Understanding the Business Value of Social Solutions in Sales

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1 WHITE PAPER Understanding the Business Value of Social Solutions in Sales Sponsored by: SAP Vanessa Thompson April 2014 IDC OPINION The confluence of the changing competitive landscape, strategic business objectives, and how organizations are changing to meet future needs is having a deep impact on current business dynamics. Understanding this impact forms the basis of a plan for how organizations can enable users to work and collaborate across global, mobile, and cloud scenarios, all supported by a more social workflow. The right combination of traditional collaborative applications ( , messaging, and team collaborative workspaces) and enterprise social networks is a core part of how organizations can manage the transition to a new way of working or usher in a more holistic cultural change. Sales teams, being on the frontline in terms of customer engagement, are best placed to understand the future needs of customers, partners, and suppliers. They are also able to be more involved in maintaining customer relationships and make the transition to the support organization as seamless as possible. Within this, there are some cues in the sales organization where enterprise social networks or collaborative tools may add value to existing business processes: Sales organizations are focusing on the quality of opportunities as a way to deepen engagement and cut time and effort from the overall sales process through building a deeper relationship with customers, partners, and suppliers at the front of the transaction. The most appropriate initial mode of communication contributes to building a deeper and more engaging connection across all business constituencies. Supporting early-stage relationships with a streamlined mode of communication, through an activity stream that can parse data and information quickly and effectively, will create the difference between a simple connection and an ongoing engagement with a customer, partner, or supplier. Maintaining ongoing relationships and handing the customer over to the support organization can be a convoluted and complex task. For this to become streamlined and add value to both the sales team and the support organization, the handoff should be seamless and allow the actions of the customer to be transparent to all internal business users. April 2014, IDC #248018

2 METHODOLOGY The basis for this white paper is to establish and validate a core set of metrics in the sales line of business based on individual key performance indicators (KPIs) and role-based outputs. The metrics are added to a framework that enables the benefits of enterprise social networks to be mapped against existing business objectives and future potential scenarios. This is in line with IDC's ongoing research into the challenges associated with traditional collaborative applications and enterprise social networks and the deployment of software tools designed to improve those processes. Research includes interviews with software vendors, as well as their partners and customers, to understand the key attributes and benefits of enterprise social networks and collaborative technologies. In addition, IDC conducted in-depth interviews with five sales executives to understand common metrics and measures. IN THIS WHITE PAPER This IDC white paper describes how enterprise social networks and augmenting social workflow can add business value to existing business processes for the sales function inside the enterprise. It is one of a series of line-of-business white papers that help articulate the business value of social solutions across sales, HR, marketing, and support functions, primarily through the linkage of key performance indicators and role-based outcomes and outputs. Understanding the basis of how sales executives, management, and staff are incentivized to perform can elicit where a social process may support existing business metrics. In addition, processes that are shared can also be supported by traditional collaborative applications and enterprise social networks, so understanding how those are accounted for between employees, customers, partners, and suppliers adds another dimension to where an organization can recognize explicit business value from social solutions. Over and above this, there are a number of scenarios where enterprise social networks can impact the sales function directly because of the changing nature of businesses' strategic objectives. Understanding these scenarios will enable business decision makers, particularly those looking to support the changing nature of sales, to formulate plans to support specific business processes through enterprise social networks and ultimately add incremental business value across the organization. SITUATION OVERVIEW The sales organization has very individualized KPIs, incentives, and processes, and the collaboration that takes place in this group is heavily project and workflow driven. To be of significant value in the sales process, enterprise social networks and collaborative technologies need to be deeply embedded into the workflow and daily activities of sales associates and readily available to management and also need to support existing collaborative applications. The ultimate measure of success is how well relationships with customers, partners, and suppliers are managed and maintained, with or without technology. IDC has identified some specific measureable outcomes inside the sales function, from both a team and an individual perspective. With sales being heavily individually incentivized and often not tied to shared outcomes, the processes performed in this business function are explicit, specific, and detailed. This sets 2014 IDC #

