Can Your IT Project Manager Sell Better Than Sales?
In short, IT needs a sales quota. We’re not talking about database admins making cold calls or security teams sweeping LinkedIn groups for prospects. Instead, our organization should assign a target sales goal as part of its overall IT objectives, focusing your team on increasing revenue hand to hand with the sales organization. … It’s tough to admit you don’t really get the sales process, but IT teams just don’t have a ton of sales experience to build upon.” Sell It! InformationWeek, Michael Healey, March 26, 2012.
Hmm, IT doesn’t understand sells or marketing? Let’s think about this notion a little bit. Keep in mind “IT” are people just like those folks in other departments. Very often, especially for technology products (mobile phones, consumer electronics, PCs, iPods, etc.), those IT folks often look more like the customer than the sales and marketing folks I’ve worked with. Let’s take a real world example to add some perspective.
I was managing a software development department. We had some 100 software engineers and technicians that worked on our products and delivered them to our customers. The problem was that we were not a “profit center” but were categorized as a “cost center.”
That was strange to me. Here we were selling our software to customers both as stand alone products and as a service. Customers paid us to develop new capabilities and install them into their IT centers. Engineers were sent out to work at customer sites and we charged our customers hourly rates for their work. How were we not a profit center? What was our purpose if it was not to generate revenue?
It seems that with each revenue transaction we associated the sale not with the engineering department, but with the marketing team and their customer. Even as the Director of Development, I could not see from my finance provided accounting data how much revenue my team generated by their development and service activities. It was like we were invisible as a revenue source.
Add to this situation that it was not unusual for our account teams to inveigle me to send out engineers free of charge to help at a customer site (support was a billable item per our customer contracts). It seems that since the account got to recognize the sales, but not the costs, it was not a conflict for them to try to get an engineer onsite but without charging our normal fees.
I raised this situation up to more senior management and recommended a solution which was to designate my department a profit center. Finance would simply also keep and show the data of how much revenue we generated and of course continue to show our costs. Senior management found this humorous. The other development directors thought I was nuts. Needless to say, my recommendation was not adopted.
The finance system was locked up tight such that I couldn’t pull the data to see what revenue we generated (and I had already tipped my hand to what I was trying to do, so my request was met with silence from finance). I considered tracking the revenue manually but that just seemed silly when we had a whole system that captured the needed data.
The insight and breakthrough came while I was updating my annual budget. It came in the form of a question (a good metrics technique). While I didn’t know my revenue, I did know my cost, so the logical question was “how much revenue would I need to generate to break even?” This translated into “how many hours do I need to bill at the average contract rate for my team to pay for itself?” This was easy to compute since I knew my cost and I knew the contract rates. It came out that I needed to have about 40% of my folks (total work hours) billed to revenue generating activities (contract development, service calls) for our team to break even, to pay for themselves and for all our equipment, systems and overhead.
While all this was going on, we were regularly being extorted to cut costs and do more with less. It was obvious to me with this accounting that it was equally important to get more of my team working on a billed contract (as opposed to the normal defect repairs and developing future capabilities that may or may not be billable as new capabilities, etc.). In fact, it seemed obvious that selling our capabilities to put more staff on a billable activities made more sense than trying to reduce folks. Yet, here I still had account managers, for example, trying to give away our engineering hours for free (e.g., “we’ll earn their goodwill!”).
At a budget review I summarized my department and then I dropped the bomb that if we had 40% of my team on billable hours than we would pay for ourselves. Over that, we would generate a profit. Why were we talking about reducing staff costs when these “costs” generated revenue and were highly prized and sought after software engineers? Let’s proactively put them to work rather than giving them away for free. Unlike the reception of my previous recommendation, this notion struck a chord with most of management during these budget reviews.
When an account manager would ask me to send out software engineers for free, I would ask them how were they helping to pay for the team we had? Was it OK with them and their customer if I reduce the size of my, costly, team and so have less people available for these free visits? I was being asked to reduce my costs after all. If I had someone I could send out for free, obviously she was someone not working on anything billable and so probably was someone I could let go. How about using someone who was also working on a billable project for the customer? Send them out? Of course that would probably slip out the project delivery date or otherwise cause us to do a bit less due diligence on development and testing, since we would spend time away from our billable projects.
I knew I had finally gotten through when an account manager walked into my office, sat down and his first words were “I have a request for an engineer and the the customer will pay for him!”
Once we had the insight on how our engineers contributed to our revenue and to selling our products and services, we had less “giving away the store” than we had had in the past. People would now look at our technical folks and see their revenue capabilities and not just their costs. Needing, per the opening quote, for the engineer/IT person to do more to sell the product or service just seemed silly in this case once we gained an objective perspective on how they already contributed to the bottom line. Putting everyone to work using their primary expertise was still the best project management tool.
Is your project team seen as a cost or as a generator or enabler of revenue?
