One of the most impressionable meetings that I have been involved in occurred early in my career at Microsoft. In was 1996 and I was a freshly minted technical evangelist working in Microsoft’s Developer Relations group (DRG). DRG was a group tasked with convincing developers to write applications for Windows, specifically Windows 95 and Windows NT 4.0. I was responsible for evangelizing partners in the healthcare industry (I worked for a hospital software developer before I came to MS). Because I was one of the few people on campus that was familiar both MS products and healthcare, I sometimes got invited to the Executive Briefing Center (EBC) to participate in customer briefings. In this case, the customer happened to be the largest chain of hospitals in the United States and they were in the midst of negotiating a new enterprise licensing agreement with us. They were unhappy with the pricing that they were being offered and brought it up several time during the morning sessions.
Executive briefings usually consist of a parade of different presentations and demos of Microsoft products along with lunch with a Microsoft executive. The executive scheduled for the briefing lunch was SteveB himself. I had never seen him in person before that time so I wasn’t sure what to expect. After a quick lunch (the catered food in the EBC is always good), Steve began to provide his thoughts on the healthcare industry and how a close partnership with MS could really benefit the customer. But it soon became obvious that the customer wasn’t really listening and instead wanted to discuss the pricing issue. Steve stopped and listened to their complaints about the license price for five or ten minutes before suddenly saying, “Timeout!”
“Let’s do an exercise. I want you to think of your overall yearly IT budget – your personnel and benefits, hardware, software licenses and maintenance, consulting services, outsourced services, everything. Don’t tell me the number, just think of it. Now I want you to think about how much we are asking you to pay us each year. OK, for this second number, all 130,000 of your employees to have access to the full suite of Microsoft products – Windows and Office on every desktop and Windows NT Server and SQL Server access licenses for everyone. I’m going to guess that the second number is less than 2% of the first one. Maybe even less than 1%.”
Steve continued. “Now, if you don’t think that the value of the products and services that we provide is in line with your overall IT expenditures, then we can have that discussion. But if you are looking to cut costs, I really don’t think we are the problem.” Pause. “Now, let’s talk about how you can really leverage our partnership.”
In the span of 30 seconds, Steve changed the conversation from one about cost to one about value. He was able to get them to stop thinking exclusively about the cost of the software and think about what they get from this cost and how it compares to the value they got from other costs. Often, the true cost driver in information technology isn’t the software (or the hardware, for that matter) – it’s the people. What’s the cost of inefficient business processes? What’s the cost of supporting software that is hard to use? What’s the cost of entering data into multiple applications because they don’t work together? What’s the cost of being unable to use data because it is locked into hard-to-access systems? In most cases, if you can give people in a company the tools to be more productive, the benefits will greatly outweigh the cost of the software and hardware.