3 a more project-based approach where enterprise social networks and collaborative technologies can support the existing environment. The KPIs for employees in the function support this view. Key Performance Indicators Sales is an explicitly revenue-generating function. The core KPI for sales teams overall is to drive revenue (some but not all of the revenue metrics were tied to cash budgets). While the incentive base for performance in the sales function is explicitly tied to an individual's performance, understanding how shared success is accounted for will ultimately help an organization understand where enterprise social networks and collaborative technologies can be added to the existing process as well as aid in building and maintaining a consistent relationship with all constituents that interact with the company. The following discuss critical KPIs and elaborate on shared metrics: Revenue growth. The ongoing viability of a business is measured through revenue growth. Depending on the business, profit also plays a critical role, but with remuneration of sales staff primarily tied to revenue growth (cash or bookings) for the bonus component, top-line revenue growth was the critical success measure for this KPI. In some cases, revenue was tied to cash and bookings. To support ongoing measurement of revenue growth, social workflow could be surfaced from within a sales force automation solution or customer relationship management (CRM) system to enable users to collaborate around budgets, costs, forecasts, and outcomes as well as become a central workspace where this information can be discussed with all appropriate stakeholders. Opportunity qualification. The focus of metrics in this area is shifting toward a style where understanding the quality of the opportunity is as important as capturing the opportunity itself. Qualifying the opportunity early and identifying the key characteristics have become critical success measures to ensure the quality of the opportunity. Organizations are looking for more data that is able to drive the qualification process as well as ensure that the right relationships are aligned to enable ongoing success. Enterprise social networks and collaborative tools can play a critical role in determining the status of a relationship between a prospect or customer and an organization based on the measurement and analysis of interactions directly with the company or with other parts of the business. Profitability. The cost of a sale is a critical success measure of productivity, as it can be measured against both the overall cost of a sale to the business and the individual contribution against total sales. With individual targets and calculated bonus remuneration explicitly linked to the sale itself, gaining deeper detail into the cost base creates a view of all contributing elements in the sales cycle, not just the individuals. Information on the cost base of a sale can come from traditional reporting, but the ability to surface this inside an enterprise social network or collaborative tool (potentially supported by an organizational data store) can help make organizational profitability information accessible in real time in order for employees to understand more immediate impacts. Customer care. Within the sales process, customer satisfaction is critical in maintaining an ongoing relationship with customers. If customer care behaviors can be instilled in the client base as early as possible in the sales cycle, then the ongoing relationship can be fostered early on in the transaction process. Enterprise social networks and collaborative tools can help facilitate the flow of information and processes from customer support through to the sales team. Connecting users across a single consolidated network can aid in quickly connecting experts to solve point problems as well as manage the ongoing communication with the customer IDC #

4 Relationship validation. Managing an ongoing relationship with customers, partners, and suppliers involves constant validation, and while this was not called out as an explicit attribute during the course of the interviews, it was an underlying theme across the respondent base. The industry variation across this theme was heavy, with the utilities group noting that gathering feedback on the relationship was critical because the turnover of partners and suppliers is often at risk and needs to be monitored and protected. Enterprise social networks can support this ongoing validation as they are able to surface active conversations and enable real-time (or near-real-time) feedback to all stakeholders involved across the lifetime of the relationship. Managing multiple suppliers. There is an expected level of relationship that exists with clients and prospects, particularly associated with the RFP process. Within the RFP process, enough of a relationship with the customer must already exist for the process to be successful. Outside RFP, the level of relationship needs to develop to an ongoing strategic relationship in order to demonstrate continued long-term value. To serve and manage multiple parties collaborating around a deal, a secure and contained asynchronous environment is able to be created via an enterprise social network or a collaborative tool to enable continuous, timely, and relevant information transfer and decision making with all participants in the process. Pre-sales collaboration. Complex sales cycles require additional support to aid the order, delivery, and invoice phases of the sales process. Companies sell and deliver goods or services and are collaborating (around exceptions) in the entire process internally as well as externally. Oftentimes, resolution is required around exceptions, such as issues with the delivered quantity, pricing discrepancies, discrepancies between ordered and delivered goods, and incorrect invoices. Enterprise social networks or collaborative tools can support this process by providing a common place for all constituents in the sales process to meet and discuss discrepancies. Solutions should also have the ability to provide lightweight workflow around problem resolution in order to identify a course of action. Cross-Function Collaboration Sales teams are heavily autonomous, yet they still rely heavily on internal business functions to ensure all clients' current and future needs are being met. This requires a stronger alignment of the business goals and measures of the sales organization and the KPIs of individual employees against the organization's business strategy and priorities. With the heavy project-driven approach of the sales function, there are other business units that need to be involved in the sales process. Primarily, the interactions are point interactions that involve process approval and workflow, although some collaborative processes can occur, particularly when involved with legal: Finance. As revenue growth is the overarching KPI in the sales group, it is critical to develop a strong relationship with the finance team to get deeper insight into forecasts as well as other business spend metrics. These teams share data-intensive information and reports, and an enterprise social network or a collaborative tool is able to surface relevant information from directly within the finance system or CRM system depending on how the solution is offered (or integrated). Enterprise social networks can surface relevant information from directly inside a finance application for those users, and they are still able to participate in an ongoing discussion in the overall social network. Legal. With the contractual nature of sales, legal is the most common business unit sales are required to work with. Correct representation and interpretation in the process of a sale is critical to ensure the sale itself has as minimal handling as possible and is relatively low touch IDC #

