The Rise and Rise of the Business Case - A Review of Best Practice

Many large organizations require a business case for purchases of as little as €20,000. Unless the seller's proposal focuses on costs, benefits and risks it is going to miss the mark.

The Rise of the Business Case.

As one salesperson told us recently; ‘I have seen more business cases in the past year than I have in the previous 19 years’.

With budgets being squeezed, projects and purchases must increasingly compete for scarce organizational resources. The reality is the business case is now more important than the sales proposal.

The Salesperson as Business Case Facilitator.

The emergence of the business case as the prime factor in organizational spend decisions obviously presents advantages for those sellers who can demonstrate the business justification for their solution.

If a vendor wants to win the sale, they must at least input to the preparation of a credible and compelling business case. Traditional features and benefits message are no longer adequate.

What your solution does and how it does it, including the technology involved, is the stuff of traditional sales presentations, but not a business cases.

The reality is that many buying decisions are made when the salesperson is not in the room, by a sceptical audience that the sales person may not have met, based on information which the salesperson has had little, if any input to. Traditional feature led sales pitches are out of touch and won't cut it in the boardroom.

The Compelling Business Case.

Whether your sales goes ahead will depend on a ‘to the point’ value equation, that reflects not only costs, benefits and risk, but also how the project will contribute to the achievement of broader organizational goals and strategies. That is the new reality of the business case sale.

A compelling business case is not just important in getting the sale, it is also essential to ensuring successful implementation and developing long term client relationship. As one buyer said to us, "the business case is also playing a role in guiding, tracking and managing project success, it may no have done in the past but it is now".

A Review of Business Case Best Practice.

In order to guide you in your new role as business case facilitator to your prospect we have reviewed the work of 9 of the leading experts in this space (the list is at the end.)

Specifically, this article presents an overview of the key advice from specialist books written for buyers on how to develop a business case and sell their projects internally.

The Business Case and Success.

The business case is not just a means of optimizing the allocation of scare organisational resources among competing projects. It is also an important means of ensuring project, as well as organisational success.

Let us take IT projects as an example. Everybody knows that most IT projects run into problems - the Standish Group and other figures are familiar to us all. However, the cause of those problems is often misdiagnosed.


Indeed, most of the experts suggest that the number one reason for the failure of IT projects is a poor business case, or no business case at all. That is not just failures in terms of delivering on time and within budget, but more fundamentally for IT to impact on business success.

Cost overruns are often not the result of overspending, but of underestimation of costs at the planning and budgeting stage. Indeed, the problems with most projects can be traced back to their inception and planning. The business case has an important role to play in making sure projects get started, but also stay on track.

Business Case Quality Issues.

Some of the experts suggest that expenses claims were subjected to more scrutiny than business cases for the purchase of multi-million pound IT systems!

All too often the business case was seen as bureaucratic, as opposed to a strategic exercise. As a result, many business cases were prepared to justify a desired choice of action, as opposed to presenting management with the information required to evaluate, select, manage and track projects in terms of their impact on the organizational success. Times have changed whether it is an external purchase, or an in-house solution, the development of a robust business case is now essential. As sales people we need to ensure we keep our focus on the how (the features, the technology, the solution) and the why (the business case).

12 Tell tale Signs of Poor Business Cases

Based on our experiences and the experiences of nine leading experts in the field, here are 12 telltale signs of poor business cases:

1. Lack of skills, discipline, or more importantly objectivity

2. Absence of cross functional involvement

3. Failure to engage with stakeholders and their needs, creating buy-in in the process

4. Failure to adequately define scope and requirements

5. Failure to present a menu of alternatives and options, in the context of business drivers and constraints

6. Lack of feasibility study type information and scientific validation, or data
7. Failure to address how the project fits with the organization’s strategy and past decisions.

8. Failure to conduct an accurate, robust, and credible cost – benefit analysis, underscored by clear and realistic assumptions

9. An overly simplistic analysis of project related risk, or implementation issues (governance, control.)

10. An overly simple view: The business case is prepared and presented; but it has limited value throughout the project lifecycle

11. Lacks structure and process for completion / agreement

12. Weak investment analysis

Business Case - Document, or Process?

