Solution Selling In a Changing World

1. 2014 US&C Sales Conference Dallas, Texas April 28, 2014 Solution Selling In a Changing World Thomas Young, Managing Partner RUMJog Enterprises

2. Agenda • Changing World • What is happening in the global markets? • Current state of affairs for buyers and sellers • What are the market trends? What is changing? • Where are we headed? • Solution Selling • What are Solutions and how are they different from Services? • Solution examples • Selling techniques in a rapidly changing market • What are the selling techniques and approaches that will be effective in the market in 2014 and beyond? • Solution Selling Solution Selling in a Changing World Solution Selling in a Changing World

3. Physicality  Virtuality Our Changing World

4. Technology Heat Map • The Technology Heat Map is dynamic and suggests both risk and opportunity to the market participants in the coming years. Issues that are on the Desk of Technology Leaders Cyber-Security Social Media Innovation Mobile Internet Advanced Robotics Big Data Nanotech Collaboration Digital Labor & Analytics CLOUD 3D Printing Internet of Things Automation Of Knowledge Work Talent Management IT Consumerization Tablets & Death of the PC Unified Communications

5. Commercial Market Trends Pace of Change > Pace of Learning The pace of change in today’s market is exceeding our collective pace of learning. Services and pricing are changing, but our commercial models were not designed for this new world. • Market Disconnects • Where is the misalignment? • Pricing • Pricing vectors for services are dramatically dropping as Service Providers begin to implement • Labor Automation • Big Data and Analytics • Software Tools & Platforms • Innovation • Normal commercial relationships (i.e., contracts) limit innovation by eliminating or severely restricting: • Transparency • Risk Taking • Shared Failure • Shared Reward • Commercial Constructs • 1,000 page contracts with prescriptive SOW’s, SLA’s, and pricing does not work well in a dynamic and sometimes ambiguous market. • More collaborative and dynamic approaches are required. Technology & Services We are here Growing Misalignment Business Alignment x Business Practices

6. Wave View of Technology Trends - Virtualization • Current Cresting Wave • Virtualization of physical computing leading to greater reliance on network technologies. • New Wave Forming • Virtualization of technology labor resources leading to a full reliance on network technologies. Wave View of Technology Trends - Virtualization The common theme in today’s changing technology landscape is Virtualization. Cloud Computing leading to the virtualization of physical compute, Digital Labor leading to the virtualization of labor. This will put Network Technologies center stage in coming years. Collaboration Increase in Network-Enabled Architecture CLOUD Talent Management Cyber-Security Social Media Innovation Mobile Internet CLOUD Advanced Robotics 3D Printing Big Data IT Consumerization Unified Communications & Analytics Internet of Things Nanotech Tablets & Death of the PC Digital Labor Reliance on Network-Centric Architecture Digital Labor Automation Of Knowledge Work

7. Network Centric Service Delivery Evolution Network Centric Service Delivery Evolution The role of the network will have increasingly central role in the delivery of business platforms and service delivery. Cloud Computing – Phase 1. Digital Labor – Phase 2. Cloud Computing Digital Labor Present Past Near Future Network As Communications Network Enabled Compute Network Centric Business Platforms

8. BT Americas Strategy BT Americas Strategy The waves of Virtualization (Cloud  Digital Labor) that lead to business models that rely on a Network Centric Architecture, position BT Global Services at the center of the action to capture growth and new business opportunities. BT Americas Core Focus Connect Network-Centric Business Platform Security One Mobility Compute Foundation for Growth

9. A brief History of the Market A Brief History of the Market

10. 1970’s/1980’s: The Early Days • In the early phases of technology development and deployment, Buyers assumed the de facto role of Service Integrator by buying disparate technologies directly from Technology Providers. • Complexity limited innovation and adoption and created the need for order in the eco-system. • The market was inefficient and significant resources were misallocated and wasted. • The misallocation of resources created the business model for the formal creation of a Service Integration function as a viable business model. Evolution of the Buying Ecosystem Buyers De Facto Service Integrator Role Complexity Technology Providers

