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Selling technology in a recession: VARs tackle executive boardroom

With the recession chopping IT budgets, VARs and other channel partners are adjusting by bypassing CIOs and network managers. They're selling network technology directly to the CEOs and other members of the executive boardroom.

With the recession taking technology buying decisions out of the hands of IT executives, VARs and other channel partners need to learn how to engage higher-level executives and business unit managers in order to close a deal.

"If I'm an account manager and I'm calling on a company, right now they have six or seven or 10 or 20 people calling on the IT directors in a government agency," said Gary Nordine, president and CEO of NetXperts Inc., a San Ramon, Calif., value-added reseller. "So if I have an application I'm selling, I can call on someone else who probably controls more budget than IT."

What's more important is for Nordine and his staff to be able to talk directly with the business units that will be serviced by his solutions.

Dan Holt, CEO of HEIT, a Fort Collins, Colo.-based Cisco VAR that specializes in selling products to financial services firms, said his company has also recognized the need to engage non-IT executives. He said the CIOs that his sales representatives typically call on don't have as much independent budget authority as they did before the current recession.

"A lot of times, the CIO can't make the final decision anymore. It has to go up to the executive board," Holt said. "So we make sure we're talking to those folks as well, the CFO, the CEO. I'd say that people's decision-making power has decreased. Before, a vice president of IT at any time could sign a PO [purchase order] for up to $50,000 if it was a budgeted item. Now, even if it is a budgeted item, they are only allowed to sign up to $5,000. And it's got to go all the way to the COO to sign a $10,000."

HEIT is adjusting to this shift with a company-wide training program, Holt said. All 50 of his employees will be taking a two-hour training course with a third-party provider on how to engage with CEOs, CFOs and other high-level executives. His eight sales representatives will then go through an additional three-day training program on the subject.

"We need to talk to those people to make sure they understand the value [of our services] from their executive perspective," he said. "It changes the message you're sending. It's less about speeds and feeds and more a business-level conversation about how plugging into the HEIT platform is going to benefit them as [executives]."

Holt said his company is also re-branding its marketing collateral to reflect these changes.

"Let's not only talk to IT. Let's talk to the people we're trying to provide solutions to – the CAO [chief accounting officer] in accounting or the county supervisor," Nordine said. "In healthcare, we've always had the focus where we provided applications to a CMO [chief medical officer] or nursing director. What we found is we've had to build relationships outside of IT. A lot of times, an IT budget gets cut, but some of these other departments still have money and they're spending that money. That's been a huge boon for us."

Bringing the pitch to the executive boardroom isn't the only strategy to follow during economic hard times. HEIT is also adjusting by focusing heavily on managed services, such as managed security and managed compliance technologies, Holt said. This makes it easier for prospective customers to work with HEIT because many financial firms can afford the smaller operational expense rather than the larger, up-front capital expense associated with on-premise products.

Holt said that HEIT's goal is to transition to a managed-services-first company. By the end of the year, HEIT will focus 100% of its sales efforts on managed services. It will continue to sell on-premise products like switches and routers, but only to existing customers.

NetXperts has been through recessions before, Nordine said. His company started out as a Novell and Microsoft consulting company in the mid-1990s. It thrived during the dotcom boom, selling technology to dotcom startups and venture capital firms. But then the bubble burst.

The company lost a lot of business during that recession, Nordine said. It responded by building a technology practice that was focused on a specific vertical market: healthcare.

The new specialization started with a new partnership with Cisco Systems and expanded with specific vendors of vertical applications, such as Vocera and Aeroscout.

"We actually had a Cisco Channel sales engineer come, and he said, 'You need to build a reference architecture around healthcare.' I thought about it, and I had a couple of our sales engineers and a few salespeople pop in, and we built out this large, poster-sized reference architecture," Nordine said. "It ended up encapsulating at the top of the poster the audience we were selling to and what were their key drivers. And then it went down to the application layer, and then advanced interactive services, security, and then the core layer. It helped our team from the sales director down to the lowest-level engineer in building out solutions. The instigator was Cisco, but the return we received was amazing."

The reference architecture was useful for engaging with IT executives at healthcare firms, but the higher-level elements of the document also helped sell products and services to non-technology executives such as chief medical officers and nursing directors.

Now, a deeper recession has come along, and Nordine said NetXperts is trying to follow the money. The healthcare market is still spending at a steady pace, but the company is looking to another vertical that could have more growth potential in the coming years.

"We've picked up quite a bit of government and higher education business," he said. "We just feel there is such a shift of money going into that market, and we feel it would be wise to build that practice out."

NetXperts is responding by developing a new reference architecture for the government and education markets, just as it did for the healthcare market eight or nine years ago. The company will rely on its existing expertise with Cisco technology to build out the practice while adding some vertical-specific technologies, such as license-plate reading applications from Motorola.

Let us know what you think about the story; email: Shamus McGillicuddy, News Editor

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