Underpinning many of these problems is the fact that the business case is often seen as a document, rather than a process. This is particularly the case in the absence of corporate standards with regard to:

· How a business case should be completed

· What it should contain

· Who should be involved

· How it will be evaluated

· What templates are to be followed

The single most important factor in terms of business case preparation is the process involved, in that any business case is only as good as the process by which it is prepared. Also the process of business case preparation is iterative, evolving to reflect changing needs and requirements.

The Full Life cycle Business Case.

All too often a business case document is hastily prepared and then once the project is given the green light it is put aside. A business case should be a living document, that:

· Guides implementation

· Tracks progress

· Manages change requirements and helps the seller and buyer

· Enables management to assess if projects are delivering as expected and if corrective action is required

Business Case - Attractiveness and Achieveability.

A business case is concerned with 2 dimensions of a project – attractiveness and achievability. So it is not enough to include just a cost and benefits justification.

The business case must also address how achievable it is, including for example a register of risk, as well as details of implementation, governance and control.

When it comes to the economic analysis, it is important to realize that people often have a genuine difficulty with numbers and in particular in working with spreadsheets. That is not withstanding the challenge that may be presented in terms of the monetization of benefits, particularly in the case of less tangible ones.

All of the above is a lot to take in, as sales people we need to develop our business case development skills.

How To Get the Prospect To Do Your Prequalification for You

How you allocate your time as a salesperson is key. In particular, maintaining a healthy pipeline requires that you balance your efforts as follows:
- Focusing on closing the most likely deals for this quarter
- Nurturing those prospects with potential for next quarter
- Generating fresh leads to go in at the top of the sales funnel.

To get the balance right can be a challenge.  Key to the efficient use of time is a system for prequalifying those prospects and opportunities on which you are going to focus.  However that is not all you are going to need - because prequalification is too often applied in a blunt manner.

Prequalifying Leads.

With the effort that is required to generate leads, your sales and marketing efforts must be aimed as precisely as possible at those companies - and only those companies - that fit your ideal target customer profile.  Beyond that you need to be careful.

The popular BANT (budget, authority, timing and need) criteria applied too rigorously, for example on the basis of an inbound enquiry, or cold call, could exclude the bulk of the marketplace, including many companies that, don't presently have a budget for your solution, but could represent potential customers.  There are two reasons for this.

The first is that buyers are reticent about sharing information with a salesperson that they don’t know. So, the reality is that any prequalification questions will only elicit superficial answers at the early stages of contact.

Imagine, for example, a salesperson you don’t know calls out of the blue and asks:

- ‘Do you have a budget for replacing front end systems this year?’ Your immediate reaction is ‘that is sensitive information how do I know where it will end up’.

- ‘Who has decision making responsibility for purchases in this area?’ Your thoughts might include; ‘you don’t want to talk to me because you don’t think I am important enough!’, or ‘I am not going to give you a name so that you can ring up and pester them – thereby getting me in trouble!’

The second reason is that you cannot limit your sales and marketing activity to those that have a budget, a well as an immediate and pressing need. That is because those that are ready to buy are but the tip of the iceberg in terms of the potential for your product.

Indeed those ready to buy are likely to be greatly out numbered by those who have the potential to buy in the future, but are as of yet unaware of your solution, or perhaps even unaware of the need for your solution.

Replacing Pre-qualification with Marketing.

Bottom line, the sales organization must generate, or at least foster and nurture demand for its solutions, while at the same time selling to those who are already actively searching for a solution in the marketplace. That means sales and marketing must work together marketing.

When this happens marketing effectively substitutes for prequalification at the lead generation stage.  While some leads are classified as sales, or sales meeting ready, those that are not ready for the next step are not, as is often the case, left to waste.

The balance of leads while not sales read are marketing ready and can stay in the pot for further nurturing by means of the occasional email with a link to a white paper, an invitation to an event, or webinar, the occasional telephone call and so on.

Pre-qualificaiton of Sales Opportunities.