11. Early to Mid-1990’s: The Beginning of Outsourcing • The formal creation of Service Integrators, masked the underlying complexity of the technology supply chain and simplified the interface to the Buyer. • This model allowed the Service Integrator to act as an intermediary between the Buyer and Technology Provider. • These were the early days of Outsourcing and the Service Integrators reigned. • High margins • Control of the Ecosystem • Contracts on Service Integrator terms and paper • “Keys” to the technology kingdom • The Service Integrators were in the “driver’s seat” and Buyers were along for the ride. Evolution of the Buying Ecosystem Buyers Service Integrators (SI) Complexity Technology Providers

12. Late 1990’s and Early 2000’s: Outsourcing Heyday • As the Service Integrator market matured, Buyers sought to take stronger control of the ecosystem. • This gave rise to formality in the procurement processes between Buyer and Service Integrator which led to the creation of the Third Party Advisor (TPA). • This was the heyday of Outsourcing and the Buyers reigned. • RFP’s dominate the landscape • Commerce on Buyer Terms • Competition fierce • Service Integrator cost and margin pressures • The rise of offshore labor and the Indian Services market. • The Buyers were in the “driver’s seat” and the Service Integrators had to compete for a ride. Evolution of the Buying Ecosystem Buyers Procurement Third Party Advisors (TPA) Service Integrators (SI) Complexity Technology Providers

13. Mid to Late 2000’s: Outsourcing Maturity and Supply Chain Fragmentation • The services that Technology Providers offered were progressing geometrically, while Buyer processes and TPA led commerce was on a linear path. • This growing divide created a situation where Buyers and Technology Providers were bypassing the traditional SI and formal procurement routes to conduct commerce. • The ability of Buyers to “cherry pick” which Technology Providers to procure directly and which to run through traditional SI business models indicated that a new model was needed to address the new realities of the technology service landscape. Evolution of the Buying Ecosystem Buyers Procurement Technology & Services Third Party Advisors (TPA) Service Integrators (SI) We are here Growing Misalignment Business Alignment Complexity x Technology Providers Business Practices

14. 2013/2014: Visible Cracks in the Old System Evolution of the Buying Ecosystem Buyers Procurement Third Party Advisors (TPA) Service Integrators (SI) Buyer interfaces to SI’s and Technology Providers proliferate Price Vectors start to drop significantly as a result of technology disruption. Primary Driver  Reduction of Labor in the Supply Chain from Automation and Elimination Emerging Price Vectors manifest initially on competitive pursuits by Service Providers looking to win new logos. Incumbent Service Providers are reluctant to proactively bring new price points to embedded contracts for obvious reasons. Complexity Technology Providers

15. History of Models in One Chart • As technologies evolve, Functional Out-Tasking and Service Integration will emerge as the growth areas for Third Party Services. SI Management is strategic. Supply Chain  From One to Many Strategic Tactical Strategic Out-Tasking Players EMC Akamai VMWare Hitachi IPsoft Oracle SFDC Amdocs Amazon Xerox IBM Etc. Multi Tower One Neck To Choke Model Tower 1 Tower 2 FUNCTIONAL OUT-TASKING Service Integration Tower 3 Tower 4 Market last 3 years Next 3-5 years Importance of Software, Platforms, Labor Automation, Scalability Importance of Labor Arbitrage

16. Sourcing Evolution Labor Wave Theory • Think of the market progression from the left hand side of the chart to the right in two waves: Wave 1: Labor Arbitrage; Wave 2: Labor Automation Sourcing Evolution Labor Wave Theory Wave 2 Labor Automation Wave 1 Labor Arbitrage Wave 2 Characteristics Wave 1 Characteristics • 15%-30% cost take out • Model is scalable to the extent that you can scale labor • Custom/complex, legacy :“Your mess for less” • Access to Low Cost Labor necessary to provide continuous value • Revenue/Profit correlated to People 40%-75% cost take out for relevant functions Model is scalable and is largely independent of labor growth Transformative – New way of doing business Access to “Rocket Scientists” who can codify manual processes Revenue/Profit NOT correlated to People

