value

 

Unfortunately the above quote is not applicable in the corporate world. If you are unable to articulate your organizations worth to your customers then your “value” DOES decrease. “Value” is among the most loosely used terms in today’s services world. Right from the RFP stage till the renewal stage the word “value” is used in different context to achieve different objectives. Every customer wants value and every service provides wants to provide value, the only challenge is do they really know what is “value”? Since I am from IT I have written this article keeping in mind a typical IT Services organization and its customer however I feel this can be extrapolated to any industry.

If you try and look up the dictionary meaning of value you will come up with various words, however the one that I found most relevant for this discussion is “Perceived Benefit”. Perceived benefit refers to the customer’s perception of the positive consequences that are caused by a specific action. It may have little or nothing to do with the market price of the service, and depends on the ability of the service to satisfy his or her needs or requirements.

what is value

 

Let’s start with the RFP stage, invariably there will be a section where the customer would ask the service provider to give their value proposition. This is a section in the RFP that receives a lot of attention and is one of the sections which is definitely reviewed by senior leadership before the RFP goes out. The typical contents of this sections includes things like the service providers expertise, the automation they will bring in, the reduction of TCO, productivity gains etc. The problem with this approach is that this is applicable for almost any customer and does not necessary mean value for a particular customer. For E.g. for a large pharmaceutical company TCO may be the least of their worries because they are cash rich and the “best in class service” may be the real value for them. My opinion is that a service provider cannot give a real value proposition unless they know the company priorities really well or have had a candid discussion with the CIO. It is advisable that during an RFP phase try and get as much insights as possible from the customer by asking the right questions to understand what value would really mean to them rather than just putting the run of the mill value proposition in your RFP.

Now let’s assume you win the contract and after a very turmoilous transition you are in the BAU phase. Once in the BAU phase after months of hard work you have finally started meeting all the SLA’s however, there is no time for you to pat your back because the next question invariably from the customer is “All this is fine but what value add are you providing?” As far as most customers are concerned for anything that is mentioned in the SOW and for anything that they are paying cannot be construed as a value add. Then what is value? The challenge is even more when you are providing more than one service to a customer and interact with multiple stakeholders within the customer organization. Value could have a completely different meaning for each of the stakeholder. For E.g. if you are providing desktop support services to a particular customer you would believe that if you meet all the typical SLA’s associated with that service that would keep the Service Owner within the customer organization happy but that far from the truth. He may have a completely different parameter which he sees as value which could again be quite different for the Network Service Owner. So what do we do? Let’s think this from their stand point, what are the goals in their goal sheet? , what is that will ensure that they get their maximum bonus at the end of the year? If you know the answers to these questions reasonably well then it will become easier to understand what value means to each of the Service Owners. The goals in their goal sheet would be a part of the overall goal of the organization and hence will be an insight into what value means for the organization. As crude as this may sound it is the truth. None of these answers are straightforward however, it is the responsibility of the Program Owner from the service provider’s side to develop that bond with each of his stakeholders so that he can work together to meet the overall objectives of the organization which in turn will also meet the objective of the stakeholder. At the end of the day each of the stakeholders will have a say on the contract renewal. The other approach could be that during the transition phase you sign-off with the customer what value they would want to see from you and then agree on reporting the value in a periodic manner.

Assuming that you are now clear on what value means for the customer articulation of the value provided and doing it in a timely manner is another very important thing which many service providers miss out on. For E.g. suppose by taking some Problem Management initiatives if you have managed to bring down the ticket volumes for a particular category, don’t just communicate that fact that the ticket volumes have come down, convert that into a business value in terms of how it has increased user productivity or reduced downtime and then communicate. The customer will be able to relate to that much better. Also, keep a track of all such initiatives so that at the end of the year or during the renewal phase you can make a strong case and the customer doesn’t beat you to reduce price.

To sum it up there is no easy way to deal with “value” questions from the customer, however you could deal with it better by taking some simple steps.