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Why Alliances have gained prominence?

December 24, 2009 Leave a comment

Over last few years, Alliances have gained more prominence than the regular route ot mergers and acquisitions. Monetary considerations have played an important role but, are not the sole reason for organizations going in favour of alliance formation. I have listed below a few important points that have driven forces for organizations going the “Alliance Way” :

1. Core Competence:

Companies tend to build on their core competence and this very fact can give a differentiating  edge on other competitors. Thus, leaving one’s core competence and getting into a new field can be a disaster unless handled very carefully. Aligning to one’s core competence and creating an ecosystem around the core competence is the right way for expansion. The creation of ecosystem can be done through acquisitions, mergers or alliances. Mergers and Acquisitions may lead to diversifying into new territories and may dilute the core competence of the company. Thus, unless handled carefully, alliances should be the first choice for expansion.

2. Affordability:

Not every company can afford an acquisition or a merger. The costs of M&A are both in terms of tangible and intangible resources. Some companies might not have money or scale for M&A and other might not have scope for M&A.

3. Government regulations:

Sometimes government regulations prevent mergers and acquisitions. For example antitrust laws in the US or anti-Monopoly laws in other countries may hinder the M&A process. Thus, forming an alliance is the most favoured way out.

4. Entry Barriers:

Some markets and sectors have entry barriers due to favours by the home governments, access to raw materials, access to distribution channels etc. In such a case also forming an alliance with an existing player in the market or sector  is the most favoured way out. 

5. Competitive Landscape:

Companies do not operate in isolation. The company takes actions in response to the changing market dynamics and for any action that a company takes, the market forces respond to it. In a competitive environment, sometimes companies bleed to death fighting each other. Over time companies have realized that cooperation gives better results than competition. 

For example when Air Tel entered Sri Lanka, it signed a pact with the biggest telecom player in the market to use its towers and some other infrastructure.

6. Role Play in Value Chain:

All companies have been playing a particular role in the extended value chain. Sometimes the strategic role that the company plays in the value chain prohibits it to go for M&A, hence the Alliance route.

Another big factor in avoiding the M&A option is that only 43% or M&A are successful. The failure rate in IT-ITES is a staggering 80%. This can be because of many reasons. Most important out of which is that companies do not have compatible cultures and even compensation issues.  In an Alliance the companies work together to achieve the desired results, but as separate entities tied by the common goal. The cultural issues and compensation do not hinder the process.

2010: The year of exploring new avenues.

December 23, 2009 Leave a comment

Every one knows what happened in the year 2008 and 2009. The analysts have made thread bare discussions and post-mortem on the economic downturn. Now, when the economy is looking up, the businesses are again gaining their senses and gathering their strengths back to climb up the crest.

The climb, though exciting, will not be easy. The large organizations have already started making strategic alliances and partnerships to be prepared for the upturn. The smaller players are also pulling up their socks. Over the last few months, I have made a list of recommendations (mostly for small players) that will help them to gear up and make the most of the upturn:

1. Look for options: This is to make sure you don’t just jump on to the bandwagon in anticipation of success. Make sure that the bus is going in the right direction and at right speed before you decide to ride it.

2. Know yourselves well: The downturn has given companies a lot of time to retrospect, but still make sure you know waht you are good at and also know very weel what you are not good at. This will help in increasing the number of successes and decreasing the number of failures.

3. Alliances: Enter into a strategic alliance. Try to make an ecosystem around the customer so that when the customer identifies a requirement, he does not have to wander far and wide for a solution. Step forward and tell the customer that you can deliver it, if not, one of your alliance partners can deliver it.

4. Have a look at emerging markets: By emerging markets I do not mean the emerging markets like India, Brazil etc. , what I mean is look for a market of requirements. There will be lots of unment requirements and if you are an innovator, target the latent requirements of the customers.

5. Keep a track of your dollars: By this recommendation I mean, keep a track of the in-flow as well as the out-flow of cash. Cash in-flow (that too only from operations) is the real wort of the company. The economic downturn has put a lot of pressure on the fluidity and liquidity of finance options. So, make the best use of the money at hand!

