are unaffordable by the average mom and pop store in your local area.  While Wal*Mart may have some unique applications in place, their infrastructure isn’t really unique, just unaffordable to smaller companies.  The process itself is key, and unique as it is cost prohibitive to the smaller company.

Operational efficiency in itself may offer competitive advantage as seen above, and the seller can use this to gain momentum on the purchase, but the efficiency is more easily articulated by the seller.  To go down the competitive advantage road with technology sales may require a deep understanding of the vertical’s market pressures.  Perhaps if the sales person has come out of that industry, they’ll have success with this.

Competitive advantages not tied to operational efficiency, which stand alone as a true advantage that cannot be duplicated, may come in the form of location such as the best corner owned by McDonalds, exclusive distribution of a product, or patented technology such as the iPad and Mac OS.  These advantages are not easily matched.  Will Dell come out with a better laptop than Mac?  Probably not (in my opinion), however they certainly have a less expensive one.   Note how first to market has earned Apple 90% of the market on tablet computers!  This won’t be easy to steal.  This is hard to match when selling commodity goods which are largely over distributed in the VAR/Reseller world.

© 2011, David Stelzl

Here’s a great example showing just how much you lose when you discount services or consulting efforts.

Let’s assume you quote a job, fixed price, but calculated by estimating your time.   Here are some considerations you use in your quotation process:

1. Engineering rate: $150/ Hour.  (example rate).

2. Company’s published burden rate: $75/ Hr.

3. Hours estimated to do the job: 8 (one full day)

4. Total proposed price (Fixed Fee): $1200

5. Expected burden cost on the deal: $600

6. Expected gross profit (GP) on the deal: $600

So you put together your proposal and submit it to the client along with whatever products are to be installed.  The client looks at it and figures there’s no harm in asking for some discount.  “How about if we just go with $1000 even?”  Well,  that’s fair.  After all, it’s so close.

Assuming your engineer does complete the work in 8 hours, the client get’s billed $1000.

Looking at the numbers more closely:  That is about 17% off.  Not a huge discount, so you’re not worried.  However, let’s look at the GP discount:

Your fee: $1000

Actual burden cost: 8 X $75 = $600  (Same as above)

Realized GP: $400

Whoa, you gave away $200 right off the bottom line.  That’s a 33.33% discount which is about twice the discount you thought your were giving!  No wonder the numbers don’t work at year end…

© 2010, Dave Stelzl

Google Changes Everything

December 1, 2010 — 2 Comments

My educated started with school, ended with Google

I learned about Cobol programming, Fortran, 8-inch floppy drives, and outdated architectures at college.  I also learned how to cram for tests, gain the teachers favor, and correctly fill in scantron test sheets with a #2 pencil.  Eventually I graduated and needed a brain dump on relevant technology – at the time, Novell operating systems, ArcNet and Ethernet, PCs, and mainframe/PC connectivity.  The first part of my education came from professors lacking any relevant field experience, the second from sales people.  Sales people educated me, kept me up-to-date on product road maps, and even taught me how to address TCP/IP back when you did everything manually.  There was value in product knowledge, and other than some outdated bulletins our company subscribed to (at a very high price), I had few resources to turn to.  Even books were out of date by the time they hit the market; on demand publishing didn’t exist.

Google It

Enter Google.  Need to know how to cook something, understand a math formula, fix an engine problem, find a verse in the Bible, or learn about a technology?  Google it!  I used to be a central resource of knowledge, teaching my kids at home.  No more.  Now I just have one answer…Google it.  Just about every question that comes at me during the day can be answered on Google (well almost every answer).  We’re almost at the point where I don’t have to ask my wife what’s for dinner!  Chances are it’s on our family blog and all I have to do is Google the question.

They Can’t Google Your Expertise

So what is the sales person’s value?  It was about product knowledge, coming features, and compatibility.  Not any more.   It’s all on Google.   So where is your value?  It comes back to “improving the client’s position”.  What Google doesn’t have is your expertise and customer interaction.  You can find a million articles addressing someone else’s situation, but not one that exactly fits your client’s current situation right now, with the current market conditions, partners, employees, plans, and current technology.  This must become central to your value proposition and you must be able to communicate it with confidence.

They can’t Google Mine Either

In 2003 I was looking for something new.  My wife sat me down and said, figure out what you really love about the work you’ve done in the past, what you don’t like, where your passion is, what won’t commoditize in the next year, and create the perfect job.  Then, taking a note from Jim Collins, author of Good to Great, I added the economic engine concept.  (Notice this type of decision process is not in Google).   Speaking, writing, teaching, mentoring…these are the things I love.  I do them at home in our homeschool program, I do them at Church,…why not do them for a living.  So on December 17, 2003 Stelzl Visionary Learning Concepts was formed.  I found my niche and have never looked back.  In fact, in the early days whenever difficult times would come, I would simply call up one of my buddies in product sales and ask him how things were going.  Their answers always validated my choice.  Whether or not I sold a product didn’t matter.  What did matter was that I offered something based on intellectual capital, something uniquely mine.  I don’t sell hours, skews, or discounts.  I sell IP (Intellectual Property).

Find your Niche and Sell it!

There are millions of things to specialize in, and for the engineer, products are included.  In sales, you must pick something you believe in, are passionate about, and something you can be the best at.  Then it must have an economic engine that works.  Take inventory of your intellectual capital.  What value can you provide which cannot be commoditized through Google or filled through your prospects everyday social contacts?  Hopefully you can come up with something your company can offer or support you in.  Then become the expert in it, and figure out how to take it to market. But don’t stop the learning process or the market will quickly pass you.  In 2011, Find your niche and go out and sell it!

© 2010, David Stelzl