Upload
mike-nevin
View
391
Download
0
Tags:
Embed Size (px)
Citation preview
Explaining the VST Alliance Sales Methodology
Mike Nevin
Managing Director Alliance Best Practice
Page 2
VST Agenda / Contents
The VST model = 250% - 650% increase in alliance sales within 12 months
Executive Summary
Introduction to alliance best practices
The connection between alliance best practices and the VST model
The components of the VST model
Comparison of three case studies to the VST model
1 2 3 4 5
Implications of the case studies and the VST research
Research recomendations
Next steps
6 7 8
Page 3
Executive Summary
Companies use formal methodologies in direct sales with great results. Indirect sales are becoming increasingly important to software companies. A very important indirect sale route is an alliance or even a strategic alliance. Until now there has not been a formal and standard alliance sales system that companies could use.
ABP has now developed such a system by observing and documenting over 100 software / SI alliances. The system is currently being used by: IBM, Oracle, Capgemini, Tieto and Qliktech. The system is based on three critical components: Vision, Skills, Trust. Hence the name VST Methodology. Users of the system typically see a 250% - 650% increase in alliance sales within 12 months.
Using a systematic approach to alliance sales produces better results
Page 4
What is Alliance Best Practice (ABP)?
ABP is a benchmarking consultancy specialising in B2B strategic alliances
Alliance Best Practice
Alliance best practices are those actions that research has shown lead to optimal alliance results
ABP is a group of over 20 international alliance experts able to cover the world and work in multiple languages
ABP is dedicated to: discovering, developing and disseminating best practices for its clients
It does this through the ABP Database (ABPDBTM)
Page 5
Alliance Best Practices Exist
Best Practice approach is recognised in General Management theory - goes hand in hand with quality and benchmarking.
ABP has examined 27,000 international collaborative relationships from around the world.
We found factors which appeared consistently in successful strategic alliances (CSFs).
Research
Critical Success Factors (CSFs) - ‘Those practices, principles, procedures, behaviours or factors which appear in successful strategic alliances in a statistically relevant manner’.
Tested the concepts with over 300 companies since 2002 (ongoing).
Research findings regularly validated.
Validation
Identified alliance best practices and CSFs are lodged in the ABP database.
The ABP database currently holds over 180,000 observations of these CSFs in practice.
Research shows overwhelmingly that doing the right things (best practices) produces the right results (more value / revenue).
Implications
ABP has investigated over 27,000 alliances to identify success factors
Partner ‘Intimacy’ Spectrum
Commodity Price Interchangeable Product Highly specified deliverables Buy from and sell to
Shared risks & investment Deeply integrated Mutually interdependent Breakthrough market value
Some customization Flexibility/levels of service Special knowledge Buy from, sell to and sell with (GTM together)
Customized/ individualized Process & data integration Solutions oriented Greater cost value leverage
0 Sell To 25 Sell On 50 Sell Through 75 Sell With 100
Both partners need to define the type of partnership. Low Score generally indicates low ‘business intimacy’.
Low Value
High Value
Low Intimacy
High Intimacy
Page 6
Page 7
Commercial Technical Strategic Cultural Operational
Co1 Business Value Proposition (BVP)
Co2 Due Diligence
Co3 Optimum Legal / Business Structure
Co4 Alliance Audit
Co5 Key metrics
Co6 Alliance reward system
Co7 Commercial cost
Co8 Commercial benefit
Co9 Process for negotiation
Co10 Expected Cost value ratio
T11 Valuation of assets
T12 Partner company market position
T13 Host company market position
T14 Market fit of proposed solution
T15 Product fit with partners offerings
T16 Identified mutual needs in the relationship
T17 Process for team problem solving
T18 Shared Control
T19 Partner accountability
S20 Shared objectives
S21 Relationship Scope
S22 Tactical and strategic risk
S23 Risk sharing
S24 Exit strategies
S25 Senior executive support
S26 B2B Strategic alignment
S27 Fit with strategic business path
S28 Other relationships with same partner
S29 Common strategic ground rules
S30 Common vision
Cu31 Business to business trust
Cu32 Collaborative corporate mindset
Cu33 Collaboration skills
Cu34 Dedicated alliance manager
Cu35 Alliance centre of excellence
Cu36 Decision making process
Cu37 Other cultural issues
Cu38 B2B Cultural Alignment
O39 Alliance process
O40 Speed of progress
O41 Revenue flow
O42 Business plan
O43 Communication
O44 Health check
O45 Alliance charter
O46 Change mgt.
O47 Operational metrics
O48 Operational alignment
O49 Exponential breakthroughs
O50 Internal alignment
O51 Project plan
O52 Issue escalation
Critical Success Factors
There are currently 52 CSFs in 5 categories
Page 8
Connection Between ABP and VST Model
VISION : S30 - Is there a common vision of the strategic intent of this relationship?
STRATEGY : O45 - Does a relationship strategy document exist?
SENIOR EXEC SUPPORT : S25 - What support is there from senior executives in the business for this relationship?
Vision
ALLIANCE PROCESS : O39 - Do you have a defined alliance process?
PRODUCT / SERVICE SKILLS : T14 & T15 – Do both sides know how to: sell, implement, and maintain the products / services for the client?
