Stephen Conner, Director of Client Strategy at Nutanix, discussed the importance of speaking to the business in their language and knowing how to talk about TCO and ROI.
“I’m not going to talk about technology today. I’m going to talk about how, at our company, we’re helping our customers—our partners—to speak more in business terms,” said Conner at the outset of his thought leadership presentation at the 2016 Chief Information Officer Leadership Forum held on December 1 in Boston. “As part of our process, we help any of our customers develop those types of conversations around TCO and ROI, driving toward talking about the top line,” he said.
“What do our customers think of us, as IT people?” Conner asked. He said the primary complaints about IT people are that they speak in jargon, are focused on functions rather than customers, and live on their own island. “We need to start speaking in terms that people in finance and marketing understand. If we do, they’ll start to love us.”
Conner continued, “In the 1990s, four out of every five dollars were spent on capital, not operations. In 2016, we’re spending a lot of money on people and function—and dysfunction. We need to look at technologies and techniques that will allow us to decrease operating expenses.”
“In the 1990s, four out of every five dollars were spent on capital, not operations. In 2016, we’re spending a lot of money on people and function—and dysfunction. We need to look at technologies and techniques that will allow us to decrease operating expenses.”
Conner pointed out that legacy poses complexity every step of the way. There are big incremental risks, big purchases, and long deployments that take months and years. Difficulty in scaling is a huge issue. “We need to be able to scale in the blink of an eye,” he noted.
“Any IT organization that isn’t focused on services really needs to start thinking about that,” advised Conner. “Look at SaaS options and taking everything you do and bubbling it up to the business. Break down what you do into services. Once you make this transition, you become a business enabler that moves from total cost of ownership to return on investment that leads to top-line revenues. Now you’re at the table.” Conner emphasized that IT needs to move toward the strategic business partner by speaking their language and thinking of IT as providing a service. “The first step is to go to the business and tell them if you provide this service, you can guarantee them you’ll cut five million out of the COGS line and decrease the overall net impact on margin by x. The next step is talking about return.” For this, said Conner, it’s necessary to understand the difference between ROI and TCO:
Return on investment applies to:
• Net new project
• Real costs associated with the project
• Opportunity costs exposed by the project
• Overall return
Total cost of ownership applies to:
• Project approved and underway
• Projection of capital and operating costs
• Comparison of two alternatives
“Any IT organization that isn’t focused on services really needs to start thinking about that. Break down what you do into services. Once you make this transition, you become a business enabler that moves from total cost of ownership to return on investment that leads to top-line revenues. Now you’re at the table.”
“What I try to do with any company I work with is step above the TCO and look at how this conversation will impact the top line, not just the middle line—the cost of doing things,” stated Conner. “One way to do this is to implement technologies that enhance incremental revenue, such as by finding out where time is being allocated and reducing time spent—even by as little as a few minutes—because this can really add up. This is the type of conversation that most people in IT don’t have but need to have.”
“What I try to do with any company I work with is step above the TCO and look at how this conversation will impact the top line, not just the middle line—the cost of doing things. One way to do this is to implement technologies that enhance incremental revenue.”
To begin the transformation, said Conner, it’s necessary for IT people to stop thinking of themselves as an expert in a particular technology and, instead, think in terms of products. “We want to think of it as ‘I’m working on this product, not I’m a server guy or a network guy.’ The second step is understanding your business partners’ pain points. Understand what they need so you can make sure your services are functional and sellable. Lastly, speak your customers’ language. When we speak in speeds and feeds, nobody hears us. What I’ve learned is the only way to do this is to bubble the conversation up toward the top line.”
ABOUT STEPHEN CONNER:
Steve Conner currently works as the Director of Client Strategy for Nutanix. Prior to joining the Client Strategy team, Steve lead the Service Provider sales team for North America and was instrumental in establishing the distribution strategy for Nutanix in the United States and Canada. Before Nutanix, Steve worked for over eight years as a NetApp partner with Sequoia Worldwide (now Presidio Cloud Services), Arrow Electronics, and Inscope International, building a services business from the ground up to a business with revenues of over $20M. In addition to the many years working with NetApp, Steve also worked for large service providers including Exodus Communications, Cable & Wireless, and Savvis in capacities ranging from Systems Engineer to VP of Professional Services. While at Exodus, Steve started the Professional Services organizations in Washington, DC and Atlanta, growing the overall service business to $50M.
Steve has a bachelor’s degree in Computer Science from the University of Richmond, a master’s degree in Computer Science from George Mason University, and is pursuing his MBA in Management & Finance from Florida Institute of Technology.