rsmba at kearney nitin

Strategic Restructuring

© 2005 RSMBA

RSMBA

GSG Back to double digit growth RSMBA TeamNitin GoelGuido CazemierBas HazelzetTzung-Min Hung

Strategic Restructuring RSMBA

2

Products

Sales Process

Customers

Partners

Revenue

ChallengesCurrent Situation Solution Approach

Decreasing growth

Decline of share price

Situation Analysis Slowdown due to lack of new market focus and integration

Unsatisfied

No explicit policy

Unsatisfied

Mostly enterprise

Ad hoc sales

Increased competition

Product oriented

Improve partnerships

Develop and implement new customer strategy

Understand customer industry

Industry customization

Solution oriented products

Identify growth areas

Understand customer

Recruit, motivate, support and reward

partners

Back to double digit growth

Identify focus segments

Explore new markets

Solution selling

Educate sales force

Company Analysis Revised Strategy Organization Financial Impact Risk Mitigation Time Line


3

Revised Strategy for GSGIncrease share priceVision

Increase revenue growth to double digitsBusinessObjective

Proposition Focus on customer segments with low competition and high growth potential

Strategy

Organizational restructuring

Partners/Alliances

Industry expertiseSolution selling

Be the first to enter low competition and high growth

market

Dual FocusSegment focus: SB & Mid-Market

Product focus: Solutions

Method

Expected outcome

Aggressive growth in SB & Mid-Market segment

25 % share in SB segment in 2009

20 % share in SB ERP in 2009

Increased employee and customer satisfaction

Increased sales and new accounts

Growth in all

segments



4

Segment Focus : Grow in Small Business SegmentSB market is big, fast growing with increasing IT needs

6,20%

12,90%

18,30%

62,50%

0% 10% 20% 30% 40% 50% 60% 70%

Consumer

Small Business

Mid-Market

Enterprise

Revenue weight by customer segment


15,30%

18,80%

-15,50%

-3,60%

-20% -15% -10% -5% 0% 5% 10% 15% 20%

Consumer

Small Business

Mid-Market

Enterprise

Companies maturing their SB strategy will also be able to master their mid-market strategy (mix enterprise and SB strategies)

Revenue-weight and growth rate of GSG total revenue, FY 2004

Growth rateGrowth rate

GSG over relies on “Enterprise” segment which drives growth slowdown

Focus on growth marketSmall Business and Mid-Market

Focus on growth marketSmall Business and Mid-Market

Low Competition: companies have enterprise strategies but lack SB

strategiesGSG development toward SB would

allow company to focus on SB & Mid-Market



5

Prioritization in Small Business segmentPrioritize SB industries on basis of potential and sales effort

Manufacturing

Telecom and UtilitiesTransportation

Distribution (wholesale)

Distribution (retail)

Financial Service (Finance and Insurance)

Food and Accommodations Services

Health Care

Total industry IT spend (billions $USD)

Estimated size of IT spend per company (millions $USD)

Average size per company = $5.94m

Average potential per industry = $3.57B

- First target area with both a high industry and a single company potential

- Following are area and areas, with a single high factor

- Strategic Alignment: GSG core competence & major SB Market, i.e. Financial Services

- Set Business Services, Manufacturing, Financial Services and Telco verticals as priority

Low Priority High

Business Service

0

1

2

3

4

5

6

7

8

30 40 50


Agriculture and Resources

Construction

Financial Service (Real Estate and other)

Other Services

GovernmentEducation

0 10 20

Source: Small Business IT send by industry vertical


6

Product Focus : Grow in SolutionsOpportunities in ERP/CRM market

Total ERP market is $15 billion

SB ERP market is $5.3 billion

GSG only has small share

Gaining industry insight is key to significant growth in the ERP market

Seize opportunity in SB CRM market (5%)

Drag along to Mid-Market

GSG should strive for significant SB ERP market share by 2009 (20%)