What about later in the sales cycle?  Well, prequalification becomes more and more important the further along the sales cycle you go and the more time and resources you must commit to an opportunity. In particular, it is essential to ensuring that you don’t spend 3 months chasing a prospect, writing documentation, delivering presentations, etc. to discover that you are wasting your time.  For example there may be no potential for a sale, or the approach you are adopting may be inadequate.

Progressive prequalification – that is asking the right questions – ensures that you can continually adapt your sales approach to ensure you have the maximum chances of success.  That means you will learn fast if you are talking to the wrong people, or addressing the wrong requirements.

Pre-qualification can be a crude term and no customer wants to feel in anyway like they are being pre-qualified, or vetted in any way by you. That is why your approach has to be a careful one.

As an example, one of the popular sales methodologies has an approach which it calls ‘Progressive Questioning Control Technique’ – can you imagine the buyer finding out that you were applying such a term to them.  You absolutely have to ask the questions – questions that will guide the buyer and seller alike - but you have to ask your questions at the right time and in the right way.

Pre-qualification, like all aspects of selling, is not something that is done to, but rather is done with a prospect.  It has got to be a two way process – that means asking the customer what stage he, or she is at and what they want to do next, if anything. It is important to remember that you have to earn the right to ask progressively more direct and searching questions.

Your approach has got to reflect the stage of the buying cycle (if indeed there is one) that you are both at, as shown in the table.

Stage	Prequalifying Questions	Seller Questions	Buyer Questions
Sales LEAD:	Should we be talking?	Do you fit the profile to be on our target list? Have I got something that is interesting for you?	I am not sure if this is of interest to you…
Sales MEETING:	Should we meet?	Is it mutually beneficial to meet at this time? What useful information, or insights do I have to share?	Is this an something that is important to your business? Is it an area for which you are responsible?
Sales CYCLE:	Should we explore problems / solutions together? How should we engage?	Are you at the exploration of; needs, solutions, or suppliers stage? What is the need? What is the ideal solution? What is the buying process? Am I talking to the right people? Am I getting the right reaction? Do I have a sponsor? How am I positioned? Where am I strong? Where am I weak? What is the next step?	Is now a good time to look at this? What are the implications of the problem? Is there a reason why this problem has not been addressed to date? How does it fit with your organizational priorities and strategies? Who else needs to be involved? What would the ideal solution look like? What are the alternatives? What are the constraints? What are the characteristics of the ideal supplier?
Sales ORDER:	Can / Should you buy / buy from us?	What is the business case? What are the selection criteria? Are there any yellow, or red lights?
REPEAT Sale:	How strong is our relationship? Can, or should we deepen it?	How are we performing? How well are we working together? How can we help more? What is the sales/profit potential?

Newsflash- Buyers Don’t Want to be Treated Like Leads

Newsflash- Buyers don’t want to be treated as a lead, a prospect, or a sales opportunity.

Here is what they are increasingly telling salespeople:

- Don’t treat me like a lead…

- Don’t prequalify me…

- Don’t give me your sales pitch…

- Don’t force your sales process on me…

In short, buyers are increasingly independent and self contained. They don’t want to be corralled into your pipeline, or managed through your funnel.

Yes, buyers are prepared to buy, but they don’t want to be sold to. That is they don’t want to be exposed to the stereotypical sales person, with his, or her self-serving sales tactics, messages and techniques. Have you heard this from your prospects recently:

- We have done our homework.

- We have the information.

- We know what we want.

- The process is set out.

- We have the expertise to decide.

CAUTION: Take Care How You Treat Buyers

So, as salespeople when we try to accelerate the sales cycle, converting a lead and prequalifying an opportunity, we may be alienating those who we depend on for our next commissions payment.

For the past 5 years or so, sales managers have been focused on the development of a repeatable sales process that puts the seller in more control and ensures maximum chances of success. They have also been focused on more effective sales techniques and strategies.

Great, but let’s not forget about the buyer and what his needs are. They are after all the Ying to our Yang!

Has Your Prospect Done His, or Her Homework?

Has your prospect dutifully completed the tasks that were agreed at your last meeting? Has the homework been done, thereby helping you to qualify the opportunity and to determine how much time and effort you should commit in selling to them?

