How Technology Is
Re-inventing the Customer Relationship
The Blending of the Offer and the Experience
Monetize 2015
Aria Systems
April 1, 2015
Two Kinds of Tech CEOs Today
“We Have a Problem…”
“A New Purchasing
Model Is Coming”
“Industry
Transformation”
3
SUPPLIERS
The Great Divide
Product
Focused
CUSTOMERS
Outcome
Focused
Much of Future Supplier Growth and
Differentiation Will Be
Determined In This White Space
4
B2B Was Designed By Early Manufacturers.
What Do Manufacturers Like To Do?
• Make.
• Sell.
• Ship.
5
Level 1 Works Great For Basic Offers
Supplier Operating Model
Product
Focused
Basic Offer:
LEVEL 1
SUPPLIER
IT Department Role To Own and Operate
Outcome
Focused
Customer Value
Great
Features,
Fair Price
It’s Easy!
Supplier Offer
Best Product
Make.
Sell.
Ship.
6
Revenue Model: Pay Upfront
Supplier Operating Model
Product
Focused
Basic Offer:
LEVEL 1
SUPPLIER
IT Department Role To Own and Operate
Outcome
Focused
Customer Value
Great
Features,
Fair Price
It’s Easy!
Supplier Offer
Best Product
$
Sales Function:
Get New Deals – Win RFPs
7
Complex Offers Require a Level 2 Supplier
Supplier Operating Model
Product
Focused
Basic Offer:
Complex Offer:
LEVEL 1
SUPPLIER
LEVEL 2
SUPPLIER
IT Department Role
To Own and Operate
Outcome
Focused
Customer Value
Great
Features,
Fair Price
Fast and Sure
Availability
Supplier Offer
Best Product
Make.
Sell.
Ship.
I Need a
Bit of Help!
Attached
Services +
Best Product
+ Service
8
Revenue Model: Upfront with Annuity Renewal
Supplier Operating Model
Product
Focused
Basic Offer:
Complex Offer:
LEVEL 1
SUPPLIER
LEVEL 2
SUPPLIER
IT Department Role
To Own and Operate
Outcome
Focused
Customer Value
Great
Features,
Fair Price
Fast and Sure
Availability
Supplier Offer
Best Product
I Need a
Bit of Help!
Attached
Services +
Best Product
$
$$
$$
Sales Function:
New and Renew
9
Old World Thinking
Supplier Operating Model
Product
Focused
Basic Offer:
Complex Offer:
LEVEL 1
SUPPLIER
LEVEL 2
SUPPLIER
Outcome
Focused
Customer Value
Great
Features,
Fair Price
Fast and Sure
Availability
Supplier Offer
Best Product
Attached
Services +
Best Product
$$
$$
$$
•
•
Celebrate “the deal”
Experience mattered less
than sales
10
For 50 Years, Just Two Models
Supplier Operating Model
Product
Focused
Basic Offer:
Complex Offer:
LEVEL 1
SUPPLIER
LEVEL 2
SUPPLIER
Customer Value
Great
Features,
Fair Price
Fast and Sure
Availability
Supplier Offer
Best Product
Attached
Services +
Best Product
Complexity.
Friction.
Cost.
Time.
STOP
=
Not
Scalable
Outcome
Focused
11
$1T Annual Combined Revenue Shrinks $180B:
Shrinking and Creating Disruptive Opportunites
Total Quarterly Tech Revenues For 50 Large Tech Companies
$260,000
2008 Q4, $246B
2011 Q4, $239B
$240,000
$220,000
$200,000
2014 Q4, $200B
$180,000
$160,000
$140,000
1
2
3
2008
4
1
2
3
2009
4
1
2
3
2010
4
1
2
3
2011
4
1
2
3
2012
4
1
2
3
2013
4
1
2
3
4
2014
12
Growth In the B4B Era…
Supplier Operating Model
Product
Focused
Basic Offer:
Complex Offer:
Optimize Offer:
Outcome Offer:
LEVEL 1
SUPPLIER
LEVEL 2
SUPPLIER
LEVEL 3
SUPPLIER
LEVEL 4
SUPPLIER
Outcome
Focused
Customer Value Power
Best Product,
Fair Price
+Fast and Sure
Availability
+
Optimal
ROI
+
Ease
Supplier Offer Power
Standard,
Reliable
Product
Implementation and
Maintenance
Services
Tailored Product
Adoption Services
Operate (Managed)
Services
Connected Product
Outcome
as-aService
Will Come To Suppliers Who Step Over the Line To
Deliver Successful, Long Term Experiences…
One Transaction At a Time
13
At Level 3 Suppliers Stay Connected to Optimize ROI
Supplier Operating Model
Product
Focused
Basic Offer:
Complex Offer:
Optimize Offer:
LEVEL 1
SUPPLIER
LEVEL 2
SUPPLIER
LEVEL 3
SUPPLIER
Outcome
Focused
Customer Value Power
Best Product,
Fair Price
+Fast and Sure
Availability
+
Optimal
ROI
Supplier Offer Power
Standard,
Reliable
Product
Make.
Sell.
Ship.
