Increasing Business Value Through Demand Shaping


walk-past-no-coffeeA key role for IT leaders, especially during recessionary times, is Demand Shaping.   A perennial reality in the business-IT world is that demand seems to exceed supply.

Of Backlogs and Early Cloud Computing

When I entered the field of IT back in the 1960’s, the term “backlog” was pervasive – that huge list of requests we could not get to until supply resources freed up.  Around the same time, and partially as a result of these huge backlogs (often measured in months or even years!) time-sharing and service bureau’s were the rage.  Often they would install terminals for you for free, provide access to so-called Fourth Generation Languages, data analytics, simulation and modeling tools, and let you “pay by the drink.”

Long term, this may not have been the most cost effective approach, but it let “end users” (as we called them back then) get access to the tools and computing power they may not have otherwise had access too.   I remember doing some work for a large enterprise that ran movie theaters.  I needed to model the economics of dividing up cinemas from single screen (which was the only model in the UK back then) into mutli-screen theaters – an approach called ‘multiplexing’ today.  I used a financial modeling tool called PROSPER through a service bureau.  I was learning the tool while I was building the model, so it took me a while to get it all working.  I remember getting to my 30th iteration of the model before I saw the first service bureau invoice, and on seeing all the zeroes following the pound sign, realizing that, “I had some splainin’ to do” as Ricky Ricardo would have said at the time!

But the results were important to the company, and they were happy to pay the invoice without complaint as it validated a major strategic shift for them, and they became one of the pioneers of the new movie theater model in the UK, capturing significant market share from competitors, and driving great profits for many years.  Had I responded to their request for the analysis with, “IT does not have the capacity just now, we’ll get to it in 18 months,” at best, I’d have had an unhappy customer.  At worst, we’d have watched a competitor beat them to the punch!  On-demand, cloud computing (in its earliest form) provided me the flexibility to satisfy demand without capital investment or undue delays.

Shaping Demand Rather Than Accepting It

Perhaps the more interesting story behind the cinema multiplexing modeling story above is how it came about.  I was at the time a Systems Engineer for ICL – then the leading British computer company.  I was working with a Sales Engineer.  The movie theater enterprise (actually, this was just one business in a broad range of consumer businesses) was his key account, and he was working hard to convince them to buy a larger computer.  He came up with the strategy of multiplexing (I think he’d been to the US and had first seen it there) and took the idea to his customer with the offer to find a free resource (yours truly!) and do the necessary modeling to analyze the financial implications.  (Note the irony here that we both worked for Britain’s largest computer company and that I had to go to a service bureau to get access to the computer cycles!)

The point is, that sales executive was shaping demand for his customer – bringing ideas to create demand.

Two Ways to Drive Business Value Through Demand Shaping

In the example above, demand shaping was through the relationship manager bringing ideas to his customer.  This is a technique familiar to all of us (at least, in the US) used by pharmaceutical companies to let us know about medical conditions we may not even be aware of and for which they have a potential remedy – even if we can’t go out any by those remedies.  We have to ask our doctors whether the treatment is appropriate for us.

The second method those in relationship management roles use demand shaping is when the customer tells us their ‘demand’ and we deflect it by suggesting a solution that might be of higher value, or, at least, pointing out that the requested ‘demand’ may not deliver value sufficient to justify the need.  This is the more common opportunity for demand shaping, and typically the trickier role to successfully pull off.  If we are not careful, it can be seen as being unresponsive or uncooperative.  It might mean elevating a one-off and/or siloed need to a more enterprise-wide solution.

Anne, that’s an interesting request, but perhaps we can kill several birds with one stone if we provide a solution that addresses more than the needs of your department?”

To the customer, that might mean delays as we work through enterprise-wide governance processes, or work the politics to enroll other departments in the solution.  In these cases, pushing back by the relationship manager requires intestinal fortitude, skills in the art of persuasion, and political savvy.  But such is the lot of relationship manager – shifting from ‘order taker’ to ‘valued business partner’, from ‘account executive’ to ‘agent of enterprise solutions and business value.’

How often are you simply in the role of order taker?  What could you do differently to position IT capability for value realization?

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2 thoughts on “Increasing Business Value Through Demand Shaping

  1. This is good advice for shaping business demand at the request level – although it runs the risk of IT becoming known as the ‘re-director’, as in business people thinking “I can’t ever get a simple answer from those IT folks”.

    A bigger issue is shaping demand at more of an aggregate level. I’m speaking to two groups of CIOs over the next month on “Managing Business Demand In A Time Of Tight Budgets”. The concern for them is everyone has been asked to trim their spending plans – but demand for IT resources doesn’t necessarily go away just because the budget’s smaller – projects and services. While they have a reason to say no to project requests, or to trim service levels, they are hurting the perception of IT as attuned and responsive to business priorities. We have survey data – less than a week old – that has CIOs putting “Improving the transparency of IT costs, capacity and business demand” as the fastest rising priority (compared to 2007). CIOs are concerned and have reason to be – they don’t have a lock on their firm’s IT solutions, given the alternatives available to business areas from SaaS vendors and service providers. When the upturn comes, they want their organizations viewed as valued partners, not as ‘one supplier among many’.

    I’d love a discussion of “what does IT transparency mean to business execs?, and how should CIOs address this transparency?”

    Reply
  2. All good points, Alex, thank you. I’ll get a discussion going shortly on the IT transparency issue – its been a huge concern at one of my current consulting clients, and I think becomes especially pertinent during a recession.

    Reply

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