Steve Baxter, Enterprise Marketing Manager for Zoho UK, has made so many bad purchases in his life he thinks he’s finally worked out how to do it well. PS: does anyone want to buy a fluorescent green Reliant Robin?
It has taken me nearly 40 years in the British business community to come to a startling revelation: we are far better at selling than we are at buying. In fact, we are pretty hopeless at buying things – and monumentally hopeless if we are talking about complicated IT systems.
I should not reserve this criticism for government institutions. Mind you, with Birmingham City Council’s catastrophic Oracle project been cited as one of the reasons the council went bump, it is hard to resist the temptation.
No, we are all bad at purchasing IT, from small businesses to massive ones. And I do mean “we” – I have been involved in my share of FUBAR projects. So what are the golden rules for buying IT better?
Number One: do not rely on anything you read in marketing literature. I should know, I have spent a lifetime writing it. Marketing literature and web sites do not lie but nor do they have the space for the whole story. If it says you can see a report that shows how current quotations would affect credit limits, you can. It may not have space to say that (with some systems) this is not a standard report or that it takes an advanced user to create it.
Number Two: do not trust anything anyone tells you verbally. I think it was an American businessman who came up with the wonderful phrase “trust, but verify”. In other words, trust nobody.
Number Three: define all your processes. We never do this properly because it is a monstrous ball-ache. Let’s use CRM systems as an example. CRM is often considered a sales tool. In enlightened organisations it is even seen as a marketing tool too. So the purchasing team look at everything to do with generating revenue. How will marketing manage advertising campaigns, track website activity, send out nurturing emails and decide when a lead can be passed to sales? How will sales identify purchasers, budget, authority, need and time scale? How will they progress the sale through demonstrations, meetings, negotiations and, if the wind is in the right direction, a sale?
To many organisations, that would be a reasonable view of the sales process. And yet, it is woefully inadequate. It treats sales and marketing as if they were an isolated part of the business. What about Finance who need to check if a new customer is financially sound? What about Legal who need to be brought into negotiations early rather than later? What about Operations who need to know whether you are committing them to deliver a product they will not have to a place they cannot reach by a deadline they have no chance of meeting? What about Purchasing who need to know what to order to build the marvel you are selling. All of a sudden, CRM morphs from a tool to improve sales to a much bigger deal.
Then you have a choice. Do you forget the other departments, buy what sales needs and adopt ye olde ‘full speed ahead and damn the torpedoes’ approach? We do not need a crystal ball to know how that turns out. You turn a happy, cooperative company into a battleground of recriminations. Everyone loads up with blame bullets and lets rip.
Cease-fire is reached by agreeing that the CRM system is to blame. It is not. The system does what it was sold to do. It was purchased to do the wrong thing.
It ain’t what you do…
Number Four: how will it do what you need it to do? In a previous job, a CRM supplier (not Zoho, obviously) suggested that they would integrate with our ERP system using about 30 CSV files that would be transferred every hour. As if that was going to work. Whether it is behind-the-scenes functions like integrations or operational issues like the user interface, how something happens is as important as what happens.
Written in blood
Number Five: get a contract and make it specific. For my sins, I went to university to study law and my family are all lawyers going back many generations so this is yet another area in which I am biased.
You do not need a contract to cover every commercial activity you do. Instead, work on a simple rule of thumb: if you are spending enough money to hit annual profit, if you are affecting a process that can disrupt your business or if you risk hurting people, get a contract.
Whatever platitudes sales people give you, whatever promises marketing people make and however friendly negotiators seem, not a single word they say will stand up in court. Litigation is what contracts are all about. They are not there to protect you when times are good and everything is rosy. They are there for when the shit hits the fan. If you don’t think that can happen, retire.
The legal part of the contract is neither complicated nor expensive. It just needs to say the supplier will supply a system that does X and the customer will pay Y. The important bit is the part where you and the supplier write down what the system is going to do and how it’s going to do it (see points Three and Four).
Bad purchasing is a phenomenon I learned the hard way over 30 years ago. I was selling Pegasus Accounts software. The customer said he wanted “multi-level discounts”. Pegasus could do this – different customers could have different levels of discount.
We installed the system. The customer said “Where are my multi-level discounts?” We showed him what Pegasus did. “That’s not what I want!” He wanted his customers to get 40% then 20% off the same invoice. That was his idea of multi-level discount.
To this day, I see this as bad purchasing because it wasn’t at all specific. Needless to say, the customer saw it differently. It was “not good for the purpose sold”. They were totally wrong. It was perfect for the purpose sold. It just wasn’t good for the purpose bought. That’s why you need it in writing and you need in detail.