Chalfant's Blog

Follow the Money

Most people remember the manta of Jerry McGuire – Show me the Money! When it comes to storage, customers would be wise to 'follow the money'. Everyone in the vendor community understands the insider quip regarding sales people – they are said to be ‘coin operated’. While this is a friendly jab at the sales people, it is also fairly true. Sales managers know that when you build a compensation plan for the sales force, you have to be really careful. Sales people will figure out how the plan works and do what it takes to best leverage that plan.

Business is very much the same. I was recently out on a sales call where I was once again reminded that businesses will also do what they are compensated for. Here is the situation.

About a year ago, I was a speaker at a large golf tournament. Everyone that has seen me present knows to expect brutal honesty and some sound advice on how to bring their operating infrastructure into alignment with the needs of the business. And so it was at the event a year ago. One long term customer heard some new things we are doing which involves an assessment that peals back the layers of complexity in the data centers, and exposes how inefficient storage and servers can be. They decided to give it a try, and so we contracted to perform a business value assessment.

The interesting thing about this engagement is that this customer has multiple data centers. One of their data centers is managed by a service provider, which has lots of disk from one vendor in particular. Our team showed up at that data center with tool kits in hand to begin the collection process which leads to an irrefutable exposure of how much space is commonly wasted. The cool news is with this in hand, the customer can cut their costs in a big way, because they can re-allocate and use space that is otherwise hidden, undiscovered and unused.

Only one problem, the service provider and the disk vendor get compensated based on how much capacity they use. If we go in there and uncover how much space is wasted, and can reclaim it, the service provider and the disk company have a major revenue hit. They don’t like that. So instead of inviting the team in for the greater good of the customer, they blocked the doors and wouldn’t allow any work of any significance.

Now interestingly enough, I have met with this service provider, over and over and over. They are afraid the approach we tout will make them loose business. I have told them this is an ‘eat your own children’ problem, and that if you don’t – someone will do it for you. But – in a time when corporate pressures push revenue and operational efficiency at the same time, it seems impossible to change the business model enough to not only make a reasonable profit, but also do what is right for the customer. So, at the end of the day they blocked the effort.

Well the day of reckoning may be on the horizon for them. I had a meeting with that same companies CIO today, and exposed the game that is played by vendors pushing capacity (as a value for their own top line growth, from the expense line of our customer). I showed him and his technical team how to expose it, and what to do about it. Right in the middle of my presentation he stopped me and asked if we knew the guy that is in charge of this service provider locally. He said he wanted to get up ‘right now’ and bring him into the meeting to find out what they were doing.

Follow the money. If your service company and your vendors are comp’ed to sell capacity, they will sell capacity. What you need to figure out is how to comp them for selling the minimally correct amount of infrastructure that allows the business to operated at peak performance. Period, full stop.

I love the awakening I see going on. Business leadership knows fair well that the IT infrastructure is critical to business. They have suspected for years that there is a better way to align the needs of the business with a balanced implementation of the infrastructure. Now that the tools, technologies, and consulting practices are in place to deliver that, the game is up.

Fair warning to all vendors that are over selling for personal gain, the game is drawing to an end.

Posted at 08:27AM Jun 27, 2007 by chalfant in Personal  |  Comments[2]