From Outsourced Product Development to Solving Business Problems - A Journey
In the last 12 months, we have personally met with more than 150 customers and partners. We have undertaken a journey to understand the nature of change that is taking place in the market. We would coin this as a journey to learn; to know what is on the top of our customer's minds; a journey to align our company with our customer priorities; a journey to transform our organization and business models. We met with primarily CEOs, other C-level leaders, and senior executives in our customer / partner universe. This page is a compilation of the learning and a communication of what we are doing inside our company to transform ourselves and to take an active role in addressing our customer's challenges.
What are the top issues on our customers' minds?
- Most technology companies are seeing a flat to shrinking top line. This is largely caused by the uncertainty presented by the economy that has resulted in less spending; reduced spending from consumers, from enterprises, and from service providers.
- In the wake of the shrinking top line and a lack of clear visibility to sustained market growth, companies can no longer address their problems by means of marginal cost cuts. A bold analysis of what is strategic / core versus what is not has become a necessity.
- CEOs want to spend more time in the market and with their customers to develop clearer insights into trends and future planning. It has become even more important to be precise in this planning and investment process. Fundamentally, this is tapping a major portion of senior executive bandwidth and focus.
- Profitable growth necessitates the right and focused investment: be it investment of capital, investment of resources, or investment of management bandwidth. And, it is a given that the execution of the plan has to be most cost effective.
- To summarize, the questions on their minds are: a) How do I access new markets and customers without substantial investment? b) How do I transform my organization to focus on core and strategic initiatives? c) How do I solve the management bandwidth issue? And d) how do I minimize the cost of execution?
What advice do our customers share?
The mantra that we keep hearing time and time again in the area of outsourcing is "Be my partner not my supplier." By definition, a partner is someone that shares risks and rewards, someone that brings about close alignment of goals to the success of both parties. With this backdrop in mind, it has not been surprising at all to get advice such as; "Take more risks," "Solve my problems," "Be more creative with your business models," etc.
Very specifically, the themes have been focused on the following areas
- Persistent as a partner to help us access new markets. This access could come about in several ways. A) Help us access new geographies due to our presence, B) Help us access new customers through our network into the ecosystem, C) Help us access new market segments or new customers through creative adaptation of the product roadmap, and D) Help access new, emerging markets by creating bridges from their product offerings to other companies' product offerings, thus expanding the offers. What we hear is "Be one of my top line enablers."
- Persistent as a partner to help us solve our problems. One of the CEOs of a major Independent Software Vendor tells us that he is completely open to Persistent taking a lead in solving their major problems. For example, enhancing the profitability on some of their product lines. Solving problems require proactive thinking and applying holistic thinking about the ecosystem in which our customers operate. It is about being at the roundtable and actively participating with business ideas, market ideas, and execution ideas. The notion is to take more complete ownership of problem solving, rather than drawing too many boxes and boundaries. If done right, this can successfully free-up the bandwidth of senior executives to focus on more of their core and outward facing activities. And for this, there is perfect willingness to share some of the rewards. What we hear is "Be one of my business enablers."
- Persistent as a partner to help us in our product operations and execution. A mature partnership model for execution takes us into areas far beyond traditional design, development, testing, and maintenance. It gets into areas such as a) Taking over captive R&D centers around the globe and bringing about R&D optimization and productivity improvements. b) Taking over all the R&D aspects of the product and becoming the sole engineering center for a set of products. c) Taking over lower performing products, invest in roadmaps, optimize costs, and revitalize the P&L. d) Outright acquisition of certain non-core products etc. Many of these require very creative business models and structuring. What we hear is "Be my extended product organization"
What are the transformations that we are making at Persistent to address this new future?
Aspiring to become a true partner requires changes throughout the organization. It requires flexibility, agility, a risk-taking culture, and innovation in all facets of operations. From sales and marketing to delivery, finance, and operations, it requires us to align our process and approach. It mandates us to think beyond time and materials costing toward value creation and delivery. We have already begun this process. Here are some of the key actions we have taken:
- Sales and Marketing: On the front end, we are taking a 360-degree approach towards our customers and engagements. The discussion is centered on what problems we can solve and how can we help increase the customers' top line and bottom line. We are also getting more precise in our insertion points with our customers and working with a sense of urgency around this. We are increasing the team to look at more partnerships in the ecosystem as well as drive bandwidth to touch more geographies.
- Offers and Solutions: We have created a SWAT team to develop very targeted areas where we can offer frameworks and bring the ecosystem into play to solve larger problems for our customers. Very broadly, this team is working on four major areas: 1) Cloud Computing and Software as a Service 2) Enterprise Mobility 3) Enterprise Collaboration and 4) Business Intelligence and Analytics. This team will form the backbone for the company to think like product managers and portfolio planners. We are augmenting this team with technology and solutions resources that can play an active role in solving business problems for our customers. This will help us evolve to taking a more consultative approach towards our customers.
- Delivery: We are aligning the delivery teams with offers and solutions. Considerable work is underway in training and creating the right cultural awareness within the teams: risk taking, reinvention of some of our processes to bring about efficiency and being proactive, etc. We are also taking steps to expand into new locations, so we are favorably positioned to take over captive centers. We are preparing ourselves for a global delivery model as opposed to primarily offshore.
- Finance and Operations: Alignment and training to take more risks and be more flexible. Creating frameworks and processes that are reusable and substantially reduce the time to transact.
One of the fundamental changes that we are making is inserting innovation into areas beyond technologies, i.e., new business models. This is critical, as the bulk of the value creation is in shared risks and shared accountability.
Summary
Persistent is willing, able, and ready to engage in this new world order. We have already begun doing this with some of our customers. Some of these customers are already seeing some positive business results emerge out of these new models. More customers taking the step of adopting this model will also help build scale for the process, network, and resources - which will quickly translate to more efficiency and value to the ecosystem.
We want you to succeed. Can we talk?
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