2,99%

2,99%

12,34%

67,87%

0% 10% 20% 30% 40% 50% 60% 70%

UDS

PP

BIS

BSS


Product CAGR (2001-2004)

Dual Focus UDS

PP

BIS

BSS

Enterprise Retain Grow

SB / Mid-Market GrowGrow

Agressively

Consumers Retain N/A

Industry standard product sales (UDS & PP) are stagnating in US

(saturated market)

BSS and BIS have shown significant growth

{

{

Long Term FocusFocus on solutions

Long Term FocusFocus on solutions


7

Key Success Factor: Partners!Partners are indispensable to reach SB and solutions market efficiently

- Channel strategy is key to reach wide range of Small Business customers

- Recruit and attract partners: System Integrators, Resellers, IHVs and ISVs

- Partners have Industry expertise and ensure integration of products (turnkey solutions)

- Establish partner organization in GSG to cover partner needs, strengthen partner relations, review performance

Account coverage Fulfullment Account types Discounts / incentives

GSG sales reps

Partners

GSG Sales reps

Partners

Installed Base

New

3% of order if channel fulfills

GSG sales reps

Partners

Joint sales approach

PartnersInstalled Base

New

35%

Industry best partner service

Partners

Aggressive huntingPartners

Installed Base

New

40%


Enterprise

Mid-market

Small Business

10-50 employees

>$50m

<$500m

>$500m

<$50m

Size

Intimacy

CRM matrix for partnersHigh potential partners with high intimacy “defend strategy”

High potential partners with low intimacy “gain strategy”

Low potential partners with high intimacy “develop strategy”

Low potential partners with low intimacy “observe strategy”



8

Partner Organization

Changes in GSG organization structure are necessary for increased partner focus, better industry knowledge, industry solutions and better service and support

Industry Solutions

Service & Support (CRM)

SB

Mktg/Sales

Enterprise

Mktg/Sales

Product

Marketing

Industry expertise

Analyse requirements

Complex sales

Industry expertise

Support sales/partners

Express products

Analyze customer &

partner requiements

Feedback

Technical interlock

Industry feedback

to development

Express products

Incentives/Discounts

Joint selling

Measure partners


Joint selling

Measure partners

Adequate feedback

& support

Analyze customer &

partner requirements

3 new

matrixed

divisio

ns


Industry focus is key to growth - Educate GSG Sales force- Recruit, nurture, reward partners- Provide turnkey industry solutions- Actively gather feedback from

customers and partners (CRM)


9

New Sales and Marketing Process for GSG

Product

Marketing

Enterprise

Sales

Enterprise

Customers

Partn

ers

SB

Mid-Market

Customers


Feedback

Support

CRM

Integrate product and service development, marketing, sales, partners and customer service

Cre

ate cus

tom

er cen

tric cu

lture

“Needs” analysis Know prospects and partners

Consumers

GSG

Partner

Org.

SB

Mid-Market

Sales


10

Sales Forecast by SegmentSet objective of reaching 25% of total SB market in 2009

44,2%

19,9%

28,5%

5,3%6,7%

15,0%

19,2%

59,1%

Key Factors and impacts- Invest in partners for Small Business- Revenue generated rapidly from SB- Mid-Market penetration following SB- Revenue growth results in share price increaseKey assumptions- Analysis focus on U.S. market- SB market remains 9% CAGR in 2009

Original forecast for FY 2007 (weight per segment)

New forecast for FY 2007 (weight per segment)

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

FY01 FY02 FY03 FY04 FY05 FY06 FY07

Enterprise Mid-market

Small Business Consumer

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09Source: GSG Finance; GSG US 3 year outlook forecast model Source: GSG Finance; RSMBA consultant

Small business segment becomes the growth engine

New forecast ($m)Original forecast ($m)


18% 57%


11

Sales Forecast by Product GroupsSet objective of reaching 20% of SB ERP market in 2009

