Bad Processes Kill Business

While I argued last week that oversight of business is necessary to move us to a longer-term approach to growth, too much oversight is even worse for a business.

I’ve come across countless examples in my own, IT, industry where companies seem to try very hard to prevent sales, rather than make them – all as a result of too much oversight. Let me illustrate this with an excellent example.

The company in question, let’s call it ABSC (A Big Software Company) is a very significant multinational software vendor, with offerings targeted at a range of companies, from the very largest down to a mid-size level – and it is this mid-size level where the powers-that-be are expecting significant growth. The only problem is that their processes and procedures effectively kill sales in this market and make them extremely difficult in their traditional high-end one, too.

Let’s assume that an end-user, we’ll call it Widgets Inc., wants to purchase a 100-user system from this company after being sold on the concept by a Reseller of ABSC – in line with ABSC’s policies that all SMB sales go through the channel. The outline of the process is as follows:

  • Reseller calls ABSC and requests a quote (they cannot yet provide a quote to Widgets Inc. as there are no official price lists).
  • The Account Manager for Reseller at ABSC in turn requests a quote from ABSC EMEA HQ as even he has no pricelists. The turnaround time for this quote is typically 2-5 working days (not helped by different working days in different countries).
  • The Account Manager receives the quote from ABSC’s EMEA HQ and emails it to Reseller who can then provide an official quote to Widgets Inc.
  • Widgets Inc., accepts the quote and asks to place the order. Because Widgets Inc., is a new customer (as are most SMBs!), Reseller has to supply Account Manager with extremely comprehensive information on Widgets Inc., in order that this can be properly recorded on the ABSC systems for, amongst other things, credit purposes (even though ABSC is not providing Widgets Inc., with credit as that is up to the Reseller).
  • Account Manager enters all the data and applies for the software licenses. This approval process generally takes some 10 working days to go through the various internal levels in EMEA HQ (although 4-6 weeks is not unusual). Eventually, approval for the sale is granted and Reseller can download the software licenses. Total turnaround time from when the customer firsts wants to buy until delivery is some 4 weeks on average, and up to 2 months if there are any problems.

Apparently, the rate of lost/cancelled sales as a result of this tedious process is very high – customers simply go with their #2 option for the solution, where that solution can be provided more quickly.

Of course, what should happen is that Widgets Inc. expresses interest, Reseller gives immediate quote from its own pricelist, Widgets Inc. agrees and places order on Reseller who places this on Account Manager at ABSC and is then given the licenses within a day (after checks are made that Widgets Inc. is not prohibited by US Law from accessing the software).

Unfortunately, though, this streamlined approach to business is the exception rather than the rule in our industry. ABSC is, admittedly, an extreme example (although absolutely factual), but most IT vendors have degrees of this sort of inefficiency built-in. We might sell software and/or hardware to make [other] companies more efficient, but our own processes leave a great deal to be desired instead of showing the way.

Isn’t it time the customers started expecting the vendors to practice what they preach? It would not only allow them to get what they want, when they actually want it, but should reduce prices, too, as the sort of process described above is extremely expensive in terms of manpower and, therefore, cost.

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