5 With the customer care elements in the KPIs, delivering correct documentation up front provides an easier and lighter-touch transaction. Enterprise social networks or collaborative tools can help facilitate this closed-loop discussion by segregating a workspace within an account or opportunity where only named users are able to enter in order to collaborate around sensitive material. Operations and support. Servicing a sale is critical, so streamlined collaboration with internal operations and support staff, across internal business operations as well as technology, also becomes critical to deliver the required level of service back to the customer. Optimization of the operational processes that support the sale also requires partners to be managed and maintained as part of the operations relationship. Enterprise social networks and collaborative tools can support the facilitation of lightweight workflow around processes, particularly where exception handling is required. Accounting for shared data and information. If a partner or supplier is more deeply embedded with an organization from a technology perspective, this creates both a challenge and an opportunity. The common information breakdown is where data conversion is involved, and information needs to flow from one system to another through organizational firewalls. This creates a challenge as the increased number of partners increases the risk of where data quality may be compromised. With the need to deliver information back through to internal functions (finance, legal, operations, etc.), the ability to deliver sound data in order to make more efficient and accurate business decisions becomes critical. With this, data quality itself is superseding the need to account for the data sources and attach metrics against partners (internal or external) that do contribute information in the process. Enterprise social networks can act as a bridge to facilitate information transfer as well as intelligent filtering of the most relevant data and information in any given context. Collaborating with partners and suppliers. Aligned to both the relationship validation through constant contact and the need to manage multiple supplier relationships, was still the most widely used tool to collate and distribute information, whereas Web conferencing (audio and screen sharing) was the next commonly used functionality. Screen sharing and sales engagement are inextricably linked, so the reliance of the sales function on the ability to quickly share and deliver content to prospects, clients, and partners has become an increasingly important function. Although screen sharing has become a targeted way to help these organizations deliver faster value to clients, there has not been any attempt made at connecting standalone Web conferencing capability with existing enterprise applications or other knowledge management applications. Routing the Web conferencing experience through the enterprise social network can make connecting with other users more seamless as well as add context to the conversation being had in the Web conference. FUTURE OUTLOOK The ultimate success for a sales organization is based on how effective it is at meeting customers' unmet needs. Currently, there is a gap between how organizations are approaching the way they understand those needs and how the sales function is incented to perform. There are some specific use cases where organizations can add value to existing business processes using enterprise social networks. The most pertinent components are: Opportunity, quote, and order management. From the time that an opportunity needs to be qualified through the sales cycle and ultimately through to support and service, there are many 2014 IDC #