Key Factors and impacts- ERP for SB market drives growth- Product Groups integration causes sales increase- Revenue growth results in share price increaseKey assumptions- Analysis focus on U.S. market- ERP belongs to BSS product group- SB ERP remains CAGR 8% during 2008-2009

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

FY01 FY02 FY03 FY04 FY05 FY06 FY07

BIS BSSPP UDS

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09

2,00%

8,70%

16,90%

8,00%6,80%

22,70%

0%

5%

10%

15%

20%

25%

FY 2005 FY 2006 FY 2007

Original forecast

New forecast

Source: GSG Finance; GSG US 3 year outlook forecast model Source: GSG Finance; RSMBA consultant

New forecast ($m)Original forecast ($m)

Back to double digit revenue growth in 2006



12

Risk MitigationRisk Rating Impact Mitigation Strategy

Customer centric culture is opposed by employees

MediumSolution based product

development and selling is in danger

Involve, motivate and reward employees on all levels

GSG has difficulty finding the key partners in SB market

HighSolution based product

development and selling is in danger

Focus on partner research and selection process and set up proper support and reward

structure

SB targeted market segments don’t develop as expected

MediumRevenue growth targets

might not be reached

Track market developments with partners and customers as

soon as strategy is implemented

Competition copies our model

MediumMarket shares from

forecast might not be reached

Integrate customers in organization through CRM

raising “step out” threshold

New entrants copy our model

LowMarket shares from

forecast might not be reached

Integrate customers in organization through CRM

raising “step out” threshold

Company Analysis Recommendation Company Strategy Organization Financial Impact Risk Migration Time Line


13

Proposed Actions / Timeline


2005 2006 2007 2008Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

OrganizationEstablish partner organization within GSGGrow and educate sales force on industry solutionsDevelop incentive schemes for partnersImplement CRM system - know customer/partnerDefine and execute account coverage (segments/(in)direct)

PartnersRecruit/incent partners (ISV, IHV, SI, resellers, ...)Review partner performance/statusActively gather partner feedback

ProductsDevelop/maintain Industry specific packagesActively gather customer feedbackDevelop express products for small bus. (1-4 employees)Integrate Business products for partners/customers

MarketsGrow in Small Business segment - Financial services, Business Services, Manufacturing - Healthcare, Retail, Distribution, Telco - All other industriesMidmarket segment (drag along with small business)Enterprise segment (industry focus)

Industry standard product enhancementsGrow Business products in all segments

moderate focusstrong focus


14

Conclusive Summary

Target market: focus on growth in Small Business SegmentSB market is big, fast growing with increasing IT needs

6,20%

12,90%

18,30%

62,50%

0% 10% 20% 30% 40% 50% 60% 70%

Consumer

Small Business

Midsize

Enterprise



15,30%

18,80%

-15,50%

-3,60%

-20% -15% -10% -5% 0% 5% 10% 15% 20%

Consumer

Small Business

Midsize

Enterprise


Segments growth rate and revenue-weight of GSG total revenue, FY 2004


GSG over relies on “Enterprise”segment which drives growth slowdown

Short Term Target SegmentsDual Focus: Enterprise and SBLong Term Target Segments

Focus on growth markets: SB & Mid-Market






Situation Analysis Strategy Targeting & Segmentation Organization Financial Impact Risk Mitigation Time Line

Target market: focus on growth in Small Business SegmentSB market is big, fast growing with increasing IT needs

6,20%

12,90%

18,30%

62,50%

0% 10% 20% 30% 40% 50% 60% 70%

Consumer

Small Business

Midsize

Enterprise



15,30%

18,80%

-15,50%

-3,60%

-20% -15% -10% -5% 0% 5% 10% 15% 20%

Consumer

Small Business

Midsize

Enterprise


Segments growth rate and revenue-weight of GSG total revenue, FY 2004


GSG over relies on “Enterprise”segment which drives growth slowdown









Key Success Factor: Partners!Partners are indispensable to reach SMB and solutions market efficiently


