The Trouble with Value

A recent Computerworld article covered a study done by the Harvard Medical School about the value of computerization in US hospitals.  The article led with the headline: “Computers don’t save hospitals money”.  This is not good news if you’re a seller of Information Technology solutions.

First tip: Be prepared1. You can expect to hear about this, certainly if you are selling in the health industry, but generally if you are selling the value of Information Technology to people who either have trouble believing in the value of IT, or for whom it is disadvantageous to admit it (for example, buyers in procurement roles).  The article will be used in attempts to undermine your value arguments, and thereby reduce your prices.

For those of you who regularly read our articles, or are familiar with our teaching, you know that we consistently find that sellers who focus on and deliver unique business value win more often, close their sales faster, and sell at higher prices. Sellers who do not have this focus and/or delivery are more often commoditized, have sales which drag on, and lose more to competition if they are not the low-cost seller.

Second tip: If you think you’ll hear about this from a client, consider reading the full article from The American Journal of Medicine®. It’s the only way you can really be ready to talk about this. One thing that stood out to me was that the article appeared to treat all costs in the same way – all costs were attributed to the attempts to save money through computerization.  If true, that’s clearly an overstatement.  In the United States, anyone who has gone to a doctor in the past several years knows that the 1996 Health Insurance Portability and Accountability Act (HIPAA) has significantly altered the recordkeeping landscape. Primarily a privacy and recordkeeping law, it was not driven by a need for efficiency or effectiveness in healthcare.  It would seem there are HIPAA implications in the computerization topic. Penalties for lack of compliance are strong motivators to action in cases like this. Significant HIPAA regulations implementation occurred during the study period. No matter what the case is, your personal knowledge of the Harvard publication will be important if this study is used against you.

Third tip: There is the concept in sales of a “loyalty gap”.  This gap occurs when business value is projected for a project at the beginning, but no one ever goes back to the clients who supported the decision with a report of the actual values that accrued.  In the absence of this feedback, the sponsor understandably doubts the result, and in doubting feels a “loyalty gap”. When your projects complete, whether the value is fully delivered or not, make sure that you let the sponsor know what happened.  If you do not, they assume the worst, and you get a “loyalty gap”.

Last tip: Why is our title “The Trouble with Value” if we are such strong believers (and we are) that IT projects provide value, and that emphasizing that value is the most persuasive way to sell?  It’s a catchy title. However, it isn’t the value that creates the trouble.  If you sell the value of your offering to your clients, you should reasonably expect them to question it, and you should be prepared to back it up with references, rational arguments, and joint work with your client to confirm the expectations.  Then, you should execute strongly, and follow-up to see if the value accrued or not.  Realistically, we know that most business value projects are just as strongly (if not more strongly) influenced by client performance as they are by seller performance.  But you cannot afford to just ignore the business output metrics, and move on to the next sale.  Selling is a persuasion business, and persuasion is a credibility business.  You need to have both to succeed.

The real trouble with value is the follow-up and execution by the seller – lacking that, you risk your value prediction becoming an empty promise that hurts your credibility going forward.  And that’s trouble.

1 One of the K&R Six Principles™ is: Get M.O.R.E. Preparation is Key to a Winning Negotiation