5 thoughts on “Can Your IT Project Manager Sell Better Than Sales?”
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More comments from around the web:
Ingemar Andersén • This is so true Bruce, you got a big point regarding IT project Manager. We had in Sweden two weeks of training a Business school for ” Technicians and Consultants”. The main task was to have big ears, to acctually learn to listen if the client had some problems. And bring back that “problem” back to the Account Manager.
Success!
More comments from around the web:
Marty Kubalanza MST • Typically they can because the understand the client, the interaction between IT and technology. Sales exist to open door and establish the relationships. Management consultants seal the deal.
Chip Fox • Amen Marty! I totally agree! I have seen some very savvy sales people particularly on complex integration work … but nothing sells the deal like the two legged partner, one who can deliver and therefore close the deal!
Christopher Moyle • A project manager’s primary task is to manage the project to completion within budget and schedule constraints, and to keep the customer on side in the case of a single client. However, if the target is multiple customers, it is completely distracting to the project manager to also be selling the product and the project will suffer as a consequence.
Alex Ladjimi • It managers, PM’s, and consultants should have nothing to do with sales other than provide info/hear say to a detailed sales workforce. It takes away from the performance of the assigned tasks of the managers, PM’s and consultants whose are responsible to the clients. That is what brings you back to a gig.
peter edwards • If the project is on site at the customer and/or project members are interacting directly with customer influencers, it is inevitable that they will also have a direct influence on sales opportunities, particularly extention and expansion work. It’s not distracting, it’s their bread and butter for the future and should be encouraged. The administrative aspects of sales however should be kept strictly away from them for the reasons stated by Alex
Cynthia Miller, ITIL V3 • Having spent most of my CSC career working at the customer site, I can say the emphasis should always be primarily on performance of required daily tasks. That said, one should always keep one’s eyes open for opportunities to promote the company, and keep knowledgable of new technologies that could be applied and promoted if the occasion arises. There is a fine line between actively marketing which can be a turnoff to the COTR with a tight budget and responding to a new opportunity with a mature knowledge of proven solutions that can improve business functions and ROI. Briefing management should immediately follow any such interactions with the customer whether or not the customer exhibits an interest in that new service or technology as the marketing team should take it from there if appropriate.
Karthik Kumar • Well, I agree to Cynthia’s comments on marketing team should take the lead from the front because they should know onething that they are the one who is projecting a company’s beauty and the truth is unsaid about everyone should take responsibilities in their own domain and sharpen the saw both internally, externally, indvidually and collectively as one team through self confidence you can change anything in this world …
Bruce Benson • Everyone, thanks for the comments and feedback. The essence of the article was that in doing their primary jobs well, the engineering staff does indeed sell the company (product, service, etc.). This was in contrast to the notion that the engineering staff needed to do more sells directly, which just struck me as a misguided solution to problems in sales.
More comments from around the web:
Marty Kubalanza MST • Typically they can because the understand the client, the interaction between IT and technology. Sales exist to open door and establish the relationships. Management consultants seal the deal.
More comments from around the web:
Debbie Edmiston • Bruce, it’s great seeing it broken down the way you did in your experience. I have to be reminded that sometimes everyone has to be included in the loop to continue to be profitable in such a tight and competitive market/times.
Comments from around the web:
Debbie Edmiston • I am interested in finding out from the IT Project Manager if they had success rates? Also if the IT PM was better in the beinging of the sales portion and then the Sales/ Margeting force comes in and does the closing? Because this may be an option I am looking into.
Bill Schlesinger • In my years in field service supporting sales as well as customer maintenance duties I always felt we (My self and sales) were a team. I would set up demo’s etc and the sales people would handle the politics.
Debbie Edmiston • Hello Bill I think we met in Vegas in January how are you doing?
I understand clearly about working as a team player, and I hate the politics all the time. However politics does have it’s place. I will work on having the PM’s more involved. thank you
Bruce Benson • Debbie,
In the article’s example, the IT person didn’t normally initiate the sales. Generally they were on-site or otherwise working with the customer and they heard about a new need or desire (often in the form of “can you also do this for us?”). The engineer would get the account team involved at this point and often be the “technical voice” to translate between customer and account/sales. IT management would then need to be called in to balance resources and quality/schedule possibilities. First contact however, was with the IT folks. The hard part was to remind the engineer to be positive but be cautious about making promises (or trying to do it themselves in their “free” time for free).
It also helped when everyone knew the general rates or contract costs of doing work. When the customer could estimate the ballpark something would cost (and be close) they were much more willing to quickly make a commitment (or at least engage in negotiations). In a sense, the customer’s technical folks who needed our services became part of our team to convince their management of the need. When IT could say or talk little without the sales/account team with them, then we missed a lot of opportunities (which became obvious when things were more transparent to everyone and the customer started peppering IT with more billable work).
So this seems to match your model of having the sales team do the closing.