VST briefing pack for senior executives version 3 0

VST© Briefing Pack for Senior Executives

Mike Nevin

Managing Director Alliance Best Practice

VST© Methodology Briefing Pack Contents

The VST© methodology delivers increased alliance sales within 12 months

Executive Summary

Introduction to alliance best practices

Connection between alliance best practices and VST© methodology

The components of the VST© methodology

Comparison of three case studies using the VST© methodology

1 2 3 4 5

Implications of the case studies and the VST© research

Research recomendations

Next steps

6 7 8

Executive Summary

Companies use formal methodologies in direct sales with great results.

Indirect sales are becoming increasingly important to high tech companies (whether hardware, software or services).

A very important indirect sale route is an alliance or even a strategic alliance.

Until now there has not been a formal and standard strategic alliance sales system that companies could use.

ABP has now developed such a system by observing and documenting over 100 high tech strategic alliances.

The system has been used by: IBM, HP, Oracle, SAP. Microsoft, Capgemini, Logica, Atos, Tieto, VMware, Pegasystems, NextiraOne, CA Technologies, 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

What is Alliance Best Practice (ABP)?

ABP is a benchmarking consultancy specialising in strategic alliances

Alliance Best Practice

Alliance best practices are those actions that research has shown lead to optimal alliance results. ABP is a research group dedicated

to helping its clients achive greater value from its collaborative relationships. ABP is dedicated to: discovering,

developing and disseminating best practices for its clients. It does this through the ABP

Database (ABPDBTM).

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 Collaboration 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 Collaboration

High Collaboration

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

Connection Between ABP and VST© Model

VISION: - Is there a common vision of the strategic intent of this relationship?

JOINT BUSINESS PLAN: - Does a joint business plan exist?

ALLIANCE PROCESS: – Is there an agreed partnering process?

MOUP: - Is there a Memorandum of Understanding and Principles in place?

Vision

COLLABORATION SKILLS: - Do the necessary partnering skills exist?

COMMUNICATION: - have the communication processes been set up?

INTERNAL ALIGNMENT: - Is there a high degree of internal alignment.

OPERATIONAL ALIGNMENT: - Are the two operational teams aligned?

Skills

TRUST: - Is there a high degree of trust in the relationship?

CULTURAL ALIGNMENT: - Are the two companies culturally aligned?

SENIOR EXECUTIVE SUPPORT: - Is there a high degree of senior executive support?

OPERATIONAL METRICS: - Are we measuring the right things for success?

Trust

The VST© methodology is a simplified version of the full ABP framework

Stages in the VST© Methodology

1. Vision 1. Benchmarking – Is the relationship capable of improvement and would it be worth the

effort? 2. MOUP – Assuming it is improvable and worth the effort what is the Vision of the

relationship as described in a Memorandum of Understanding and Principles?

2. Skills 3. Planning – How will we jointly execute on the agreed vision? What tasks and activities

do we need to undertake and in what order? 4. Skills Training – What additional skills will the teams on both / all sides of the

relationship need and how will they be coached?

3. Trust 5. Growth – How can we grow the relationship quickly and effectively over time? 6. Monitoring – How will we keep track of progress and adjust actions to accommodate

changes?

VST© = Vision Skills and Trust and has 6 Stages in 3 phases as follows:

Commercial Results Closely Follow Best Practice Scores

There is a clear relationship between VST© scores and increased value

Higher VST© Score = Higher Value

The chart opposite shows examples from the database of High Tech 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 VST© scores The Line shows average commercial return

The VST© Methodology in Action

Customer was a large retail bank in Spain.

The IBM : Partner relationship impressed the bank the most.

IBM GTS implemented the Partner Networks Cloud-Ready Data Centre Solution.

Result was improved networking capability whilst reducing cost.

TCV = €1.9 million

TCV = Total Contract Value

Case 1 - VST© 88

Customer was a global financial services company in Poland. IBM’s global Alliance Partner was an Optical Networking company.

Project was implementation of a high availability data center interconnection system.

"It (this project) couldn't have been done without support from the partner, I am really pleased about the quality of cooperation with our partner."

Maciej Wardaszko (Territory Sales Leader IBM Poland)


Case 2 - VST© 84

The client was a Pharmaceuticals conglomerate in Switzerland

Both IBM and the Partner had struggled to make any progress with the client alone.

Both were facing ‘meltdown’ and removal from the account.

By combining offerings and working together they managed to: Stay in the account Grow account revenue Turn the account round


Case 3 - VST© 87

In all three cases a high VST© score = high commercial return

Sample of VST© Case Studies in High Tech

Average increase in the database is 250% - 650%

Client Partner Target Increase

Capgemini IBM $19m $51.3

Unisys Lenovo $4m $6

Capgemini Microsoft $230m $782

Cognos IBM $23m $69

Cognos IBM €12m €42

Oracle IBM €6m €22.8

BT 8 Partners £150m £480

Micro Focus Accenture £3.5m £17.01

Siemens AG PwC €4m €16.2

APC IBM $3m $7.98

Total 454.5m 1494.29m

Client Partner Target Increase

Chordiant IBM $16m $80m

Capgemini HP €34m €61.2m

Capgemini Oracle $18m $82.8m

Siebel IBM $900m $1044m

Unisys EMC €13m €18.59m

BT Fujitsu £12m £15.24m

SAP 32 Partners €65m €152m

HP StorageTek £26m £41.6m

BT Cisco £5m £30m

Alcatel BT £4m £7.6m

Total 1438m 1975.53m

Recomendations

Results showed that VST© = Better Relationship and Higher Commercial Returns

Recommendation : Adopt the VST© Model in multiple countries with multiple partners.

‘In country’ alliance managers and salesmen are typically 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]

VST briefing pack for senior executives version 3 0

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