These are just a few of the important observations that I came across in last few months. There are many other things organizations should take care of in the oncoming upturn, but, I thought of sharing just a few important out of them. 

The CRM implementation: Preparing the ground.

December 7, 2009 3 comments

Once the organization knows that it has to implement CRM and has selected the EA Product to implement, the next step is to have the ground ready for the implementation. Along with that, the organization has to form a team for managing and overlooking the implementation. The following is the list of some important components of this phase. The organization is required (or I say MUST) prepare ground to have a long term relation with these components. The effective management and control of these components is important in the making or breaking of the project.

 

  1. The Business Case: For every task that involves huge monetary and human efforts, one needs to justify the means and the end. For the same, a business case is necessary that concisely states the end result one wants to achieve by the efforts and the benefit that the stakeholders will get from the exercise. Someone rightly said that if you cannot state the business problem in a single sentence, you have not understood the business problem. I agree with the statement, but, in addition to that, one should put a one pager note to the business case which in brief explains the cause, case and the end. 
  2. The Steering Committee: The stakeholders need to form a steering committee for the implementation. The main task of the Steering Committee is to make sure that the teams working o the project do not loose the direction. The SC works mainly on the line of aligning the implementation with the long term strategy and achieving the same. The SC generally has on board the decision makers from all the partners involved in the implementation. There will be a few representatives from the client, the System Integrator, the vendor and other partners. In most of the cases, the SC is the ultimate decision making authority in case a dispute arises among the partners. The SC also takes care of the mid course correction, if required. 
  3. The Lead: All the teams involved in the exercise have to have a team lead. The team leads act as the POC (Points of Contact) for the teams to coordinate with each other. Also, the Leads make sure that the teams understand their roles and give the required inputs. In case there is ambiguity in the views given by the end users or the team members it is the Lead who gives the final say. Also, the Leads resolve the disputes in case something is overlapping two areas and most of the time is involved in give and take when some functionality can be done by one or more of the teams. 
  4. The Champions: The Champions will be the guys in different teams who have the knowledge of “how things work?” and not only “why something works?” In every organization and department, there will be guys who know which piece fits where in order to make the system work perfectly fine. They will be a great source to know the short comings of the present system. For a successful implementation, the Champions are required at every point in time. But, the Leads should not be too dependent on the Champions as they have the present system imbibed in them, they might not be able to visualise the future system or the future requirements. 
  5. The SI/ Implementation Consultants: The System Integrator (SI) and the implementation consultants come from two backgrounds (one consultant have both the back grounds). One, some of them have in depth knowledge of the domain and are called domain experts. Two, the product experts: Who have the in depth knowledge of the EA product. The implementation consultants work together to understand the client requirements and meet the same through the system capabilities. There are other functions of the implementation consultant which are very vague and may come time to time. Some of these functions might include getting a buy-in for the solution from the Process Owners, negotiation with the clients and the partners etc.
  6. The Vendor Relations: It is a must to have a small team from the client and the SI to keep in touch with the Vendor. This is to make sure from time to time on the customizations and the bolt-on that are being built. Some (read all) of the vendors might not give the support and upgrade required for the EA product in the future.
  7. Feedback Channels: The implementation exercise should have feedback channel for the implementation. The feedback can come from all the stakeholders including the Steering Committee, the Process Owners, Business Managers, Vendors etc. The Feedback is necessary to make sure that the implementation is in line with the “means and the ends”. This also gives a base for the course correction, if any, required.

 

The above listed teams and the functionalities are very important for a successful implementation. Or, to put it in the other way, these are the participants required to “almost” eliminate the chance of a failure.

The CRM implementation: Is CRM really required?

November 30, 2009 Leave a comment

Every day there are stories and advertisements in business magazines and newspapers about the organizations benefitting from the implementation of ERP and CRM. The vendors (Oracle, Sales force etc.) leave no stone unturned to make sure their success stories reach the audience. Many organizations do get influenced by these messages coming from the industry as well as the vendors. No organization wants to lag behind its competition and is willing to invest a few million dollars if the implementation gives it an edge over the competition.

