CASE STUDY STRATEGY MANAGEMENT

CASE STUDYSTRATEGY MANAGEMENTSTRATEGY MANAGEMENTDELTACOM GmBHObjective: The case study helps to understand the perception & application of strategy formulation.The company is established in Germany and it is into the business of IT solution providerto various customers all over the globe. Recently in Chine, the company has participated in the International Bidding and awarded the contract. The company has made huge effort to get the order as it was very competitive, financially as well as from Technical specification point of view.The project duration is within the range of 7 to 10 years and it also outlay larger chunk of money. So after winning the contract, management called for Executive level meeting in Berlin for overall framework. The agenda of the meeting distributed to them was to decide upon the formulation & evaluation of various strategies to be adopted for the project.The major participants of projects are enlisted below.(1) Exclusive Partner (2) Integrated Partner(3) Project Solution seeker (4) Body Shopper(A)PARTNERSSEGMENTATON(B) BUSINESS DIMENSION FOR DIFFERENT CUSTOMER(C) VALUE PROPOSITION FOR DIFFERENT CUSTOMERS(D) BUNDLE OF COMPETENCES ANALYSIS(E) MISSION OF BUSINESS(F) STRATEGIC TEST(G) SCOPE OF TRANSFORMATION(H) STRATEGIC AGENDASTRATEGY MANAGEMENTPROCESS OF FORMULATION OF STRATEGYTCS BPCUSTOMER SEGMENTATION & VALUE PROPOSITIONTHE BUNDLE OF COMPETENCESMISSION OF BUSINESSI OPERATIONAL EXCELLENCE INNOVATION CUSTOMER TARGETINGAGGREGATE/GRANULAR METRICS EXPERIMENTATION AND FEEDBACKFINANCIAL EVALUATION & MATCHING STRATEGY STRATEGY MANAGEMENTLEGENDS :->TCS ---- TOTAL CUSTOMER SOLUTION BP – BEST PRODUCTSLI – SYSTEM LOCK IN(A) Partner SegmentationTier 1: Exclusive Partner• Japan based organisations provides outsourcing of IBM mainframe applications• Opportunity for customer lock-in• Joint Venture with IBM, the main source of Mainframe developer• Existing customers: GE Japan, JBCC, and AIGTier 2: Strategic/Integrated Partner• Long term symbiotic partnership with high value added• Existing customers: GE China, GE US, Kawasaki and Unisys.Tier 3: Project Solution Seekers• Full project ownership and solution delivery responsibility without established (but potential) for long-term client relationship• Existing customer: Toyota, Honda, US prospects, Dept. of Transportation ChinaTier 4: Body Shoppers• Transactional relationship to provide supplemental staff without much end client relationship• Existing customers: IBMDELTACOM GmBH has to choose the partner for project operation in Chins. Every business Partner has some strength & weakness in terms of their competency in different field. So the Company made the business dimension & value proposition analysis for each partners. So the cost comparison, Timely delivery as well as Qualityof operation can be judged on the same platform. STRATEGY MANAGEMENT(B) Business Dimension for Tier 1 -“Exclusive Partner” Products Critical partner to client providing highly integrated, customer specific, high-value added turnkey solutions for legacy mainframe applications in Japanese marketServices 24x7 Maintenance of mission-critical mainframe legacy.Application extension through analysis, design and development of new, integrated modules.Customer Japanese Corporations in Financial Services, Insurance, etc. industries.Channels Direct, Referrals from highly satisfied existing clientsEnd Users Japanese Corporations, Japanese Government organizations. Complementors IBM (as an h/2 and s/2 partner), existing clients, Accenture. Unique Competencies 1. Combination of deep knowledge of mainframe applications.2. High level of Quality combined with all the other costadvantage available to Chinese companies.(B) Business Dimension for Tier 2 -“Strategic /Integrated Partner”Customer Dimension DescriptionProducts Long-term relationship with client to provide customized and integrated solutions across multiple business units• T&M and Fixed price application development across multi- phase projects• Joint application development enabled through deep Services understanding of client culture and methodology• Dedicated retained teams as extension of clients ITorganization Customer GE US, GE China, Kawasaki, UnisysChannels DirectEnd Users N/AComplementors Other GE partners, IBM, other software partners, Accenture1. One of 12 exclusive outsourcing vendors or GE Unique Competencies 2. Six-Sigma quality combined with China’s cost advantage STRATEGY MANAGEMENT(B) Business Dimension for Tier 3 -“Project Solution seeker” Customer Dimension DescriptionProducts Individual project solutions without committed long-term relationshipT&M and Fixed price application development of discrete Services projects Customer Toyota, Honda, Department of Transportation China, USprospectsChannels Direct• Consulting partners such as IBM• Strategic partners such as GEEnd Users N/AComplementors Other GE partners, IBM, other software partners, Accenture1. One of 