Let us explain what we mean. Too often salespeople meet with a prospect who nods in agreement to everything that is said, indicating a need and the desire for a solution.

Why Give Your Prospect Homework?


The salesperson leaves the meeting full of enthusiasm and with a number of follow-on tasks to complete, for example: writing up and sending on a note of the meeting, forwarding a short technical brief (hopefully it is a template that does not require too much customization), offering a list of suggestions and next steps, perhaps even creating a summary proposal, or price quotation.

All that may involve several hours work for the salesperson. Meanwhile, what does the prospect do? Well, probably nothing. That means it could all be a waste of time.

A Commitment on Both Sides is Required.

When the salesperson has completed all his or her tasks and the proposal is sent, expectations are high. However, many sales people are disappointed when the buyer does not respond with equal enthusiasm in turn. Here is the problem - the salesperson has does all the running, failing to check that the customer is following.

It is a statement of the obvious, but selling requires the involvement of the buyer. Buyer and seller must move ahead in tandem, because it has to be a process of dual engagement and mutual commitment. So, there is no point in the salesperson doing all the running, or taking on all the work.

How To Ensure Your Prospect is Following.

To avoid this happening, salespeople are advised to build and test commitment incrementally, for example by giving the buyer a test, in the form of some homework after a meeting, or a task to be completed prior to the preparation of a proposal.

If the buyer does not complete the task successfully, then a red flag is raised regarding his, or her level of commitment. This is an effective means of allowing the buyer to prequalify himself by his actions.

This is important because words and deeds don't always match up. For example, the buyer may be saying the right things, but only because he, or she is reluctant to say ‘no’, even though there is not intention to buy.

So, let us take an example - the prospect asks for a proposal after just one, or two meetings. Rather than immediately saying yes, you might give the buyer a test by responding as follows: ‘Sure I would be delighted to prepare a proposal for you, but in order for me to be able to do that effectively would you….’ The specific ‘homework’ might be as follows:

- Send me a one page outline of your requirements, or a technical specification…

- Introduce me to your colleagues in IT, so that I can check one or two pieces of information with them…

- Send me a sample of the reporting provided by your existing system, so that I can understand the gaps as you have described them…

- Provide a tour of the facility and talk to some end users…

Progressively Building and Testing Commitment.

Giving homework is an integral part of the process of confirming interest, agreeing next steps and sharing of any follow-on tasks.

Agreeing to share tasks between buyer and seller at each stage of the sales process, is likely to involve some, or all of the following:

- Sharing information
- Providing feedback

- Providing access

- Indicating commitment

- Organizing a next step (e.g. demo, presentation, etc.)

The particular task is not only aimed at testing, but is also used to build the buyer's commitment. The rationale being that if the buyer is prepared to take the time to prepare a specification then that is a sign that he, or she is pretty serious. The act of preparing the specification is a significant advance in the buying process, as well as an important input to enable you complete the next step of your sales process – in this example the preparation of the proposal.

A Word of Caution

The principle of 'giving the prospect homework' is an important one. However, as with all techniques it must be applied with care. Although it is a term that is in common usage, the language is a little off, particularly if you are a buyer. People don't like being told what to do and just as in school days most people don't like doing homework!

Can we learn from a window supplier?

Following on from our post earlier in the week on trusted supplier.

I bought windows for our house last year from a guy called Joe. Joe supplied and fitted the windows and new patio door. He did a great job. He not only delivered on time, but over delivered - he even undertake an after installation review with us.

Since then Joe has secured three pieces of business from our friends. Joe is also the first person we call when we need a recommendation for other service providers. Why am I telling you this? Well the reason is as follows: 8.5 organisations in every 10 fail to measure the affect their solutions, with most fearing post installation reviews.

So back to Joe. Over the past year Joe has become our trusted advisor, we are working on an extension and Joe has been called, he is fitting the windows and new french doors (he knows we are not looking for other quotes) and has provided recommendations for other service providers - all of whom are now working for us.