- Recruit and attract partners: System Integrators, Resellers and ISVs



Installed Base

New

Installed Base

New

Installed Base

New

Account types

40%


PartnersPartners

Aggressive hunting

35%


Partners

GSG sales reps

Partners



GSG Sales reps

Partners

GSG sales reps

Partners

Discounts / incentivesFulfullmentAccount coverage

Installed Base

New

Installed Base

New

Installed Base

New

Account types

40%


PartnersPartners

Aggressive hunting

35%


Partners

GSG sales reps

Partners



GSG Sales reps

Partners

GSG sales reps

Partners


Enterprise

Mid-market

Small Business

10-50 employees

>$50m

<$500m

>$500m

<$50m

Size

Intimacy






Key Success Factor: Partners!Partners are indispensable to reach SMB and solutions market efficiently


- Recruit and attract partners: System Integrators, Resellers and ISVs



Installed Base

New

Installed Base

New

Installed Base

New

Account types

40%


PartnersPartners

Aggressive hunting

35%


Partners

GSG sales reps

Partners



GSG Sales reps

Partners

GSG sales reps

Partners


Installed Base

New

Installed Base

New

Installed Base

New

Account types

40%


PartnersPartners

Aggressive hunting

35%


Partners

GSG sales reps

Partners



GSG Sales reps

Partners

GSG sales reps

Partners


Enterprise

Mid-market

Small Business

10-50 employees

>$50m

<$500m

>$500m

<$50m

Size

Intimacy








Industry Solutions


SB

Mktg/Sales

Enterprise

Mktg/Sales

Product

Marketing

Industry expertise


Complex sales

Industry expertise


Express products

Analyze customer &

partner requiements

Feedback

Technical interlock

Industry feedback

to development

Express products


Joint selling

Measure partners


Joint selling

Measure partners

Adequate feedback

& support

Analyze customer &


3 new

matrixed

divisio

ns






Industry Solutions


SB

Mktg/Sales

Enterprise

Mktg/Sales

Product

Marketing

Industry expertise


Complex sales

Industry expertise


Express products

Analyze customer &

partner requiements

Feedback

Technical interlock

Industry feedback

to development

Express products


Joint selling

Measure partners


Joint selling

Measure partners

Adequate feedback

& support

Analyze customer &


3 new

matrixed

divisio

ns





Product

Marketing

Enterprise

Sales

Enterprise

Customers

Partn

ers

SB

Mid-Market

Customers

Feedback

Support

CRM


Create cu

stom

er centric cu

lture


Consumers

GSG

Partner

Org.

SB

Mid-Market

Sales



Product

Marketing

Enterprise

Sales

Enterprise

Customers

Partn

ers

SB

Mid-Market

Customers

Feedback

Support

CRM


Create cu

stom

er centric cu

lture


Consumers

GSG

Partner

Org.

SB

Mid-Market

Sales


Small Business segmentSmall Business segment

Mid-Market segmentMid-Market segment

Strategic PartnersStrategic Partners

Partner OrganizationPartner Organization

SolutionsSolutionsService & Support - CRMService & Support - CRM

Culture & LeadershipCulture & LeadershipPartner/Customer SatisfactionPartner/Customer Satisfaction Employee SatisfactionEmployee Satisfaction

Product IntegrationProduct IntegrationGSGGSG

Back to double digit growth

2,00%

8,70%

16,90%

8,00%6,80%

22,70%

0%

5%

10%

15%

20%

25%

FY 2005 FY 2006 FY 2007

Original forecast

New forecast

Back to double digit revenue growth in 2006


16

Partner Development and ManagementEffective partner development can become an Entry Barrier