17. The Road Ahead The Road Ahead

18. Polar Shift in the Relation of Technology and Labor Polar Shift in the Relation of Technology & Labor Today Tomorrow Business Process Business Process Polar Shift Old: Technology Supports Labor New: Labor Supports Technology Technology People Technology People

19. Cognitive Technologies: Sci-Fi Meets Reality • Language comprehension • Nuance Technologies • Language production • Narrative Science – news articles written by bots • Understanding • IPsoft’s Amelia – avatar with a neural processor capable of dynamic process grafting • Pattern Recognition • Opera Solutions – signal to noise data parsing • Google Brain • Subjective Assessment • IBM Watson • Synthesis of Complex or Large Scale Data • Google Car • Self Aware Systems • Kurzweil’s Singularity Cognitive Technologies: Sci-Fi Meets Reality

20. Innovation will Transform the Business Landscape Rumjog Innovation Formula RUMJog Innovation Formula Innovation = Creativity + Business Knowledge + Execution + Essential Ingredients* * - 1 part Risk Taking & 3 parts Acceptance of Failure Essential Ingredients = Risk Taking + Acceptance of Failure Individuals Are Creative Groups Deliver Innovation Business Knowledge + Execution Skill Innovation over the next few years will: Virtualize the physical into the logical Reduce the role of Labor in the Supply Chain of Services Expand the role of Expert Systems and AI into the ecosystem

21. Dynamic Market Changes – Two Sides of the Coin Dynamic Market Changes – Two Sides of the Coin Change is neither wholly good nor bad. There are two sides of the coin when it comes to change – Risk on one side – Reward on the other. There is no Reward without the corresponding Risk – the proverbial “no free lunch” axiom. One Defines the Other Two Sides of the Coin Reward Risk Profit Expansion Significant Returns Market Leadership Relevance Marginalization Diminishing Returns Obsolescence Existential Minimizing Risk  Minimizes Reward GOAL: Manage Risk & Capitalize on Reward The goal is not to minimize risk in a changing market, but to understand the nature of the changes in the environment and Manage Risk and Capitalize on Reward.

22. The RUMJog Zero Concept • As Cost, Cycle Times, and Defect Rates trend to zero from their current levels, the businesses that are supported by the underlying Service Delivery models will themselves transform into new businesses and new business models. The RUMJog Zero Concept RUMJog Zero Concept Zero Cost Zero Cycle Times Zero Defects Cost Cycle Time Defect Rate Time

23. Digital Labor: Waves of Value • The primary impacts of labor automation in the business case are obvious: lower cost, shorter cycle times, improved quality, etc. • The secondary and tertiary waves, enabled from Service Delivery Telemetry, are less obvious, but can dwarf the primary impacts. Digital Labor: Waves of Value Benefits Visibility Digital Labor Begets Service Delivery Telemetry More Less Base Business Case Tertiary Secondary Primary Consequential Benefits Big Data Monetization Business Transformation Revenue Opportunities Lower Costs Reduce Cycle Times Improved Quality Process Redesign Through Big Data/Analytics

24. You Cannot Sell a Solution if You do not Know the Problem Solution Selling

25. Shifting Market Trends • “Buyer Led” commerce is giving way to “Seller Led” commerce • There is a long term secular trend changing the landscape of sourcing market: • Custom  Standard • Complex  Simple • Single “throat-to-choke”  best of breed sourcing • Power shifting to the users • CXO’s & horizontal leaders moving from: • Providers of Service  Administrators of Service • In order to be successful in the market going forward: • Vertical Domain Expertise & Business Knowledge is essential • Service Providers will deliver vertical solutions with horizontal foundation capability • Horizontal capabilities are table stakes in the market going forward. • Success will be determined vertically. Shifting Market Trends Horizontal Vertical Services & Procurement Solutions & Engagement