But, the question is: Is the CRM really required?

The legendary Harvard Professor and noted economist, Theodore Levitt once said that a customer does not want a quarter inch drill; all he wants is a quarter inch hole. The same rule applies to organizations thinking for implementing the CRM package. The question they should ask is: Do we want to implement CRM or do we want a solution for a problem? More often than not, the answer will be that the organization is looking for a solution to its problem. There can be many solutions to this problem. The organization can improve by just improving the competency of the human component or by just re-engineering its processes. Some other problems might be solved with just adding enhancements to the existing IT systems.

Build vs. Buy: When the organization is convinced that it has to improve or replace the existing IT systems, the next decision is to decide between whether the organization should build its own system or buy an EA product?

When the patchwork on the IT system stops working, the option of building the system has been ruled out its time to justify the implementation of CRM. The implementation of CRM is justified if the organization has the following requirements:

  1. The organization is a customer centric organization or wants to transform into a customer centric organization.
  2. It has multiple teams working on a single process and the process ownership changes from one stage to another.
  3. The coordination between teams and flow of data from one team to another is the key to success of a process/ transaction.
  4. It feels that customer service has to be personalized for each segment or each customer.
  5. It wants to integrates all the three functions of the customer interaction: Identification, Acquisition and Maintenance of customers.
  6. It has the money and resources to implement and maintain a CRM System.

Google Wave: Another step towards “Seamless Collaboration”

November 14, 2009 Leave a comment

Google Wave is another real-time information sharing platform. But is it “just another” social website. No. I would describe it as a hybrid of mail and chat (and much more).

Though Google has been a late entrant on the Social Media stage, it still has a huge fan following to make an impact. There are many features in G-Wave which separate it from the pack. As I see it, all these features take us a step closer to the “Seamless Social CRM”. Some of the features that are of interest are:

  1. Enhanced Chat: It is a major enhancement on the basic G-Talk. One can have conference chat, a one to one chat or a video chat. The chat has been really enhanced with all the features of formatting, highlighting, different fonts etc.
  2. Attachments: This helps in sending attachments in a chat. The chat can be directly sent as a mail with the attachment to the other members who might be offline at the moment.
  3. Collaborative e-mail: This is nice feature. Even at the time of drafting a mail (or for that matter even the contents of a document), one can add friends/ colleagues who can see the content being typed real-time. This helps in leveraging a collaborative effort in drafting such memos.
  4. The Waves: The Google Waves are similar to the Tweets but have the advantage that they are “real time”. One can share and see what is being shared real time. This all is not one to one, but can be many to one or one to many. Add to it the advantage of using photographs, online information etc.
  5. G-Maps: The best feature I found was the sharing of Google maps. One can access the map of an area while chatting and mark the positions and thus create his/her own map. I see a great potential in this application. The customer can explain their exact location to the sales rep. In case of emergency, the victim can use the G Map to tell the position to the emergency response teams. These are just a few examples. The applications might be infinite.
  6. G-Search: Another great feature is the G-Search on the tool. Even at the time of chatting or making an online memo/document, one can use the Google search option to find resources online and quote them.
  7. Embedding: There are a lot of options for embedding from documents to pictures to videos. These objects can be embedded from the desktop or by searching online from the net.
  8. Play collaborative games: One can play games with people across the globe. There are not many applications available at this moment to play these collaborative games but, will be available once the developers start to show their skills.
  9. Mobile updates: The mobile version of the Wave can be used to upload the photographs take from the mobile and create waves then and there with it.

What it means for Collaborative CRM?

These applications and features mean lot for the “collaborative and seamless” CRM. The collaboration that is being offered by G Wave has limitless potential if the business teams want to use it. For example there is an option of Yes/No/May-Be for online voting. This can be of tremendous importance when a decision has to be taken by voting. The team does not need to assemble at a place; it just has to click on one of the options in the voting tab displayed.

