Outsourcing: Why CIOs Hate How You Sell IT Services

IT vendors spend $25 billion a year on lead generation, while CIOs have become skilled at the art of evasion. CIO.com talked to xPeerient CEO Mark Hall about why the IT marketplace is broken and what he thinks could fix it.

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CIO.com: But isn't that how the traditional outsourcing RFP process works—I tell you what I need and you give me your best proposal?

Hall: It is. But the model Im proposing is one in which the IT buyer remains anonymous. The identity of the user organization is not revealed until they want it to be. This gives the buyer more control over that early stage of the relationship. Say, a CIO wants to outsource a help desk. He does early stage discovery on the service providers, talks to his peers, and then engages the service companies and asks questions—anonymously.

As soon as you reveal your name or your company, it's like throwing blood in the water. Once you express the slightest bit of interest, you're suddenly surrounded by sharks. Every potential vendor—even those not in IT services, those that want to sell you office products or real estate—is circling. It's frustrating, and that's why CIOs are loathe to give up their identity.

I went to the Taj Mahal recently, and as soon as the local vendors saw me in the back seat of the car, they started swarming—one, two, then 15, 20 of them following the car until I got out. They started a barrage of sales pitches—postcards, photos, guides, trinkets. And they followed me until I looked each on in the eye and said, 'I'm not going to buy anything today.' It was humiliating for me, and it was humiliating for them. That's analogous to the IT marketplace.

Compare that to a typical shopping mall. No one is jumping out or grabbing you. They typically leave you alone to wander around. You enter a store and someone may greet you and ask you if you need help. If you say no, they go away.

CIO.com: What should IT service providers do to fix the broken outsourcing marketplace?

Hall: They need to do a better job leveraging the CIO peer network. The number one decision criteria for the IT buyer is peer feedback. More than anything, they want to talk to a customer of that IT services provider. But they want the whole story. Thats hard to get to right now. If they're lucky, they get three or four references selected by the service provider as they approach their final decision. And even then they don't get the full story.

Vendors need to pay attention to the relationship. Don't treat they IT buyer like a database entry. Don't assume they'll all respond the same way. The person on the other end of the line is not just account; theyre not just a customer ID number. There's a living, breathing person on the other side.

Update: xPeerient is in part owned by IDG Enterprise.


Copyright © 2011 IDG Communications, Inc.

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