26. Lower cost & elastic pricing • Avoid capital outlays • Improved service quality • Access to skills and technology • Shift Operational Risk • “Just make it work” – Outcome focus • Minimize – Run the Business costs • Maximize – Technology Investment in the business to Transform • Solve business challenges with Innovation & new technologies • Shift from Horizontal Buyer to Vertical Buyer Shift from Horizontal Buyer to Vertical Buyer Vertical leaders are taking a more active role in the procurement and delivery of technology within their franchise. Vertical leaders want solutions not services. General Market Trend RTB ITB Improve the Business Run the Business Buyers of Services Horizontal Leaders Service Delivery Knowledge Essential Buyers of Solutions Vertical Leaders Business Knowledge Essential

27. Today’s Clients Segments in a Changing Market Customer Segments in a Changing Market In today’s rapidly changing market, the majority of potential clients are asleep or confused as to the market realities. Solution Selling requires BTGS to engage client early to create the deal and drive a different outcome than typical approaches. Solution Selling Focus Areas “Educate”/”Convert” to Create the Deal Deal Set by BTGS “Asleep” Unaware Clueless 40% Typical Sales Focus Areas Sell & Close the Deal Deal Set by Client “Awake” Confused Scared 30% Starting to Seek Solutions 20% Clients Ready To Buy 10% Religion Bibles You cannot sell bibles until you sell religion

28. Differentiation: Standing Out in a Crowded Market • Unique messages and interactions stand out in a world filled with “Sameness” Differentiation: Standing Out in a Crowded Market Style matters as much as Content Simple beats complex Do things differently Think for yourself avoid crowd-think Communicate from client perspective, not your own Listen and react to what is said – don’t follow a script Talk about client/customer and their interests and business What does Standing Out in the Crowd mean for your Situation?

29. Client Perception of Service Providers • Generally speaking, how do clients (and advisors) view value propositions and proposals in a sourcing context? • The base level evaluation of the Service Provider solutions and capabilities are analogous to: • Compulsories in a figure skating competition • You can lose a competition if this is done poorly, but it will not ensure a “Win” in competitive pursuit • Therefore, a good solution and capability set is necessary, but not sufficient. Client Perception of Service Providers Proposed Solution & Service Delivery and Capabilities

30. The Intangible Differentiators • More often than not, deals are won and lost based on the intangible differentiators in a pursuit. The Intangible Differentiators Relationship Reputation Communication Creativity Proposed Solution & Service Delivery and Capabilities

31. Relationship • Relationships are not created or developed overnight. Relationships take time and must have a foundation that is genuine. Relationship Who do you know within the client team? How well do you know them? Do you know what is motivating the decision makers? Do you know the Advisor team or Consultants? Can you say, “If I were you, I would……”? Need to be qualified to say this with credibility When you have a genuine relationship, you are able to empathize with the buyer of services. With this empathy, you can “sell” the way that they want to “buy”.

32. Reputation • Everyone thinks that their baby is cute. Some are. But some are actually ugly babies and are not likely to get many modeling jobs. Reputation Do you know your firm’s heritage reputation whether it is deserved or not? Don’t argue or be defensive about the reputation If it is positive, leverage  if negative, address with facts Does the client have prior experiences with your firm? Do you have a realistic perspective of that past experience? Are past clients with the target client advocates for you? Client references Many positive references within the industry are key validations to the client.

