Small Business Insights: Strategic Teaming in a Competitive Federal Market

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Small Business Insights: Strategic Teaming in a Competitive Federal Market

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This report will help federal IT contractors understand the spectrum of teaming relationships and the factors affecting the current teaming environment in the federal market and identify internal......

This report will help federal IT contractors understand the spectrum of teaming relationships and the factors affecting the current teaming environment in the federal market and identify internal and external applications of strategic teaming and how these may benefit an organization. In addition, the report covers the critical success factors for utilizing strategic teaming as a growth facilitator and educates the reader on how to gain understanding of the federal government’s perspective on strategic teaming and their priorities and concerns.

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  • 1. March 2014 Strategic Teaming in a Competitive Federal Market
  • 2. ©2014 Deltek, Inc. All Rights Reserved Copyright Statement 2 Published by: Deltek 2291 Wood Oak Drive Herndon, VA 20171 © 2014 Deltek, Inc. All Rights Reserved. Printed in the United States. The information provided in this report shall be used only by the employees of and within the current corporate structure of Deltek’s clients, and will not be disclosed to any other organization or person including parent, subsidiary, or affiliated organization without prior written consent of Deltek. No part of the publication may be reproduced or distributed in any form, or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher. Deltek exercises its best efforts in preparation of the information provided in this report and believes the information contained herein to be accurate. However, Deltek shall have no liability for any loss or expense that may result from incompleteness or inaccuracy of the information provided.
  • 3. ©2014 Deltek, Inc. All Rights Reserved Table of Contents 3  Introduction  Purpose of This Report  Key Findings  Teaming for Growth • Spectrum of Teaming Relationships • Strategic Teaming and its Benefits  Environmental Drivers for Teaming  Critical Success Factors of Strategic Teaming  Government Perspective  Conclusions and Recommendations
  • 4. Introduction 4
  • 5. ©2014 Deltek, Inc. All Rights Reserved5 Purpose of This Report This report will help federal IT contractors:  Understand the spectrum of teaming relationships and the factors affecting the current teaming environment in the federal market.  Identify internal and external applications of strategic teaming and how these may benefit an organization.  Understand the critical success factors for utilizing strategic teaming as a growth facilitator.  Gain understanding of the federal government’s perspective on strategic teaming and their priorities and concerns.  Consider factors to successful teaming to increase Small Business utilization.
  • 6. ©2014 Deltek, Inc. All Rights Reserved6 Key Findings  Of the various types of partner relationships available to contractors opportunity-based and strategic teaming arrangements provide some of the most wide-ranging benefits in today’s federal marketplace.  Strategic teaming is an internal business tool that integrates long-term thinking into opportunistic activities as well as an external relationship tool where two complementary services providers proactively seek opportunities of mutual benefit.  Critical success factors for strategic teaming includes top-to-bottom buy-in across the firm; strategic thinking that is implemented at the sales process level; a formal process for evaluating partners that uses institutional knowledge; corporate self-reflection to evaluate your value to potential partners; and pre- and post-engagement analysis to determine fit and effectiveness.  Federal spending trends like increased use of GWACs, MACs and Schedules, and tightening contractor addressable budgets make strategic teaming more crucial in the current market environment.
  • 7. Teaming for Growth 7
  • 8. ©2014 Deltek, Inc. All Rights Reserved Spectrum of Teaming Relationships 8 Merger/ Acquisition Strategic SourcingAllianceChannel Joint Ventures & Consortia Low Partner Commitment High Partner Commitment Ad hoc, Opportunity- based An arrangement between two or more companies to perform on a specific contract. Strategic Teaming A long-term partnership developed to pursue multiple opportunities. Benefits of opportunity-based and strategic teaming include:  Trust- and relationship-building, along with management and administration streamlining of long- term contractual arrangements without the formality of lengthy legal agreements.  Better flexibility than joint ventures and consortia.  A lower-cost, -visibility, and -risk alternative to M&A.  Alignment with the government’s view of teaming as a means for accessing the “best of the best.” Opportunity-based and strategic teaming arrangements provide wide-ranging benefits to the majority of contractors in today’s federal marketplace.
