By Mark Larson

As technology companies know, customers today are savvy. They have more knowledge about the products and services they choose to buy and more resources to research the company that can provide them with the best product at the most competitive price.

In this business environment, technology companies have learned that managing costs and meeting customer expectations are now standard operating procedures, with business leaders consistently reviewing and improving both sides of this equation, reports the technology industry-specific results of Grant Thornton’s Survey of U. S. Business Leaders. Accordingly, six in ten survey respondents say their chief executive officer (CEO) is focusing equally on both costs and delivering their value proposition to their customers.

Controlling costs
The responsibility of controlling costs is more than a one-person job, with the CEO looking beyond the executive staff to all employees in the management of operational costs. According to the survey, more than nine in ten respondents are involving employees at all levels in cost management and nearly eight in ten are focusing on the supply chain as the most popular source for cost-reductions.

In addition, respondents say the most significant organizational change their company has made in managing rising costs and enhanced customer expectations is reorganizing the company by flattening the managerial structure, bringing in new management, consolidating existing teams and developing new ones.

“Business leaders are making changes throughout their organizations to ensure that rising costs and greater customer expectations are managed in parallel and that cost reduction is a consistent, ongoing process,” says Cal Hackeman, national managing partner of Grant Thornton’s technology industry practice.

“Today, there are no more sacred cows, no more uncontrollable costs. With this in mind, technology business leaders are not only challenging employees at all levels of the organization to search for cost cutting opportunities, but they are also working with their partners to trim costs at each step in the supply chain.”

According to Hackeman, another cost cutting measure noted in the survey is outsourcing or transferring operations overseas, with three in ten technology firms making such moves. However, for most respondents, their interest in international expansion remains low, with bureaucracy, red tape and regulations presenting the greatest barriers to entering this market, followed by lack of knowledge of, and experience with, successfully managing offshore operations.

Ensuring the value proposition is still valuable
Gone are the days when a company’s value proposition could be etched in stone. Rather, customers’ needs and marketplace forces are changing more rapidly than ever and companies must be prepared to change with them. As a result, the vast majority of technology business leaders report they are continuously reviewing their value proposition to ensure it clearly and convincingly conveys their unique value to their prospects and customers. In addition, three fourths are differentiating their products or services by creating a value-added relationship around them, while seven in ten are aggressively educating employees about the value proposition and their particular role in delivering it to customers.

“U.S. business leaders understand this renewed focus on the value proposition and have put processes in place to stay in close contact with customers to understand and anticipate their needs,” says Hackeman. “They are reviewing their value proposition on a continual basis, refining it or completely redefining it as required based on the forces in the market.”

You are only as good as your employees
Howard Fluhr, President and CEO of The Segal Company, once said, “A mediocre strategy executed well is better than a great strategy executed poorly.” Now more than ever, technology business leaders realize that their employees are the company and that they cannot successfully execute the value proposition without the right mix of skills, talent and commitment from employees. As such, they are looking at their ‘human capital’ more critically as a corporate asset, with nearly two-thirds of survey respondents believing their employees:
• are the face of the organization,
• can nurture the company’s core
competencies through their skills
and talents,
• deliver on the value proposition, and
• can differentiate the company.

With this in mind, technology business leaders are most likely to value the following employee characteristics:
• willingness to be held accountable,
• flexibility and adaptability to change,
• taking personal responsibility for
delivering the value proposition.

“Not only are technology business leaders rethinking the employee characteristics needed in the current environment, they are also recognizing that the value of their employees extends far beyond the performance requirements of their position descriptions,” says Hackeman.

“To leverage this power of their human capital, business leaders are more aggressively educating employees about the company’s value proposition and their role in delivering it, as well as empowering employees to take the actions necessary to deliver on this proposition.”

Creating tighter bonds with customers
Competition is intensifying as the market becomes more crowded with new competitors from international companies, larger companies playing in smaller markets and companies diversifying into new markets. Customers, at the same time, are not as loyal as they once were, making it increasingly important to strengthen key relationships.

Accordingly, technology respondents consistently identify the need to re-sell and re-impress core customers just as they did when trying to win new customers, respond rapidly to changes in what customers want by developing a broad mix of skills, services and competencies, and involve customers in the development of new products and services.

“Technology companies are more focused on solidifying customer bonds with creative new strategies,” says Hackeman. “They are more tightly weaving their relationship in with specific products and services, involving customers more directly in research and development initiatives and are becoming more involved with customers to strengthen the business relationship.”

Mark Larson is based in Raleigh and is Grant Thornton’s Carolinas Technology Practice Leader. Grant Thornton LLP is the U.S. member firm of Grant Thornton International, a global accounting, tax and business advisory organization with regional offices in Raleigh, Charlotte, Greensboro, and Columbia, SC. Mark Larson can be reached at Mark.Larson@GT.com.

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