The Current IT Industry Sales Model Is Officially Broken

NOV 17, 2014

By Chad Cardenas, Chief Innovation Officer, Trace3

I surely have not been alone in watching the demise of the IT sales model over the past several years, and I believe the time has come to officially declare it broken and possibly beyond repair in its current state.

I say this with trepidation because my company Trace3 started out 12 years ago as a value-added reseller of technology solutions. We have a clear and vested interest in improving the sales cycle for our CIO clients.

Why, then, would I declare the current IT sales model to be broken? Because incentives and solutions on the sales side of the equation simply don’t line up with what most CIO buyers are really interested in. As CIOs pivot more toward innovation with a business impact and away from the legacy “keep the lights on” mentality, there is a greater divide between CIOs and traditional IT sales reps. The CIO of tomorrow wants to work with business peers to identify opportunities for transformation, then leverage innovative solutions to do so.

Simply put, far too much value gets lost in the shuffle of IT sales engagements these days. Most sales cycles start with a salesperson who doesn’t understand the client’s real needs, pushing a solution in search of a problem.

Even the minority of salespeople who may lead with a problem-defining discussion are limited in their ability to provide real value because most of their solutions are becoming commoditized. Sure, there are absolutely innovative new technologies that can provide a competitive edge, but even for those, the context in which they’re delivered makes all the difference.

We are convinced there is a better way to do business for everyone involved — by doing a better job of structuring the engagement around every client’s unique needs, connecting the dots for everyone, and providing exclusive solutions and programs outside of basic infrastructure technology.

Take for example Chris Laping, the CIO and SVP of business transformation at Red Robin Gourmet Burgers. Chris and the Red Robin team are obsessed with constantly improving the guest experience. When Red Robin recently opened a new restaurant in Orlando, FL, suddenly Chris received a flood of calls and emails from Florida-based developers of point of sale (POS) retail software systems. What he wanted to tell all of them was that Red Robin already has nearly 500 restaurants nationwide, so his team has POS figured out — thank you very little.

That scenario is all too common in the IT industry’s current sales model — some inside salesperson will cold call the CIO to push a random technology that is not appropriate. Or if it were applicable, what is the value-add if that CIO can pick up the phone and call a dozen different entities for the same type of product or service at a competitive price?

Seeking alternative means of exposure to transformative innovations, Chris decided to participate in a novel technology innovation program organized by Trace3 (see program details below). The program involves executive briefings that connect global CIOs with leading Silicon Valley venture capitalists and the Founder/CEOs of their startup portfolio companies.

Many participating CIOs consider the Trace3 innovation program to be highly valuable because it allows them to build one-on-one relationships with VC partners — a connection which would be largely impossible otherwise. It also introduces them to state-of-the-art technologies that can help them nurture innovation. As Chris Laping of Red Robin likes to say, “If opportunity doesn’t knock, build a door.”

Trace3 believes its innovation program has built just such a door to open up new opportunities for CIOs, VCs and entrepreneurs. Now if we could only do something about all that wasted energy on cold calls from random salespeople lined up outside the door, we’d really be onto something.

The goal of Trace3’s program is to help CIOs identify and adopt the latest cutting-edge technologies in the areas of Big Data, cloud, virtualization, mobile, social media, security, and converged infrastructure — but highly customized and totally tailored to each CIO’s special requirements.

As the program’s host, Trace3 meets with the CIOs in advance to better understand their IT and business priorities for the coming months and years. There may be detailed discussions with the Trace3 Cloud or Big Data teams — specialty groups made up of industry experts in their respective fields. In this way, our team can curate which VC-backed startups will offer the best combination of technology solutions to meet each CIO’s specific needs. And CIOs love the arrangement because they typically only have to explain their needs once in advance, to the relevant program specialists.

In the case Chris Laping, the CIO and SVP of business transformation of Red Robin, Trace3 enlisted ten leading startup founders (not salespeople) to meet with Laping in a series of 25-minute “speed dating” sessions held in Silicon Valley. This setup allowed Laping to quickly assess which technologies and relationships he wanted to explore further. His choices included several firms at the forefront of social and mobile customer-facing applications.

Through this program, CIOs can get an insider’s look at many groundbreaking technologies without having to do all the heavy lifting and research themselves. If they elect to see earlier stage companies, they can also be in a position to influence product development with their feedback.

As if that weren’t enough, many CIOs find the most value in the thought-leadership discussions they have with VC partners and highly experienced entrepreneurs. These individuals have seen the rise and fall of countless companies and technologies, the tidal waves and passing of IT trends, which gives them a unique perspective on our industry.

This program’s distinctive model also benefits prominent VC firms such as Greylock Partners, Andreessen Horowitz, and Lightspeed Venture Partners. They get excellent exposure for their portfolio companies, and entrepreneurs get to pitch their ideas and receive feedback from IT leaders who have the ultimate say over what solutions will actually take hold.

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