By Stephanie N. Mehta
November 3, 2009

Can an online connection replace the personal touch?

By Zvi Guterman, CEO, IT Structures

The economy may be improving, but corporations are still acting like we’re in the midst of a downturn, especially when it comes to their information technology decisions. Companies are slashing IT budgets, delaying purchasing decisions, and executives are taking a more hands-on approach to evaluating new software offerings.

Technology vendors have reacted to this new world by doing some cost-cutting of their own. Ironically, at a time when buyers are making it harder for tech suppliers to close deals, vendors are making the situation worse by eliminating marketing budgets, reducing sales staff and restricting travel.

In short, sales organizations are expected to not only sell to a tougher audience, but to do it with fewer resources.

Some leading technology vendors are re-examining the way they sell in order to emerge from the recession as not only survivors, but as agile, dominant players. But with everyone focusing on making cuts and putting out fires, it is easy to overlook the larger strategic shift in how enterprise technology is used, sold and paid for.

The mammoth enterprise software deals that required millions of dollars upfront in licensing fees are being replaced by more agile business models, such as software as a service (SaaS), on-demand availability and pay-as-you-go purchasing. These dynamic purchasing trends have not stopped or slowed down because of the weak economy. On the contrary, they’ve accelerated.

Of particular interest are a series of virtual sales-engagement solutions, also known as cloud-based collaboration tools, that allow vendors to place fully functional copies of their products in a cloud environment, and share these now-online ”virtual” products with leads, prospects and customers.

Pitching in a virtual world

The economics of evaluations change significantly when demonstrating, pitching and closing the sale are done in a virtual environment. Instead of days, a product demonstration can take minutes to set up. Instead of requiring the salesman to install a sample product on some dedicated hardware, everything is done on-demand in the cloud. Much of the overhead cost and unnecessary hassles of software sales are simply cut out of this process.

Consider the real-world example of a salesman at a well-known Fortune 1000 antivirus-software company. Traditionally, John and his 200 colleagues’ sales cycles would take six months, cost an average of $20,000, and the company would still lose a significant percentage of prospects even after the initial promise. The process would involve scheduling client site visits, obtaining hardware and cooperation of their networking and security teams, and installing a “proof of concept” – sometimes returning multiple times to complete the evaluation, not to mention ongoing calls to understand the client’s usage and experience.

Today, using cloud computing tools, John can show a product off the minute he gets an interested prospect on the phone – he simply tells the buyer to direct his or her browser to his company’s demo site and starts showing off the service online – even using data routed securely from the prospects’ own servers. The average sale takes closer to four weeks to close, at a cost of less than $1500 – eliminating the need for travel, while gaining the ability to monitor client usage without disturbing them.

John also found that using the demos earlier in the sales cycle can be a good qualifying tool, by tracking which prospects are spending more time with the demo on their own.

Just as Web and teleconferencing have replaced face-to-face presentations, virtual sales engagement tools will oust on-site installations, demos and training, especially when a prospect was a lower priority to begin with. While a vendor may always be willing to allocate human and travel resources to land a $5 million deal, virtual sales will help companies capture the numerous smaller deals that often go untapped because the sales staff and budgets are stretched too thin.

Virtual sales engagements conducted in fully-functional, online IT environments remove the cost and pain of conducting numerous hands-on demos, setting up on-site customer evaluations, extended proof-of-concept projects and post-sales training. It is only a matter of time before these tools move from best practice to standard practice. In the meantime, early adopters are enjoying shorter sales cycles with markedly lower costs. So perhaps it’s time to ask yourself, as you watch the mammoth deals vanish – where will you be when the downturn really ends?

Perhaps it’s time to jump forward – and leverage the latest technology to sell your technology.

Guterman is the CEO of IT Structures, a venture-backed company that is helps corporations extend their infrastructure to the Internet cloud.

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