  • 9. ©2014 Deltek, Inc. All Rights Reserved9 Strategic Teaming is… A long-term partnership developed to pursue multiple opportunities An internal business tool  The integration of long- term thinking into opportunistic activities  …for actively mapping strong partners to market opportunities to leverage past mutual success An external relationship tool  A non-contractual agreement between two complementary services providers  …for proactively seeking opportunities of mutual benefit
  • 10. ©2014 Deltek, Inc. All Rights Reserved Strategic Teaming is… 10 An internal business tool  The integration of long- term thinking into opportunistic activities  …for actively mapping strong partners to market opportunities to leverage past mutual success  A top-100 services firm formed a strategic subcontractor team  Centralizing collection and dissemination of subcontractor data  Established plans to spread success stories from good partners out to capture teams
  • 11. ©2014 Deltek, Inc. All Rights Reserved Strategic Teaming is… 11  A mid-tier SI uses a few, carefully- chosen strategic subcontractors  Team pro-actively looks for opportunities based on best partners’ differentiators – not only the other way around  Shared pipeline allows partners to take part in the process An external relationship tool  A non-contractual agreement between two complementary services providers  …for proactively seeking opportunities of mutual benefit
  • 12. ©2014 Deltek, Inc. All Rights Reserved Know the Difference 12  ….a contractual channel strategy for the better management of the supply chain  ….an alliance partnership between a services company and commodity provider  ….an exclusivity agreement for services or products  …. a “tell all and show all,” high-risk partner relationship  ….a commitment that lasts beyond the recognized mutual benefit of both parties Strategic Teaming is not ...
  • 13. Environmental Drivers for Teaming 13
  • 14. ©2014 Deltek, Inc. All Rights Reserved14 FY 2014 Contractor Addressable Budget by Segment Points to Tighter Competition Declining contract spending makes it more crucial to be on the right contracts to be competitive in this market.
  • 15. ©2014 Deltek, Inc. All Rights Reserved15 Greater Use of GWACs, MACs and Schedules Favors Broad Capabilities MAC, GWAC, and Schedule use account for 60%+ of contracts, requiring primes to plan for broad scopes rather than for narrowly-defined specifications. This drives teaming demands. Source: FPDS, Deltek
  • 16. ©2014 Deltek, Inc. All Rights Reserved16 Importance of Teaming in the Federal Market Source: FPDS, Deltek Estimate of Small Business Subcontracting Goal for Large Primes Large primes pursuing government-established subcontracting goals may present teaming opportunities for small business. Subcontracting is at least as big as the market to compete for work directly with the government.
  • 17. ©2014 Deltek, Inc. All Rights Reserved17 Impact of Market Changes on Company Prime Contract Revenue Growth Note: Excludes companies that did not generate at least $1M annually in prime contract revenue between 2008-2012 Source: USASpending.gov and Deltek Teaming may bring chances for Small Businesses to prime more.
  • 18. Critical Success Factors of Strategic Teaming 18
  • 19. ©2014 Deltek, Inc. All Rights Reserved Critical Success Factors of Strategic Teaming 19 Top-to-Bottom Buy-in Playing the Matchmaker Strategic Thinking + Sales Process = Long-term Wins Self-Reflection Pre- and Post- Game Analysis Companies that succeed in developing, maintaining, and leveraging strategic teaming relationships share several common characteristics.
