SCDL PGDBA COMMUNITY

SCDLPGDBA

CASE STUDY

STRATEGY MANAGEMENT

DELTACOM GmBH

Objective: 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 provider

to 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 AGENDA

STRATEGY MANAGEMENT

PROCESS OF FORMULATION OF STRATEGY

SLI

TCS BP

CUSTOMER SEGMENTATION & VALUE PROPOSITION

THE BUNDLE OF COMPETENCES

MISSION OF BUSINESS

THE STRATEG C AGENDA

I

OPERATIONAL EXCELLENCE

INNOVATION

CUSTOMER TARGETING

AGGREGATE/GRANULAR METRICS EXPERIMENTATION AND FEEDBACK

FINANCIAL EVALUATION & MATCHING STRATEGY

STRATEGY MANAGEMENT

LEGENDS :->

TCS —- TOTAL CUSTOMER SOLUTION BP – BEST PRODUCT

SLI – SYSTEM LOCK IN

(A) Partner Segmentation

Tier 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 AIG

Tier 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 China

Tier 4: Body Shoppers

• Transactional relationship to provide supplemental staff without much end client relationship

• Existing customers: IBM

DELTACOM 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 Quality

of 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 market

Services 24×7 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 clients

End 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 cost

advantage available to Chinese companies.

(B) Business Dimension for Tier 2 -“Strategic /Integrated Partner”

Customer Dimension Description

Products 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 IT

organization

Customer GE US, GE China, Kawasaki, Unisys

Channels Direct

End Users N/A

Complementors Other GE partners, IBM, other software partners, Accenture

1. 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 Description

Products Individual project solutions without committed long-term relationship

T&M and Fixed price application development of discrete

Services

projects

Customer Toyota, Honda, Department of Transportation China, US

prospects

Channels Direct

• Consulting partners such as IBM

• Strategic partners such as GE

End Users N/A

Complementors Other GE partners, IBM, other software partners, Accenture

1. 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 Description

Products 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 projects

Customer IBM Japan, NEC

Channels Direct

• Consulting partners such as IBM

End Users Corporation

Complementors N/A

Unique Competencies 1. Consulting partnerships

2. Technology skill differentiation

(C) Value Proposition for Tier 1 -“Exclusive Partner”

Value Proposition

Element

Description

Experiences Seamless extension of Client team with integrated culture, skilled technologists with deep understanding of clients business.

Value Delivery

Systems

• Dedicated client-focused team immersed in all aspects of client’s culture • Network integration to seamlessly extend client

environment

Value

Appropriation

• 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 Description

Experiences Integrated teams of skilled technologists with deep understanding of client’s business

Value 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, CEO

oversight and full corporate reach

Value 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 of

shared standards and processes

(C) Value Proposition for Tier 3 -“Project Solution seeker”

Value Proposition Element Description

Experiences End-end-end delivery of a project with high quality and competitive price

Value 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 oversight

Value Appropriation • Value gained by customer: Experimentation , learning, flexibility, reduced time-to-market, high quality, ROI

Value gained by DMK: Opportunity for long- term relationship, ROI, learning •

• Value shared by both: Shared learning in business domain and new technology

(C) Value Proposition for Tier 4 -“Body Shoppers”

Value Proposition Element Description

Experiences Supplement team with individual resources and fill gaps with skill expertise

Value Delivery Systems • Strong bench that can be tapped on demand

• Mix of skills and expertise

Value 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 analysis

Systems Lock-In

Dominant Excha

Exclusive Channel

Customer Integratinge

on

Total customer solution Low Cost

Horizontal Breadth Differentiation

Redefining Experience

STRATEGY MANAGEMENT

Sr. No. Description Current Situation Desired Situation
1 System Lock In No Specific competency that

create industry standard by the company.
Company has to set

competency skills for capturing the future market.

2. Low Cost Wage differential with

reference 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 term

Expertise in managing in sudden change in demand and supply profitability

3. Dominant

Exchange
No Specific competency

that create strong bondage creation
Company should develop

strong coordination expertise with Tier 1 specialist in China.

4 Exclusive

Channel
One of few firms with low

cost mainframe expertise.

High Switching cost for fully integrated clients.
It is required to barrier the

entry of new competitors

It acts as barrier to the exit of customer as highly tacit knowledge acquired about customer process through

long interaction also

5. Customer Dedicated Team, Experience It also allow the expertise
Integration in Outsourcing

Joint venture with IBM
transferable to other function

Due to this Company is able to integrate some of technologies of IBM with their own application

6. Horizontal

Breath
Mainframe & new language

expertise. Multiple industry verticals

System development, testing

& maintenance
It strengthens the financial &

insurance segment but slow development in other areas.

Architecture & consulting expertise is a new challenge
Sr. No. Description Current Situation Desired Situation

7. Redefining

Experience

Processes & expertise at end

– to – end projects

Its provides very cost controlled atmosphere for

operation

8. Differentiations Japanese speaking personnel, IBM mainframe expertise

CMM5 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 any

redraft.

(E) Mission

Become the #1 provider of Business Process Outsourcing and IT Services in

China:

• 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 and

Latin American markets.

F) TRANSFORMATION REQUIRED

Sr.

No.
Scope Now Future
1. Customer

Scope
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.

Complementor

Scope
Hardware and software product companies Business Consulting, IT Strategy/Architecture consulting firms
5. Geographical

Scope
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 where

cost 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, system

conversation ,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 for

financial services, employee portals as HR solutions, etc. that leverage competencies/expertise of strategic and exclusive

8. Unique

Competencies
1. High maturity in Software development process

2. Six-Sigma certified

project and operations managers

3. Low cost of China- based delivery
1. Ability to build teams that can integrate to other service organizations

2. Develop professional

relationships with other culture.

3. Develop technical knowledge of specific domain

STRATEGY MANAGEMENT

(G) Strategic Agenda: Quality Tests

Sr. No. Dimension Description

1 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 Primary

Responsibility
Secondary

responsibility

1. Invest in people Train &

motivate. Hire outstanding talent. Develop strong design

capabilities.
VP HR

VP Operation
CEO

CFO

2. Expand delivery & customer CEO VP Sales , VP HR, VP
support centre throughout china Marketing
3. Work with exclusive partners for

rapid response & operation.
CEO ,VP Marketing

VP Operation
VP Sales
4. Develop engagement program of

Deltacom team for better understanding of Chinese culture for easy flow of work
VP HR VP Operation
5. Strengthen the relationship with

the IBM for better understanding

& solution of customer needs.
CEO