12 exclusive outsourcing vendors or GE Unique Competencies 2. Six-Sigma/CMM level-5 quality combined with China’s cost advantage (B) Business Dimension for Tier 4-“Body Shoppers”Customer Dimension DescriptionProducts Individual resources to supplement existing project teams and fill skills gaps(transactional)Services • T&M and retained resources for fixed time durations• Provide specific technology development skills on projectsCustomer IBM Japan, NECChannels Direct• Consulting partners such as IBMEnd Users CorporationComplementors N/AUnique Competencies 1. Consulting partnerships2. Technology skill differentiation STRATEGY MANAGEMENT(C) Value Proposition for Tier 1 -“Exclusive Partner” Value PropositionElement Description Experiences Seamless extension of Client team with integrated culture, skilled technologists with deep understanding of clients business. Value DeliverySystems • Dedicated client-focused team immersed in all aspects of client’s culture • Network integration to seamlessly extend clientenvironment ValueAppropriation • Open communication of all relevant information on both sides• Executive sponsor, CEO oversight, an full corporate reach• CMM and Six-Sigma delivery methodologies for delivery• Value added reselling of hardware and software for one-stop- shopping• Value gained by customer: Superior ROI, improved time-to- market, Security, Resource stability• Value gained by Deltacom: Exclusive long-term relationship, higher margins, predictable revenue• Value shared by both: Shared IP, shared learning, shared risk C) Value Proposition for Tier 2 -“Strategic /Integrated Partner”Value Proposition Element DescriptionExperiences Integrated teams of skilled technologists with deep understanding of client’s businessValue Delivery Systems • Dedicated client-focused teams fully trained in clients methodologies• Joint development plans• Cross-training and periodic two-way knowledge transfer• Business Relationship Manager, CEOoversight and full corporate reach STRATEGY MANAGEMENTValue Appropriation • Value gained by customer: Superior ROI, improved time-to-market, Security, Resource stability, Shared risk, Continuous improvement• Value gained by DMK: Access to client network as sales channel, credibility, learning• Value shared by both: Co-development ofshared standards and processes(C) Value Proposition for Tier 3 -“Project Solution seeker”Value Proposition Element DescriptionExperiences End-end-end delivery of a project with high quality and competitive priceValue Delivery Systems • Structured processes and teams with high quality of performance • Ability to quickly ramp-up on clients business and culture• Process for seamless transition at end of project• Dedicated project team manager with executive oversightValue Appropriation • Value gained by customer: Experimentation , learning, flexibility, reduced time-to-market, high quality, ROIValue gained by DMK: Opportunity for long- term relationship, ROI, learning •• Value shared by both: Shared learning in business domain and new technology STRATEGY MANAGEMENT(C) Value Proposition for Tier 4 -“Body Shoppers”Value Proposition Element DescriptionExperiences Supplement team with individual resources and fill gaps with skill expertiseValue Delivery Systems • Strong bench that can be tapped on demand• Mix of skills and expertiseValue Appropriation • Value gained by customer: Resources of demand and skills on demand• Value gained by DMK: Opportunity to up- sell, learning, improved bonding• Value shared by both: Exchange of skills(D) Bundle of competencies analysisSystems Lock-InDominant ExchaExclusive ChannelCustomer IntegratiTotal customer solution Low CostHorizontal Breadth DifferentiationRedefining Experience STRATEGY MANAGEMENT Sr. No. Description Current Situation Desired Situation 1 System Lock In No Specific competency thatcreate industry standard by the company. Company has to setcompetency skills for capturing the future market. 2. Low Cost Wage differential withreference to US, Europe, Japan & India.Availability of Large pool of skill in that Area.Experience Leveraging workloads & resource profitability. Chinese wages are very low.A large pool of computer science graduate for long termExpertise in managing in sudden change in demand and supply profitability 3. DominantExchange No Specific competencythat create strong bondage creation Company should developstrong coordination expertise with Tier 1 specialist in China. 