Business Development in IT

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Content

SPJIMR ITBD (PGDM

2014)

“Proposals & Contracts - & Pricing” June 29, 2014

The opinions expressed in this

presentation are my own and do not necessarily reflect those of my employers.

Today’s Agenda •

Recap

“Proposals & Contracts” Examples - RFP / Proposal / Contract Q&A

Any other issues

Coverage •

Understanding customer – fundamentals



Proposals



Negotiations – some basics



Contracts



Good Relationship Manager – an overview +Q&A

Recap -

The Sales Cycle

The Sales cycle Understanding market

The Sales cycle Understanding markets Business Planning

The Sales cycle Understanding markets Business Planning

Pre-Sales process

The Sales cycle Understanding markets Business Planning

Pre-Sales process

Sales process

The Sales cycle Understanding markets Business Planning

Pre-Sales process

Sales process Post-sales process

The Sales cycle Understanding markets Business Planning

Pre-Sales process Proposal Sales process Post-sales process

The Sales cycle Understanding markets Business Planning

Pre-Sales process Proposal Sales process Post-sales process

Contract

Objective

Why A Proposal ? •Information to the prospect

•What’s to be done ? •How to do it ?

•Who is to do it ? •How much will it cost ?

•What’s the benefit of doing so ?

How to get going ? •Understand the customer

•Know the problem •Figure out a solution •Conceptualize the proposal contents

•Pen it down

Know thy customer

Understanding the customer Who is the true customer & what’s the approach ?

Understanding the customer Who is the true customer & what’s the approach ? Railway Reservation System Sales Force Automation (Pharma) eGovernance (State Govt.) Disaster recovery / Business continuity

eLearning services (Hospitality)

(FMCG)

Understanding the customer Who is the true customer & what’s the approach ? Railway Reservation System Sales Force Automation (Pharma) eGovernance (State Govt.) Disaster recovery / Business continuity

(FMCG)

eLearning services (Hospitality)

User, Top Mgmt., Purchase, Finance, IT

Understanding the customer - some critical success factors •“Insider”

Info

Real need,

Budget,

Time frame,

Decision making process,

competition

•“Collaborate”

the solution - with KOLs (Key Opinion Leaders) - before

the proposal

•Pass

on as much info as possible to customer

The Contents

•Background •Problem

(client, requirements)

identification – thereby eliminating any gaps in

understanding •Proposed

solution – with assumptions

•Objective

& Scope of work – boundaries clearly identified

•Methodology •Deliverables

– with samples (esp. s/w. devlop.)

•Limitations

– i.e. what does this not cover and what

are the dependencies •Time

schedule

•Tools

to be used, if any

•Solution

team’s bio-data

•Customer •Terms

and solution provider’s responsibilities

and conditions

•Benefits •Price,

– of assignment and choice of solution provider

taxes, payment terms

•Validity

period

•References •Summary

A few critical aspects

Checklist: pre-submission •Review content – especially problem and solution •Recheck the financials •Have the benefits been highlighted properly ? •Are the customer guidelines met properly – esp. tenders •Technical – Commercial bid separation •Earnest Money Deposit

•Project personnel profiles •Is the summary good enough for prospect to read further ?

Some key success factors in proposals •Clarity & comprehensiveness

•Should hold attention – from first to last •Have the buy-ins of the KOLs •Peer reviews – eliminates “biased / involved” thoughts

•Submission on time

Proposal - Some questions •Is

a proposal different in a tender situation ?

•Is

a revised proposal required after agreement in the negotiations with customer issuing a PO subsequently? •Is

a proposal required if a contract is to be signed ?

•Is

a proposal required for a repeat order ?

•Should •What

?

a proposal be charged for ?

should be the format for an unsolicited proposal

Negotiations

•Scope •Time

and deliverables Vs Cost

Vs Cost

•Contract

terms

•Customer

sign offs / approvals / responsibilities •Project

closure

Negotiations - Some important considerations •Aim •No

is “Win-Win”

deviation from proposal (unless

required) but flexibility essential •Apparent

Transparency

Contracts

•Customer’s

standard contract Vs Solution provider’s standard contract •Definitions – IPR, Services, Prototype, Go-Live, Training Vs Hand-holding •Responsibilities •Confidentiality of Information (NDA) •Project Teams (+ Steering Committee) •Warranties

•Indemnification •Limitation

of liability

•Termination

i.e. exit clause

•Jurisdiction

of legal action

•Force

Majeure

•Arbitration

Contracts •When

are contracts essential ?

•Should •How

price be a part of the contract ?

do you measure success of a contract ?

•Which

is superior - proposal or contract ?

Relationship Management

•First

meeting impressions “YOU NEVER GET A SECOND CHANCE TO MAKE A GOOD FIRST IMPRESSION”

•First

meeting impressions

•Dress

- advantage of formal dressing ? •Ability to speak on a wide variety of subjects - but only when required •Listen - and never interrupt your customer •Spout jargon - but avoid making it a waterfall

Never criticise competition •Meet commitments always - give customer bad news well before he asks for it • Be in touch - order execution & peace time • Follow the customer’s rules & etiquettes for telephone / mail / letter / tenders / negotiations •

Never criticise competition •Meet commitments always - give customer bad news well before he asks for it • Be in touch - order execution & peace time • Follow the customer’s rules & etiquettes for telephone / mail / letter / tenders / negotiations •

•“Customer

is Always Right - Especially When he is Wrong”

Pricing

Pricing Products

Services

Fixed costs

Fixed costs

Variable costs Profit

Variable costs Profit

Costs – Fixed costs Products

Services

Manpower (R&D) H/w, Tools

Inventory (FM)

Packaging Overheads

Overheads

Costs – Variable costs Products

Sales expenses

Services

Sales expenses

Promotion Manpower Admin (Travel, Training)

Pricing Strategy Products

Services

Standard

Case-to-case

Impact – past, future

Impact - present

Change - complex

Change – simple

VALUE

Some questions … Pricing strategy •Customer’s willingness to pay – isn’t it value ?

•How do you respond to competitor’s price cut ? •Should market share retention drive pricing strategy ? •Can you package uncertainty ? •What should be the response to an existing customer going the eProcurement route ?

THANK YOU

. .

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