33. Communication • Oral communications provide an opportunity to draw clients in to invest more time and attention to you. Presentations and Sales discussions are not the vehicle for transmitting every detail about your service offerings. • Who are you selling to you? • Do you know: • the decision makers, • the owners of the checkbook, • the key influencers, etc. • Less is more • Avoid having a “Slide 112” Communication • Details don’t sell  concepts and ideas sell • Are you listening? Or are you following a script? • If they have difficulty understanding you in the sales process, they will assume that they will not be able to communicate if you are awarded business.

34. Creativity • Innovation is on every buyer’s mind. While true innovation is rare and elusive, creativity is a key ingredient to Innovation and by extension is a key differentiator. Creativity Hard to define it, but you know it when you see it. If the client views you as being creative, you will score well in: Your perceived ability to adapt to their environment with unique value-add solutions. What is your style? If you are boring, you are not creative. Creativity is not a commodity and it is hard to replicate. A creative solution can short circuit a “commodity” approach to the award of business.

35. Other Issues to Consider • Many other factors affect the environment for selling products and services. Many of these factors will never be stated or obvious to the clueless seller. Other Issues to Consider Balance of Trade • Are you bringing a knife to a gun fight? “When you have a hammer, everything looks like a nail”  don’t be that guy Client Executive perception of the value that you bring to them professionally: • Future career opportunities • Is picking you viewed as safe or risky? Political Considerations • Take advantage of “back-channels” if you want to get a better understanding of where you stand in a pursuit.

36. No Selling Sales Approach • From the dozens of issues, trends, and changes going on the world of the CIO, BTGS should carve out franchise expertise in a few emerging areas for Market Briefings • General Market Trend • Digital Labor  Network Centricity • Labor is moving into the cloud as software in the form of Digital Labor • Cloud Computing + Digital Labor will lead to radically new cost and performance models. • At the core of this trend in the Network and Network Based Service Delivery Platforms Suggested 2014/2015 Sales Action Plan Market Briefings • Develop a quarterly briefing package for the C-Suite for all major clients • Cover major technology, business, financial, political trends • NO Selling  this is an educational opportunity and meant to build the relationship, credibility, and jointly developed visions for the future • Let the client pull – don’t push. If the briefings are good, you will not need to push. Industry/Vertical Trend Industry Vertical Briefings for 2014 Banking & Financial Services Consumer Products Manufacturing Healthcare Retail Travel & Transportation Media Etc.

37. Appendix Slides

38. New Behaviors: Maximizing Value in the Ecosystem • Clients, primarily the Procurement and Finance organizations, need to be open to trying new ways of engaging the market for services. • Clients need to recognize the innovation requires both buyer and CSC to work together in an open environment and be willing to: • Take Risk • Share the Risk/Reward • Service Providers needs to be transparent, reasonable, and be proactive driving the most innovative solutions – even if it is to the detriment of short term revenue. • Collaborative Contracting is not for commoditized or near commoditized services. • Collaborative Contracting works ideally, when transformation is required and the path ahead undefined or untested. • Technology Providers need to better understand how their technologies fit into the overall Services Ecosystem. • You cannot have the trumpet playing off a different sheet of music. • Advisors need to be more consultative and less process driven. • Ecosystem neutrality (orchestra leader) is key to help facilitate a commercial dialog that achieves the commercial goals of: • Price optimization • Innovation & Collaboration • Trust and Transparency New Behaviors: Maximizing Value in the Ecosystem

39. The Road Ahead: Key Takeaways • The changes that we have seen in the Technology Services markets has challenged our current business models and paradigms. • Old playbooks are not yielding new results. • The pace of change is accelerating, and gaps in our processes and knowledge will increase at an alarming rate. • People need to end most of their sentences in question marks, not periods. • All participants in the ecosystem need to be open to changing their approach to engaging in commerce. • Collaboration, trust, and transparency are going to be foundational elements to success in an undefined future market. • No ones knows for sure how the markets will progress, but it is safe to say that a status quo paradigm is wrong. • Be open to change, take risk, accept failure, and try again. The Road Ahead: Key Takeaways