Moral of the story, Joe's initial on time delivery and post installation review has allowed him to claim the coveted trusted advisor position in our home and in our business, which means more business in the long run, more referrals and a reduced cost of sale.

Food for thought your post sales review is crucial, it can iron out any small problems that maybe lingering and gives you the opportunity to become that trusted advisor.

Analysts - they input to the buying process and your selection

People ask us from time to time about the role analysts like Gartner, Tower, Celent and others play in the buying process. Based on a project we are working on right now they have a huge impact. On this particular project a leading analyst house has provided suggested selection criteria and weightings. The criteria includes

• Vision
• Vendor viability
• Services
• Functionliity
• Architecture
• Price/cost

Worth noting the analyst house in question will also influence the final neogtiation.

Food for thought.

Read this article for tips on working with analysts. 

Gaining Access To C Level Executives

Sales people and their managers cite gaining access to senior level managers as one of the key impediments to identifying new opportunities and accelerating sales cycles.  Like us they know that while meeting lower level managers makes access easier, it also makes progress slower. 

However getting access to managers higher up the organization can prove a real challenge.  In particular, the methods and approach that open doors lower down in an organization are clumsy and ineffective when the job titles start to get impressive and offices get bigger.

Let us look at the issue of access in more detail, examining the problems that are experienced at lead generation stage, as well as during the sales cycle.

First, at the lead generation stage.  It is senior executives that dictate strategy, priorities and budgets – something that is particularly important in the present climate.  Here are the challenges salespeople face in having their message heard at the top of the organization:

- How to get past the PA?

- How to arouse the manager’s interest?

- How to ensure that he, or she will want to meet with me?

- How to overcome the issue of credibility – particularly when our company is relatively unknown?

- How to prevent being redirected to somebody else lower down the organization?

- How to keep the channel of communication open beyond the first contact?

The next area of challenge, with respect to access, relates to how to access senior managers during a sales cycle, especially when your contact, or sponsor is at a lower level.  In particular:

- How to ensure that my contact does not get offended if I go over his head?

- What to do when access is restricted and your contact, for example, says ‘I will pass on your information to him, or her if you give it to me’?

- What reason, or excuse do I have for contacting the manager, or for him, or her to want to talk to me during the sales cycle?

As sales people review the buying influences

Access is not an automatic entitlement, rather it is earned.  The senior manager is very busy, and will only meet with a salesperson where some, if not all of the following apply:

- I know this person (company), or they have been recommended to me

- The person is professional and respectful, trustworthy and credible

- This is not just a salesperson – he, or she won’t try to sell to me

- He, or she has something interesting to say

- He, or she has some unique insight, or valuable piece information

- He, or she won’t take too much of my time

- I won’t be obligated as a result

- I won’t be stepping into somebody else’s role

- There are no implications for my credibility, or status

The Buyer Angle: What Makes a Good Supplier?

What makes a good supplier?  Well, who better to ask than the buyer, or those who have written the bible of buying for UK Chartered Institute of Purchasing & Supply.    Here are the answers:

·        Delivers on time

·        Provides consistent quality

·        Gives a good price

·        Has a stable background

·        Provides good service backup

·        Is responsive to our needs

·        Keeps promises

·        Provides technical support

·        Keeps the buyer informed on progress

As salespeople we tend to focus on some of these variables more than others. For example, we often focus immediately on price and quality, but less on service related aspects such as keeping promises, or keeping the buyer informed of progress.

So, what does all of this mean?  Well, everything and nothing.  The more interesting question is are you performing better on some of these criteria, than others?  Does your sales pitch fail to address any of the factors listed above that are important to buyers?

Weary Buyers Warn Sellers: The Game is Up!

How Sceptical Buyers Have Caught on to Salespeople and their Wily Ways!

Buyer beware was the dominant concept for decades. No longer, the balance of power has shifted, with the seller ceding control to a more sophisticated and cynical breed of buyer. To demonstrate this point we have taken two books that buyers told us about and examined how the attitudes they reflect impact on buyers perceptions of salespeople. Lots of food for thought below.

Just Who Has the Upper Hand?

