CVC Advocates the Business Planning Imperative

Gary Fish founded his company, FishNet Security, 1996 as an integrator of hardware and software security products. In 14 years, he grew the company from $0 to more than $300 million in annual revenue, 400 employees, and more than 25,000 active and inactive customers.  Today, he’s one of the most sought after and influential security solution providers in the industry.

In many conversations I have with Fish about his company’s success, he’ll say that growth is not an option – it’s an imperative. Without growth, he would not have the capital and resources to build his business, expand sales, develop products and create jobs.

How Fish achieved his success is a relentless focus on business planning and execution.

Many solution providers say they do not have the acumen or resources to do business planning. But planning is precisely what makes it possible for solution providers to enjoy greater levels of success with less effort.

The Channel Vanguard Council (CVC), a thought-leadership advisory group to CompTIA, powered two special presentations at CompTIA’s Breakaway 2010 – transformative revenue models and rethinking sales compensation plans. The idea behind these sessions was to provide solution providers attending the event with insights on mechanisms for accelerating growth.

Why these topics, though? Let’s start with revenue.

In the conventional technology product channel, revenue is simply the cash or money earned through the sale of an on-premise piece of hardware or software. Customers pay for the product and the solution provider records the revenue at the same time. But cloud computing and professional services are changing the nature of revenue. Cloud and managed services are sold on a recurring revenue scheme, in which the customer pays for a fraction of the total cost of the service. Because of that solution providers and vendors may have a more predictable revenue stream, but the cash flow will be lower at the actual time of revenue recognition.

CVC members Fish, McAfee’s Fernando Quintero, Awareness Technologies’ Ken Totura, Do IT Smarter’s Lane Smith and Troubadour’s Jay Kirby spoke about how their companies makes every employee responsible for generating revenue, and how revenue is the lifeblood of their businesses. Maintaining a healthy business, they said, requires planning for business operations and cash needs, developing sales plans to capture necessary revenue levels, and balancing different revenue sources – cloud services, professional services and on-premise transactional sales – to ensure revenue consistency.

Equally important, the CVC panel asserted that revenue isn’t just about cash, but also intelligence. Analyzing revenue streams and sales activities provide tremendous insights into business activity that enable managers to make better decisions about product sales, new investments and growth activities.

Compensation planning is a bit trickier. CVC members Nancy Hedrick of Computer Software Technologies, Joe Qualgia of Tech Data, Ron Culler of Secure Designs and Lester Pierre of Wall Street Network spoke on the need to use balanced compensations as incentive for salespeople to prioritize sales and ensure continuous revenue stream.  The emerging issues in compensation planning is how to pay salespeople for services in which revenue isn’t recognized all at once and still keep them engaged in  prospecting and cultivating accounts.

The big takeaway from these sessions was the need for business planning and execution. CVC members aptly demonstrated that business without a plan is directionless, and unlikely to attain any measure of real viability.

The CVC released two white papers at Breakaway: “The New Normal: How Cloud Computing and the Recession is Changing the Nature of the Channel” and “Channel Sales Pipeline Management: How to Effectively Manage and Measure Sales Pipeline Performance.” These papers are available on the CVC website.