  • 20. ©2014 Deltek, Inc. All Rights Reserved20 Critical Success Factors Top to Bottom Buy-In Top leaders set the teaming agenda, but ultimately it ripples throughout to drive what’s best for the customer. Taking a strategic approach to teaming requires involvement from all levels of the organization. Management builds rapport with partner counterparts and encourages peer relationship- building at all levels of the company. Top-to- Bottom Buy- in
  • 21. ©2014 Deltek, Inc. All Rights Reserved Critical Success Factors Strategic Thinking + Sales Process = Long-term Wins 21 Strategic Thinking + Sales Process The sales funnel is kept filled, but the sales force is incentivized to think strategically Sales metrics are constantly reviewed Long-term customer assessments are ongoing throughout the sales cycle and implementation
  • 22. ©2014 Deltek, Inc. All Rights Reserved Critical Success Factors Playing the Matchmaker 22 Playing the Matchmaker Use the Data Use a formal process for evaluating partners Do extensive due diligence Create clear and user-friendly processes for receiving and collecting data Integrate the Strategy Go narrow and deep in partnerships Consider partners’ unique capabilities can be used further down the pipeline Evaluate the potential for technology sharing, joint solution development, etc. for opportunities far down the pipeline Match the partner contract structure to the customer contract structure Keep an Open Mind
  • 23. ©2014 Deltek, Inc. All Rights Reserved Critical Success Factors Self-Reflection 23 Self- Reflection How well did you articulate your value proposition to your partner and yourself? Not only helps in the development of team “message” that will be consistently communicated to your customers, but… There may be a strong partner who does something great that your organization does well. Why would a company want to partner with you? What do you bring to the table that your competitors can’t?
  • 24. ©2014 Deltek, Inc. All Rights Reserved Critical Success Factors Pre- and Post-Game Analysis 24 Pre- and Post-Game Analysis Perform honest and detailed post-mortem evaluations: How well did the relationship work? How well did we meet the needs of the customer? Are any strategy changes are warranted? Decide before work begins how you will measure success, e.g. ROI, customer satisfaction, etc. Determine a shared set of expectations with partners before the real work begins
  • 25. ©2014 Deltek, Inc. All Rights Reserved25 How Strategic Teaming Mitigates Risk Partner’s Finances Developing joint pipeline targets, sharing risk, and providing business planning assistance. Management/Governance Providing the opportunity to fine-tune the governance model over time while building up a past performance history. Financial Performance Requiring long range planning that could eliminate issues affecting performance, and therefore financial gain. Partner Mgmt Change Developing relationships at all levels of the organization. Changes in Company Strategy Ensuring that strategic relationships are part of the discussion when a company is considering changing tactic. Culture clash Presenting opportunities to adjust to cultural differences.
  • 26. ©2014 Deltek, Inc. All Rights Reserved Consider Company Culture 26 Diversity can make partnerships unique, IF there’s unity and adaptability! Would we feel good about being a prime or a sub to this partner? Would we feel good about sending our people to work for them? Are they talking more than listening? Are they touting too many “core” competencies? Are they unfocused, e.g., and willing to do something for everyone? Are they generally difficult during negotiations? What is their staff retention? Do people like working for them? Organizational cultures strongly impact strategic teaming. They can solidify a newly formed team or impede how well the team performs together. Consider the following and other factors to determine if a culture clash is imminent.
  • 27. Government Perspective on Strategic Teaming 27
  • 28. ©2014 Deltek, Inc. All Rights Reserved Evaluating Teams: Will They Help or Hurt? 28 Government decision makers evaluating contract proposals operate in a complex environment.  Rapidly changing missions and technologies translate into project requirements that are increasingly complicated and difficult to define or measure. • Agile methods and modular development seek to address this.  Short supply of acquisition professionals means greater workloads, increased risk, and demand for simplified acquisitions. • Growth in LPTA is one ramification. Agencies may ask particular questions that relate to teaming, but companies need to be savvy enough to perceive what they are trying to learn from those questions.
  • 29. ©2014 Deltek, Inc. All Rights Reserved Agency Needs May Get Lost in Translation 29 Have you worked together before? Government Asks: What Government Really Wants to Know Am I going to be the tactical integrator of this team? How do I know that I’ll be able to acquire the knowledge that I’m buying from your team? Agency Concerns  Teams with limited history may create more work for agencies in terms of reporting and oversight.  They want to gain knowledge from their relationship with suppliers. Transparency among teaming partners often leads to greater knowledge sharing with agency clients.