Guth starts with a warning to all buyers, claiming that ’the odds are overwhelmingly stacked in favor of the vendor’. That is, he argues, because sellers have traditionally been more organized, better resourced and more focused than buyers. Conversely, because they have not been sufficiently organized, coordinated, or prepared, buyers fall victim to vendors and their sophisticated ploys.

The ‘sheep in wolves clothing view of salespeople’ is still very common among buyers. Guth suggests that buyers must be constantly on their guard against vendors and manipulative, self serving and opportunistic ways. He talks for example of ‘pseudo friendships’ promoted by salespeople – pointing out that they are ‘more based in dollars than actual friendship’.

Vendor Management is the Name of the Game.

‘If you don’t manage the vendor, the vendor will manage you’ that is the clear message being delivered to buyers and decision makers. The rational put forward (i.e. the objective) is to leverage the untapped value of vendors, which, given that purchases often account for over 50% of revenues, can impact significantly on the bottom line. But that requires more than just buying cheaper - the traditional role of purchasing. It entails all issues of vendor related risk and performance, focusing on the total cost of ownership, as well as the entire vendor relationship lifecycle.

Professional Buyers Are the Front Line of Defense Against Sellers.

In this vendor management approach, the professional buyer is the first line of defense against the sales organization. His, or her role is to protect the organizational customer from the vendors wily ways, and thereby to maintain the integrity of the competitive bidding process.

Guth warns that the seller will attempt to circumvent the buyer’s power by appealing directly to the internal customer (e.g. the business manager). This may involve techniques that appear innocent, such as ‘executive briefings’, but these in the author’s view are a calculated effort to distort the competitive bidding situation.

The author reminds the buyer that, at the negotiation stage, the vendor is an adversary ‘no matter how much they act like a partner, or pal’. Although a ‘win-win’ may be the desired outcome, negotiation will likely involve some contentiousness.

The RFx Is Your Shield and Your Armor.

The RFx (that is RFP, RFI, RFQ) puts the buyer back in control. It is the foundation of the competitive bidding process that will ensure the best deal for the buyer and a level playing field for the vendor.

The RFx process is the buyers shield and armor and according to Guth, must not be compromised. That includes making the almost unforgivable error of letting the vendor write, or input to the writing of the RFx document, or reducing your negotiating power by selecting a RFP winner before negotiation is complete.

He advises vendors not to take short cuts in respect of RFx preparation, arguing that low quality RFx can result in; an unreasonable burden on both buyer and seller, substandard responses and more complex evaluation. He does however suggest that it is important to look at the RFx document from a vendors’s point of view.

Defining the rules of engagement.

Key to the success of an RFx process is the definition of rules of engagement. That involves defining what contact with salespeople is appropriate at the different stages of the buying process.

For example he suggests that lunches, social events, meetings with customer executives, or demos are in most cases ‘off bounds’ prior to the contract being negotiated. Of course, he does recognize that these rules must differentiate between those vendors that are worth spending the time with and those that are not.

Beware the Seller’s Tricks & Ploys.

Guth suggests that ‘If you can thwart one vendor ploy, or successfully use one tactic that enables you to achieve a negotiation objective’ his book has achieved its objective.

· I was in your neighborhood and I thought I would drop by…

· Inviting you to seminars, lunches, sporting events, etc.

· If the vendor is overly interested in you or is very attentive in an almost stalkerish way.

· Mirroring and pacing the behavior and body language of the buyer.
· Negotiation ploys such as good cop, bad cop.

However, to the cynical buyer everything could be construed as a ploy, which seems to be the case with the long list presented by Guth – it seems to include almost anything, other than posting an RFx response.

How Buyers Can Defeat Seller’s Ploys.

So, how can buyers defeat the ploys of sellers? Guth suggests the following steps:

· ‘Silence is golden’, be guarded in terms of sharing information with vendors regarding budget, timeline, criticality and your organizational chart. This information, he argues, can be used against you.

· Don’t be so grateful - ‘don’t fall for the special treatment and don’t feel indebted to the vendor for any trip, or event’.

· Don’t drink and buy – ‘No matter how much you think you can handle your alcohol, never drink with a vendor.’