4 ExclusiveChannel One of few firms with lowcost mainframe expertise.High Switching cost for fully integrated clients. It is required to barrier theentry of new competitorsIt acts as barrier to the exit of customer as highly tacit knowledge acquired about customer process throughlong interaction also 5. Customer Dedicated Team, Experience It also allow the expertise Integration in OutsourcingJoint venture with IBM transferable to other functionDue to this Company is able to integrate some of technologies of IBM with their own application 6. HorizontalBreath Mainframe & new languageexpertise. Multiple industry verticalsSystem development, testing& maintenance It strengthens the financial &insurance segment but slow development in other areas.Architecture & consulting expertise is a new challenge STRATEGY MANAGEMENTSr. No. Description Current Situation Desired Situation 7. RedefiningExperience Processes & expertise at end– to – end projects Its provides very cost controlled atmosphere foroperation 8. Differentiations Japanese speaking personnel, IBM mainframe expertiseCMM5 Level of operation, Six sigma approach for all functions The firm has to recruit local person that can speak & are familiar with the social & business manner of China.It is necessary to maintain the quality level of project & to eliminate chance of anyredraft. (E) MissionBecome the #1 provider of Business Process Outsourcing and IT Services inChina:• Analyzing, designing, developing, deploying, and maintaining software systems and solutions.• Delivering the highest quality of service and unparalleled value• Integrating seamlessly with complementary local service providers• Servicing large and mid-sized corporations, government departments and non- profit organizations• Through experienced, passionate and hard-working associates driven to provide outstanding service• Focusing first on China, Japan and US and expanding next into Europe andLatin American markets. STRATEGY MANAGEMENTF) TRANSFORMATION REQUIRED Sr.No. Scope Now Future 1. CustomerScope Primarily large corporations, Government departments of China Expand to include Service providers at the high-end of the software services value chain. 2. End-User Scope Large Corporations, Government departments in China Expand to include mid-sized corporations, State and Federal government departments, non-profit organization 3. Channel Scope Direct, Joint Venture Exclusive offshore service delivery partner-ships that allow white labelling of Deltacom services 4. ComplementorScope Hardware and software product companies Business Consulting, IT Strategy/Architecture consulting firms 5. GeographicalScope Japan and China with limited presence in the U.S. U.S. and U.K. expand into countries where language of business is non-English and wherecost of IT services is higher than China. (Indian firms do not have language advantage while China-based firms have significant cost advantage.) 6. Service Scope Lower end of software services value chain: Application development,system integration, systemconversation ,maintenance &support Integrated service that captures the entire value chain through strong collaboration with complementors at the high-end of the software service value chain 7. Product Scope Technology base such as J2EE framework, Microsoft.NET framework,etc. for rapid code 1. Horizontal Application frameworks such as Portal toolkits, Content Management toolkits, etc.2. Solutions frameworks such as development wealth management solutions forfinancial services, employee portals as HR solutions, etc. that leverage competencies/expertise of strategic and exclusive 8. UniqueCompetencies 1. High maturity in Software development process2. Six-Sigma certifiedproject and operations managers3. Low cost of China- based delivery 1. Ability to build teams that can integrate to other service organizations2. Develop professionalrelationships with other culture.3. Develop technical knowledge of specific domain STRATEGY MANAGEMENT(G) Strategic Agenda: Quality TestsSr. No. Dimension Description1 Comprehensiveness The agenda extends across all of functions services, geographies and market segments including geographies including customers, end users, channels and Complementors.2. Stretch Performance /measures for each thrust provide achievable but stretched goals for the organization. 3. Monitoring and control Milestones established throughout the process allow for continuous monitoring and change in strategy if and as required. 4. Motivation The mission combined with clear strategic thrust energizes the organization with a common set of goals and flexibility to innovate and grow.5. Vulnerability No material vulnerabilities have been identified at this time. Aligning execution with this strategic agenda time will be critical to the success of Delta Brake(H) Strategic Agenda Sr.No. Strategic Thrust PrimaryResponsibility Secondaryresponsibility 1. Invest in people Train &motivate. Hire outstanding talent. Develop strong designcapabilities. VP HRVP Operation CEOCFO 2. Expand delivery & customer CEO VP Sales , VP HR, VP support centre throughout china Marketing 3. Work with exclusive partners forrapid response & operation. CEO ,VP MarketingVP Operation VP Sales 4. Develop engagement program ofDeltacom team for better understanding of Chinese culture for easy flow of work VP HR VP Operation 5. Strengthen the relationship withthe IBM for better understanding& solution of customer needs. CEOVP Operation CFO