VST briefing pack for senior executives version 3 0


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A simple briefing pack to explain to Alliance executives why the VST Alliance sales System is a valuable approach. Includes case studies to show value achieved by using the system

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VST briefing pack for senior executives version 3 0

  1. 1. VST© Briefing Pack for Senior Executives Mike Nevin Managing Director Alliance Best Practice
  2. 2. Page  2 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
  3. 3. Page  3 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
  4. 4. Page  4 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).
  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 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 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: - 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?  INTERNALALIGNMENT: - 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?  CULTURALALIGNMENT: - 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
  9. 9. 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? Page  9 VST© = Vision Skills and Trust and has 6 Stages in 3 phases as follows:
  10. 10. Page  10 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
  11. 11. Page  11 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)  TCV = €2.3 million 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  TCV = €2.8 million Case 3 - VST© 87 In all three cases a high VST© score = high commercial return
  12. 12. Page  12 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
  13. 13. Page  13 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
  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