Implementation and
Maintenance
Services
Tailored Product
+ Service
Adoption Services
Operate (Managed)
Services
Connected Product
+ Operate
Optimize
Drive Adoption
14
Revenue Model: Subscription
Supplier Operating Model
Product
Focused
Basic Offer:
Complex Offer:
Optimize Offer:
LEVEL 1
SUPPLIER
LEVEL 2
SUPPLIER
LEVEL 3
SUPPLIER
Outcome
Focused
Customer Value Power
Best Product,
Fair Price
+Fast and Sure
Availability
+
Optimal
ROI
Supplier Offer Power
Standard,
Reliable
Product
Implementation and
Maintenance
Services
Tailored Product
Sales Function:
Land, Adopt, Expand, Renew
Adoption Services
Operate (Managed)
Services
Connected Product
$ $$ $
15
Level 4 Is Outcomes-as-a-Service (Utility)
Supplier Operating Model
Product
Focused
Basic Offer:
Complex Offer:
Optimize Offer:
Outcome Offer:
LEVEL 1
SUPPLIER
LEVEL 2
SUPPLIER
LEVEL 3
SUPPLIER
LEVEL 4
SUPPLIER
Outcome
Focused
Customer Value Power
Best Product,
Fair Price
+Fast and Sure
Availability
+
Optimal
ROI
+
Ease
Supplier Offer Power
Standard,
Reliable
Product
Make.
Sell.
Ship.
Implementation and
Maintenance
Services
Tailored Product
+ Service
Adoption Services
Operate (Managed)
Services
Connected Product
Outcome
as-aService
+ Operate + Low Risk
Optimize Pay For Outcomes
Adoption
16
Revenue Model: Pay For Outcomes
Supplier Operating Model
Product
Focused
Basic Offer:
Complex Offer:
Optimize Offer:
Outcome Offer:
LEVEL 1
SUPPLIER
LEVEL 2
SUPPLIER
LEVEL 3
SUPPLIER
LEVEL 4
SUPPLIER
Glamorous
But
Dangerous
Outcome
Focused
Customer Value Power
Best Product,
Fair Price
+Fast and Sure
Availability
+
Optimal
ROI
+
Ease
Supplier Offer Power
Standard,
Reliable
Product
Implementation and
Maintenance
Services
Tailored Product
Adoption Services
Operate (Managed)
Services
Connected Product
Sales Function:
Automated
Land, Adopt, Expand, Renew
Outcome
as-aService
$$$
$$$$$
$$$$$$$
$$$$$$$$$
17
OEMs Often Play At Multiple Levels
Supplier Operating Model
Product
Focused
Basic Offer:
Complex Offer:
Optimize Offer:
Outcome Offer:
LEVEL 1
SUPPLIER
LEVEL 2
SUPPLIER
LEVEL 3
SUPPLIER
LEVEL 4
SUPPLIER
Outcome
Focused
18
From Large Transactions to An Experience
Supplier Operating Model
Product
Focused
B2B Companies
Think Like This
Basic Offer:
Complex Offer:
Optimize Offer:
Outcome Offer:
LEVEL 1
SUPPLIER
LEVEL 2
SUPPLIER
LEVEL 3
SUPPLIER
LEVEL 4
SUPPLIER
$$
$$
$
$
$
$
$$
Outcome
Focused
$$$
B2C Companies
$$$$$
$ $ $ $ $ $ $ Think Like This
$$$$$$$$
19
The Yin-Yang of Outcome Offers
Product + Service
Outcome Offer
Build a Level 1 or 2 Product Offer
Build a Level 3 or 4 Outcome Offer
Product: What can this product do?
Business Challenge: What business
challenge is your customer facing?
Sell Features and Benefits
Add Minimum Services
Renew Maintenance
Deliver a Level 1 or 2 Product Offer
Identify Outcome Metrics
Add New Operating Capabilities
Re-structure Existing Processes
Add New Skills
Deploy Land/Adopt/Expand/Renew
Deliver a Level 3 or 4 Outcome Offer
20
Revenue Transaction Events Shift…
Supplier Operating Model
Product
Focused
Basic Offer:
Complex Offer:
Optimize Offer:
Outcome Offer:
LEVEL 1
SUPPLIER
LEVEL 2
SUPPLIER
LEVEL 3
SUPPLIER
LEVEL 4
SUPPLIER
Outcome
Focused
Customer Value Power
Best Product,
Fair Price
+Fast and Sure
Availability
+
Optimal
ROI
+
Ease
Supplier Offer Power
Standard,
Reliable
Product
From
Overhead
Implementation and
Maintenance
Services
Tailored Product
Adoption Services
Operate (Managed)
Services
Outcome
as-aService
To
Revenue Center
21
That Means New Opportunities For
Competitive Differentiation
Boring
Billing
Boring
Service
BECOMES
Brilliant
Billing
BECOMES
Brilliant
Service
We Don’t
BECOMES
Collect Data
We LIVE
On Data
22
Success Is Rapidly Moving…
• From Products to Offers
• From Features to Service
• From G&A Functions to Competitive Advantage
How Will You Respond?
23
Thank You!
J.B. Wood CEO TSIA
Lead Author: B4B