Oracle has come with something similar for Social CRM. It has some great features of collaboration between the various teams of the organization. It has more of business oriented features where as G Wave caters to the fun and light side of life.

But the big question is: Can it replace G mail? Yes. It has all the punch to replace the G mail. But, it will take time till all the people are on board the Wave!

The exciting world Analytics…and CRM

November 13, 2009 2 comments

There was a time when managers used to think that their business can run on ERP alone. Later the view changed from ERP alone to CRM and ERP combination where the data generated/ stored by the ERP is converted to knowledge by the CRM and then to insights by the analysts.

Now it’s the combination of analytics and CRM which is creating waves. And these are some really exciting waves.

FMCG companies pay billions of dollars to get data from the stores and then analyze them to look for patterns in consumer behaviours and purchasing patterns. This helps in predicting the sales patterns and in turn planning production and planning scheduling. The stores have gone a step forward to make use of this data in optimizing the space utilization in the shelves to maximize the returns per “foot shelf”. In a few cases (I have not worked on such assignments till now) the retail stores charge companies based on the sale these shelves offer. The additional revenue is shared between the store and the manufacturer: All possible due to the new age Analytics.

 In an assignment with a leading telecom player I worked on a solution where the last three to six months data for the customers could be analysed to identify the patterns of use by different users. The CRM then runs a match between the use pattern and the products available. This gives the list of Customers Vs the Products they should be using to make the best use of the offers and schemes available.

I have even proposed this solution to the Libraries (none of them implemented it though). There is huge amount of data available in every library. One can analyze this data to find the frequency of issuing books on various subjects. This will help in optimizing the space in the library shelves. Also in case of private libraries and book stores, the management can contact the customers who might be interested in purchasing/ issuing the new arrivals.

The CRM in combination with Analytic provides a great solution for forecasting, scheduling of production, resource optimization, revenue maximization and many other exiciting opportunities. Keep exploring!

Keep it Simple. But, not Stupid.

November 9, 2009 2 comments

 

Process

When it comes to processes, they can be as simple as one single step or as complex as multiple steps with various points where the optimum path is taken depending upon the logic. But, in any kind of process, whether it is of single step or multiple and/or parallel steps, one needs to keep it simple.

The concept of keeping things “Simple” has been given many jargons by many management gurus and successful managers. Everything comes at the same point: Cut the flab.

The job of cutting down the flab is tedious and has to be carried out with caution. The following steps might help in achieving the same:

      1.      Check the Results first:  Take a single process at a time. Make sure the result of the process is exactly what is desired. If not, first check and tweak the process to get the desired result. This because, there is no use of simplifying a process which does not give the desired result.

      2.     End-to-Front: This works for most of the processes. Check the processes one by one start from the end result and keep going up the value chain. Wherever you find a step that doesn’t add value to the next in line, scrutinize it and chop it off if it doesn’t add value.

            This step might sound easy but in practice it is not easy to remove a step from a process. One has to check the after effects (or what-if?) if the step is removed. Check with all the stakeholders and make sure that it will not cause “value-reduction”.

      3.     Front-to-End: For complex processes, having many forks and logic at each of these forks, the End-to-Front methodology might not work. Segregate these processes and treat them separately. For each of these processes, take each branch one by one and make sure that the redundant steps are removed and we reach at the end result with optimum use of resources.

      4.     Step Back and See: After simplifying each process, just step back and have a look at the bigger picture. The new, lean process should fit into the bigger scheme of things. For making sure the bigger picture is intact, segregate the processes into logical and manageable groups and before proceeding check if the processes fall in place.

           The end result of this exercise will be a simpler and leaner system. This exercise will help in achieving the same (or better) results with the use of optimum resources. Sometimes this exercise helps improving the results even before the implementation of the Enterprise Solution. If this is carried out hand-in-hand with the re-engineering while keeping the strategy and vision of the organization in mind, the results can be astounding!