6 constituents involved in the process. Gathering all appropriate participants into a group that has access to all the information about the opportunity, including financial and legal information to produce a quote, can aid in streamlining management of the opportunity. Including the ordering process adds the complication of managing relationships across supplier and distribution channels. The use of enterprise social networks and collaboration tools to support the ongoing relationship between all constituents involved in the opportunity ultimately leads to a more engaging sales process. The ability to meet the needs of prospects at the right time, with the most appropriate content and tools, in a format they would like to consume the information, is paramount and achievable. Financial management. Connecting sales operations and finance managers is essential to enable a streamlined workflow approval process. Enabling a scenario where both business units and specific users can be connected in a private workspace, through an enterprise social network that sits inside an existing finance or sales application, can accelerate the rate at which approvals can be captured because all appropriate information is able to be contained in that workspace. There were some additional cues in the broader organizational metrics discussion that highlight opportunities where enterprise social networks and collaboration tools may be able to close the gap between unmet needs and incentives. Elaborating further: Quality not quantity. To continue to meet the expectations of all of their business constituents, organizations need to understand all the future potential touch points. Focusing on the quality of a sales opportunity through deeper engagement and understanding the needs of the customer provides a way to build a greater profile of the overarching business change an organization is trying to make. It will be critical for sales organizations to quickly identify the influencers in any organization as well as create a fast bond. Enterprise social networks and collaboration tools support this by streamlining the initial relationship building process where documents and information as well as profile information may need to be shared. With the additional context provided by these tools, prospects are able to gain a greater insight into the future needs of a customer and be more proactive in servicing the ongoing relationship. Building and maintaining relationships. Relationships are another outcome of focusing on the quality of an opportunity, particularly where relationships can be deepened earlier in the engagement. Supporting early-stage relationships with a streamlined mode of communication, through an activity stream that can parse data and information quickly and effectively, will create the difference between a simple connection and an ongoing engagement with a customer, partner, or supplier. The initial stages of a sales engagement are critical, so the value enterprise social networks and collaboration tools bring at this stage is the ability to parse business systems to acknowledge existing business relationships and consolidate prospective profile information to build a level of relationship appropriate for the situation. Customer care. Predominantly, the sales process is involved in the initial transaction; following this, its role in the relationship with the customer diminishes, and primary engagement then passes to business operations functions. To maintain an ongoing relationship, the handoff should be seamless and allow the actions of the customer to be transparent to all internal business users. Enabling a transparent and open dialogue with customers throughout the lifetime of their relationship with a company is the foundation of customer experience. Underpinning this customer experience, enterprise social networks and collaboration tools can be used to support the intelligent filtering of information. In future scenarios, customers will start to demand an environment where in any customer issue or problem that arises, the sales 2014 IDC #

7 and operations functions work as a combined identity to solve the issues. Customer care will become a proactive customer engagement mechanism, underpinned by an enterprise social network backbone. CONCLUSION With the sales organization having such individual incentives and processes, the collaboration that takes place in this group is heavily project and workflow driven. To be of significant value in the sales process, enterprise social networks and collaboration tools need to be deeply embedded into the workflow and daily activities of sales associates and readily available to management. The critical point of success is ultimately how well relationships with customers, partners, and suppliers are managed and maintained. In addition, maintenance of the relationship also relies on the management of multiple suppliers and enables the handoff to support to take place seamlessly. This notion of relationships underpins how the sales teams perform based on the criticality of any given decision as well as where the handoff points exist for any given decision in the sales process. The ability to streamline this decision workflow, particularly where multiple suppliers are involved and workflow is required between the sales and support functions, will become a critical success factor for organizations looking to complement existing sales processes with enterprise social networks and collaboration tools IDC #

8 About IDC International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make factbased decisions on technology purchases and business strategy. More than 1,100 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries worldwide. For 50 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. Global Headquarters 5 Speen Street Framingham, MA USA idc-insights-community.com Copyright Notice External Publication of IDC Information and Data Any IDC information that is to be used in advertising, press releases, or promotional materials requires prior written approval from the appropriate IDC Vice President or Country Manager. A draft of the proposed document should accompany any such request. IDC reserves the right to deny approval of external usage for any reason. Copyright 2014 IDC. Reproduction without written permission is completely forbidden.

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