· Maintain your own pace - Don’t be encouraged to speed up, or slow down your process by the vendor.

· Ensure clear written policies with respect to vendor gifts

The buyer must be constantly on his, or her guard, with Guth warning that ‘loose lips sink ships’.

How do you recognize a good vendor?

Guth is cautious and cynical. However, he does recognize that while all vendors have their bottom line forecast in their minds some do actually care about customer needs and look to a long term business relationship. He recognizes that ‘unfortunate tendency is that you may start treating all vendors in the same untrusting way as a result of the behavior of a few opportunistic vendors.’ But how do you recognize a ‘good vendor’? Well, Guth, suggests the following characteristics as the guide, the vendor:

· Is knowledgeable about their products and your needs

· Provides prompt and accurate information, resolves problems and disputes

· Will even go so far as to tell you that you shouldn’t buy something from them because it’s not a good match with your requirements.

· Does not use ploys, does not try to circumvent normal challenges of sourcing and go direct to executive decision makers without reason.

Those vendors and sales teams that are strategically important and demonstrate a commitment to helping the customer succeed are the author concedes worthy of the buyer relinquishing some control and forfeiting individual gains in favor of mutually compatible objectives. He suggests that active participation in customer advisory boards – where customers input to vendor innovation and product development by the vendor – are very important for strategic vendor relationships.

So, in addition to managing the vendor, there is an element of vendor development. That is; activity to upgrade a vendor’s capability so that it can be exploited to the benefit of the customer. It recognizes that by becoming a good customer, vendors can secure greater commitment and additional benefits. That includes new vendor orientation, and a flexible approach to vendor referral, or marketing support.

Our Conclusion

Guth’s views remind me of the movie ‘when Harry Meet Sally’ and the famous line ‘men and women can never be friends, because sex always gets in the way’. In this case it is ’buyers and sellers can never be friends, because the sales always gets in the way’.

All joking aside, salespeople have to anticipate some antipathy from professional buyers and we do have to be aware buyers are reading material and attending training courses on vendor management and negotiations. We have to distance ourselves from the stereotypical salesperson and their out of date sales techniques and adopt the characteristics noted above. Only then can we align to the buyers process and help them.

Is this the Golden Age of Buying? - Implications for sales professionals

Professional buying has come of age, reaching new heights in terms of importance and sophistication. But what are the implications for sales people?

In this article we turn to the UK Chartered Institute of Purchasing and Supply and the US Institute of Supply Management to provide a new insight to the changing roles and perspectives of those on the other side of table.

The Key Trends in Purchasing.

Purchasing has traditionally been regarded as a bureaucratic function at the organisation’s edge responsible for ordering and replenishing supplies. It was concerned with paper pushing and form filling, in respect of transactions and supplies. However, the old clerically reactive style of purchasing has given way to a more strategic approach.

	Traditional Purchasing	New Age Purchasing
Function	Administrative	Strategic
Objective	Cutting costs	Boosting corporate success
Focus	Lowest price	Value, flexibility & innovation
Supplier Relationships	Adversarial	Collaborative
Organisation	Stand alone	Integrated

Implications for the vendor: How can you support the purchasing department in the fulfillment of its role?

How Purchasing Contributes to Organizational Success.

With purchases in many organizations accounting for anywhere between 20% and 50% of revenues the purchasing function has an important role to play in organizational success. That is because even a small percentage improvement in the value and performance of suppliers can have a significant impact on the bottom line.

The success of an organization is dictated by the performance, flexibility and innovation of all those members of its supply chain. Maximizing this performance is the principal motivation for a more structured approach to organizational buying.

Another motivating factor for greater sophistication of the buying function is to protect the customer from opportunistic vendors and bad deals. In short, building buying confidence and skill enables buyers to defend against the ploys and tactics of the sales person, while at the same time negotiating better deals and developing more successful vendor relationships.

Implications for the vendor: Does the professional buyer feel the need to limit your access to the customer, or business managers involved?