COMMUNICATION : O43 - What elements of communication are present?
Skills
TRUST : Cu31 - What is the degree of trust in the relationship?
DECISION MAKING : Cu36 - How long is the decision making process in your partner’s organisation? And how does this compare with decision making in your organisation?
CULTURE : Cu38 What degree of B2B cultural alignment exists?
Trust
The VST methodology is a simplified version of the full ABP framework
Page 9
Commercial Results Closely Follow Best Practice Scores
There is a clear relationship between VST score and increased value
Higher VST Score = Higher Value
The chart opposite shows examples from the database of Software and SI alliances.
ABP has been collecting data since 2002.
In that time a clear trend has emerged ‘proving’ the effectiveness of the VST Methodology.
Annual benchmarking is crucial to success.
Resetting the strategic direction annually is important.
15 19
27 29
36
41
50
28
39
49 48
65 61
71
0
10
20
30
40
50
60
70
80
2004 2005 2006 2007 2008 2009 2010
The columns show average ABP scores The Line shows average commercial return
Category Vision Skills Trust
Purpose To create a Vision and a strategy for the relationship.
To develop the skills and knowledge needed by both / all partners for success.
To grow the relationship effectively over time.
Objectives Agree partnership type Agree partnership scope Identify key stakeholders Agree current (baseline) Develop Business Value Propositions (BVPs) Document the vision and strategy for the partnership.
• Agree a go to market (GTM) plan. • Improve both / all teams
collaboration skills. • Develop governance model • Develop communication
programme • Achieve a high degree of internal
and B2B alignment. • Train all partners appropriately on
the chosen products and services of the BVPs.
• Increase the degree of organisational trust between all parties
• Deliver BVPs to time and quality • Increase the number and type of BVPs
sold. • Secure investment funding and
executive support for the partnership from both / all partners.
• Identify and eradicate cultural barriers to progress
• Monitor and manage progress to key performance indicators (KPIs)
Critical Success Factors (CSFs)
Common Vision Formal Business Plan Alliance Process MOUP
Collaboration Skills Communication Internal alignment B2B Operational alignment
Trust (B2B) Cultural alignment Senior Executive Support Operational Metrics
Outputs Scope statement List of key stakeholders Initial relationship value Go / No go decision Partnering readiness assessment
Joint go to market (GTM) plan Governance model Communication programme Training plan Skills gap analysis report and action plan for remediation
Relationship development plan Alliance balanced scorecard Change management plan. Annual relationship strategy review BVP innovation process
The VST Methodology Overview
Page 10
Page 11
The VST Methodology in Action
Customer was Banco Pastor a large retail bank in Spain.
The partners were IBM Software and Accenture. The relationship impressed the bank the most (out of 19 other offerings).
Capgemini implemented the Partner Networks Cloud-Ready Data Centre Solution.
The result for the client was improved networking capability whilst reducing cost.
TCV = €3.4 million
Case 1 - VST 88
Customer was Siemens in Germany. The partners were Capgemini and Oracle.
Project was implementation of a high availability data center interconnection system.
"It (this project) couldn't have been delivered alone. I am really pleased about the quality of cooperation with our partner.” Maciej Wardaszko (Corporate Managed Account Director Capgemini).
TCV = €6.5 million
Case 2 - VST 84
The client was Nokia in Finland.
The partners were Tieto and Microsoft.
Both had struggled to make any headway with the key account.
Both were facing ‘meltdown’ and removal from the account.
By combining offerings and working together they managed to stay in the account and increase account revenue.
TCV = €3.2 million
Case 3 - VST 87
In all three cases a high VST score = high commercial return
SAP + SIs Extended Case Study (Extract)
Partner Country Diagnostic
Stage Base (€m) New Action
Accenture UK Y/Y 2.3 €6.0 €14.3 Roll out BVP
Capgemini Nordics Y/Y 2.2 €4.3 €9.2 Develop BVP
IBM Benelux Y 1.4 €8.6 €18.5 Conduct workshop
Atos France Y/Y 3.2 €2.6 €5.3 Track progress
Logica South Africa Y/Y 3.3 €2.4 €5.8 Track progress
BDO Unicom
DACH Y 1.3 €1.1 €3.5 Conduct workshop
Ciber Novasoft
Russia Y/Y 3.3 €0.75 €2.4 Review BVP
Bearing Point
Germany Y/Y 2.3 €3.1 €4.8 Develop BVP
Frontworx Austria Y/Y 3.0 €0.80 €1.2 Renew SE support
Totals €29.65 €65.0 Page 12
Page 13
Recomendations
Results showed that VST = Better Relationship and Commercial Results
Recommendation : Adopt the VST Model in multiple countries with multiple partners.
In country alliance managers and salesmen are not aware of VST.
Recommendation: conduct a training campaign with partners to demonstrate value of VST.
The VST approach is not suitable for all partners. Just the more advanced.
Recommendation: Benchmark partners to choose potential pilots.
Following a VST approach gives tangible successful results consistently
Further Details
For further details please contact;
Mike Nevin
Managing Partner
Alliance Best Practice Ltd
Web: www.alliancebestpractice.com
Office: +44 (0)1675 442490
Mobile: +44 (0)7766 752350
E Mail: [email protected]