  • 30. ©2014 Deltek, Inc. All Rights Reserved Lost in Translation, cont. 30 Do you know my business? Government Asks: Do you know my problem and what it means for me to be successful? What Government Really Wants to Know Agency Concerns  They want vendors to value their public service and support them in being successful.  Competing or misaligned incentives between government and industry will translate into conflict.  They need this team choice to reflect positively during procurement or project reviews.
  • 31. ©2014 Deltek, Inc. All Rights Reserved31 Agency Small Business Preference is a Strategic Teaming Opportunity Government values diversity in the acquisition environment, making Small Business utilization a priority. Medium and large firms that focus on small business teaming are able to increase sales and diversity simultaneously. Success Factors in Small Business Teaming Drive the directive for strategic teaming to be integrated into ALL relevant areas of the organization, but with an emphasis in sales. Proactively support the drive for raising the profile of Small Business teaming to one of strategic importance. Provide the necessary resources to expand the Small Business program role beyond procurement into more of a business development role. Match sales representatives with Small Businesses that can help them to win new awards, thereby benefiting the parent firm and their Small Business partners. Emphasize the importance of Small Business utilization as a strategic tool in order to spread its priority throughout the organization.
  • 32. Conclusions and Recommendations 32
  • 33. ©2014 Deltek, Inc. All Rights Reserved Conclusions 33  Strategic teaming improves competitiveness by… • Turning a strong relationship into a competitive advantage for both partners • Creating opportunity to add unique expertise and innovation • Attracting customers looking for vendors with an established history • Improving outcomes  Enhance scoring  Boost win probability  Increase closure rates  Implementing strategic teaming in a proactive, thoughtful manner helps sustain market potential in a changing market  Strategic teaming is increasing in importance to small businesses and to agencies looking to increase their use
  • 34. ©2014 Deltek, Inc. All Rights Reserved Recommendations 34  Think strategically while acting tactically by aligning strategies and processes across the organization  Consider new processes for evaluating partners against your strategic goals  Take culture into account without stifling diversity and innovation  Look for ways to leverage ad hoc teaming into strategic benefit for all involved  Remember that sales teams need the right incentives to think and perform strategically  Use strategic teaming to test the compatibility and capabilities of a company you are considering for acquisition
  • 35. ©2014 Deltek, Inc. All Rights Reserved35 About Federal Industry Analysis (FIA) Small Business Insights: Strategic Teaming in a Competitive Federal Market is published by Deltek’s Federal Industry Analysis team. Its analysts harness Deltek’s wealth of data, interviews with government and industry decision makers, and other strategic resources to provide a comprehensive view of the federal IT marketplace and the trends, drivers, priorities, budgets and legislative issues influencing it. With a top‐down perspective on all of Deltek’s information and analysis capabilities and resources, FIA is able to provide broad, long‐range strategic insight on the federal contracting industry and its various sectors that focus on technology. Deltek’s analysis focuses on market trends and drivers, policy/legislation impact, agency budgets and priorities, market sizing, the competitor landscape and market forecasts. Our goal is to help your company achieve its peak potential by preparing you for future market trends. About GovWin GovWin from Deltek is the essential source for information, teaming and software solutions to help organizations find, manage and win government business. More than 2,800 companies, including small businesses, new entrants to the public sector, and the largest government contractors, rely on GovWin for the latest and most comprehensive information solutions, including market intelligence, consulting, sales management tools, teaming solutions, and educational and networking events. Deltek is the leading global provider of enterprise software and information solutions for government contractors and professional services firms. For decades, Deltek has delivered actionable insight that empowers our customers to unlock their business potential. Over 14,500 organizations in approximately 80 countries around the world use Deltek to research and identify opportunities, win new business, optimize resources, streamline operations, and deliver profitable projects. Get started today at GovWin.com. Deltek – Know more. Do more.® www.deltek.com.
  • 36. GovWin IQ www.iq.govwin.com