Finally, there is also the motivation to increase the efficiency of purchasing in response to technological advances; globalization and changes in the nature of business (e.g. supply chain management, world class manufacturing, etc.). This is manifest in the implementation of EDI, ERP, materials management, supplier management systems and so on. With this in mind, however, the appropriate purchasing principles and practices differ depending on the goals and the market conditions of the buying organization, as well as on the nature of the purchase decision (from consumables, to capital goods).

Purchasing as an Integrated Function.

Previously purchasing was a department that completed transactions and managed the associated paperwork. Now it is considered to be an integrated function, which aims to ensure professional buying skills and practices are applied to all corporate buying decisions organization-wide.

The objective is to develop purchasing skills and techniques throughout the organization, putting them in the hands of business managers and their departments. So, rather than a centralized department responsible for all requisitions and supplier relationships, purchasing authority is devolved closer to the point of use. It also involves input to purchasing decisions from a cross section of functional departments.

Implications for the vendor & sales team: What is the imprint of the purchasing department on your prospect’s buying decisions? How many people are likely to be involved in, or shape the decision?

Modern Buying is Planned & Proactive.

Professional buying aims to be:
· More accurate as regards requirements
· More competitive in respect of vendor bidding
· More careful in selection and
· More proactive in developing and exploiting the value of the vendor relationship.

It sounds obvious, but professional buyers point out that ‘a well-developed and well-stated requirement is the key to successful procurement’. That requires a more; collaborative, structured and systematic approach to gathering requirements and setting specifications.

Modern Purchasing also aims to be proactive, for example focusing on quality assurance rather than just quality control.

The Focus on Long Term Supplier Relationships.

The professional buyer recognizes that good supplier relationships are essential to ensuring supplier commitment and performance. That means ensuring fair and consistent treatment of suppliers, meeting with them regularly, improving communication and otherwise working collaboratively.

Traditionally the focus was on selecting suppliers, evaluating their performance and dealing with supplier related deviations and disputes. However, a more forward looking and collaborative approach involves vendor development, as well as vendor management. This is key to delivering greater flexibility, as well as continuous innovation and improvement.

The trend is towards the development of relationships that are strategically important and involve a mutual commitment to long term success. This often entails fewer but stronger relationships, that is a concentration of supply in the hands of a selection of carefully chosen strategic supply partners.

Implications for the vendor: Are you considered a strategic supply partner by your key customers, or one of a larger number of vendors that will face consolidation?

More Systematic Vendor Assessment.

The purchasing team’s job is to ensure that all departments and managers evaluate their vendors, using a standard format, or template, and that all this information is analyzed and acted upon. Incidentally, neither publication suggests vendor assessments should be 360 degree, that is with vendors providing feedback on what it is like to deal with the customer.

Quarterly Vendor Evaluation Form

Criterion	Weight	Rating	Total
On Time Delivery
Quality Levels
Support Levels
Responsiveness & Flexibility
Communication
Value for Money
Commitment Shown
Level of Innovation
Level of Expertise
Etc.
Total Score

Implications for the vendor: How are you being evaluated by your customers? What areas are you scoring well on? Are there areas where your score is weak?

The Science of Supplier Selection.

Purchasing is the science of supplier selection. Selecting the best supplier in the most competitive manner being the prime focus for the modern buyer. That means:
· Carefully short listing of suppliers, based on past experience and the many market information
· Understanding more about the supplier marketplace, including trends and drivers
· More clearly defined and accurate requirements, or specifications
· More effective RFx (RFI, RFP, etc.) documentation and processes
· Vendor assessments that are more systematic, structured and team based
· More carefully managed negotiation

One of the key tools in this process looks something like the following – a vendor assessment sheet with set criteria and weightings that is completed by the various members of the team.

Vendor Assessment Form

Criterion	Weight	Rating	Total
Price
Terms
Commitment
Financial Strength
Relevant Experience
Track Record
Quality of People
Technical Performance
Level of Expertise
Etc.

Implications for the vendor: Do you know the criteria and associated weightings against which your business will be evaluated?

The implications noted above are areas we should all consider. We hope they are useful.

Buying is undoubtedly as complex as selling; we need to put ourselves in the buyers shoes if we are going to help them to buy. Food for thought.