Size

Intimacy

Gain strategy- Critical improvement area

- Future growth source

- High visit frequency

Observe strategy- No special support

- Low visit frequency

- New partner survey and contact

- Customer data collection

Process of new partner recruitment and development

- Product training

- Solution integration support

- Develop high potential partners

- Eliminate unsuited partners

- Well interaction model built

- Entry barrier to competitor

CRM matrix for partners

Phase I:

Recruitment

Phase II:

Training

Phase III:

Integration

Phase IV:

Take Off

New partner

New partnerDefend strategy- Key partners

- Current major contribution source

- High visit frequency

Develop strategy- Help to develop business and

generate new customers

- Medium visit frequency


17

Sales Allocation by Segment

FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09SB potential 9.30 10.14 11.05 12.04 13.13 14.31GSG SB revenue 0.45 0.69 1.04 1.56 2.36 3.56GSG SB growth rate 51.0% 51.0% 51.0% 51.0% 51.0% 51.0%GSG market share 4.9% 6.8% 9.4% 13.0% 18.0% 24.9%

Enterprise 1,768.0 2,248.0 2,274.0 2,193.0 2,200.0 2,303.0 2,443.0 2,600.0 2,700.0Mid-market 592.0 642.0 762.0 644.0 709.0 900.0 1,200.0 1,600.0 1,950.0Small Business 338.0 350.0 382.0 454.0 685.5 1,035.2 1,563.1 2,360.3 3,564.0Consumer 217.0 292.0 190.0 219.0 230.0 258.0 290.0 320.0 350.0Total 2,915.0 3,532.0 3,608.0 3,510.0 3,824.5 4,496.2 5,496.1 6,880.3 8,564.0

Segment View

New Revenue Forecast for FY05 to FY09 ($MM)


18

Sales Allocation by Product Group

FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09SB ERP potential 5.30 5.60 6.10 6.60 7.13 7.70GSG BSS revenue 0.12 0.20 0.33 0.55 0.91 1.50GSG BSS growth rate 65.0% 65.0% 65.0% 65.0% 65.0%GSG market share 3.6% 5.5% 8.4% 12.8% 19.5%

BIS 912.0 1,143.0 1,254.0 1,293.0 1,400.0 1,550.0 1,800.0 2,200.0 2,500.0BSS 26.0 97.0 124.0 123.0 203.0 334.9 552.5 911.7 1,504.3PP 1,480.0 1,636.0 1,640.0 1,584.0 1,700.0 1,900.0 2,300.0 2,750.0 3,300.0UDS 455.0 605.0 553.0 497.0 500.0 660.0 800.0 950.0 1,200.0Total 2,873.0 3,481.0 3,571.0 3,497.0 3,803.0 4,444.9 5,452.5 6,811.7 8,504.3

Product Group View

New Revenue Forecast for FY05 to FY09 ($MM)


19

Types of partners and initiatives

Mid-Market

Enterprise

Small Businesses

Mid-Market

Enterprise

SOHOConsumers

System Integrators IHVs

Resellers

ISVs

Industry expertise

Integration / Implementation

Incentives / Discounts

Support

Express products

Bundles HW/SW

Incentives / Discounts

Industry solutions

Access to GSG technology

Incentives

Education


20

Recommendations for current dissatisfactions

GSG employeedissatisfactions

- Not enough leadership for business process and product integration

- Not satisfied due to working system inefficient

Partnerdissatisfactions

Customerdissatisfactions

- Improve product integration

- Optimize service process integration, e.g. simplified customer interface

- Solution selling without integration

- Not received enough sales and marketing support

- Need more strategic support

- GSG has Inadequate industry expertise and understanding of customer business needs

- Improve capacity for market intelligence

- Focus on market need instead of produce selling

- Strengthen more indirect sales apart from direct sales

- Develop and invest in solution business, i.e. BSS / BIS

rsmba at kearney nitin

Documents

growth market focus

sb midgrowth

growth market small

sb erp market

sb strategy

sb crm market

sb midmarketproduct

solutions market