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
Int...
Page 3
Executive Summary
Companies use formal methodologies in direct sales with great
results.
Indirect sales are becomin...
Page 4
What is Alliance Best Practice (ABP)?
ABP is a benchmarking consultancy specialising in B2B strategic alliances
All...
Page 5
Alliance Best Practices Exist
Best Practice approach is
recognised in General
Management theory -
goes hand in hand...
Partner ‘Intimacy’ Spectrum
Commodity Price
Interchangeable
Product
Highly specified
deliverables
Buy from and sell
to
Sha...
Page 7
Commercial Technical Strategic Cultural Operational
Co1 Business Value
Proposition (BVP)
Co2 Due Diligence
Co3 Opti...
Page 8
Connection Between ABP and VST Model
VISION : S30 - Is there a
common vision of the
strategic intent of this
relati...
Page 9
Commercial Results Closely Follow Best
Practice Scores
There is a clear relationship between VST score and increase...
Category Vision Skills Trust
Purpose To create a Vision and a
strategy for the relationship.
To develop the skills and kno...
Page 11
The VST Methodology in Action
Customer was Banco Pastor
a large retail bank in Spain.
The partners were IBM
Softwa...
SAP + SIs Extended Case Study (Extract)
Partner Country Diagnosti
c
Stage Base (€m) New Action
Accenture UK Y/Y 2.3 €6.0 €...
Page 13
Recomendations
Results showed that VST
= Better Relationship and
Commercial Results
Recommendation :
Adopt the VST...
Further Details
For further details please contact;
Mike Nevin
Managing Partner
Alliance Best Practice Ltd
Web: www.allian...
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VST Alliance Sales Methodology

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VST Alliance Sales Methodology

  1. 1. Explaining the VST Alliance Sales Methodology Mike Nevin Managing Director Alliance Best Practice
  2. 2. 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
  3. 3. 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
  4. 4. 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)
  5. 5. 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
  6. 6. 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
  7. 7. 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
  8. 8. 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
  9. 9. 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
  10. 10. 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
  11. 11. 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
  12. 12. SAP + SIs Extended Case Study (Extract) Partner Country Diagnosti c 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
  13. 13. 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
  14. 14. 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: mike.nevin@alliancebestpractice.com

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