New Service Development ProcessNew Service Development Process

A Report to GreatWhite Technology GroupNew York, NY

October 23, 2005

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GWTG BackgroundGWTG Background

US$100M IT services business Core Competency – Application Integration

Financial Management Regulatory Compliance

Challenges Low margins Commoditization Independent contractors Offshore threat

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RecommendationsRecommendations

Move up the value pyramid Develop new offerings in the areas of:

architecture and design services for software strategic advisory in compliance areas (SOX, Basel II, etc.)

StrategyStrategy

ImplementationImplementation

Architecture & Design Architecture & Design

StrategicStrategic

TacticalTactical

OperationsOperations

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The Development ProcessThe Development Process

First step – Create the Development Process Why a Development Process?

Higher probability of success Reduces risks of “bad bets” Brings discipline into the process Better teamwork Consistency

Just having a process is not enough High correlation between quality of process and

profitability*

*Cooper, R.G., “Winning at New Products: Accelerating the Process from Idea to Launch, Third Edition” (New York: Basic Books, 2001)

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The Development Process – A High Level ViewThe Development Process – A High Level View

Stage 0

The Idea Factory

Initial Scope Business Case

Service Development

Market Test & Validation

11 22 33

4455

Stage 1

Stage 3

Stage 2

Launch

Stage 5

Review

Stage 4

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Critical Success FactorsCritical Success Factors

Differentiation & superiority Market orientation in the process Define offering in maximum detail Marketing plan is part of the process – not the

end Create the right org structure

Participation by all stakeholders throughout the process

Executive sponsorship throughout the process Stay within core competencies Stick to the process – no shortcuts

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Cross-Functional Development TeamCross-Functional Development Team

CEO – Executive Sponsor Marketing – Program Manager Delivery Management/PMO Sales Channel Partner Management Recruiting/HR

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Stage 0 – The Idea FactoryStage 0 – The Idea Factory

Sources Top down

• From Marketing & Senior Executives Bottom up

• From consultants and sales in the field Client projects (replicate) Informal client discussions Partners Industry events Professional associations Competitive analysis

Marketing is the idea collection point

“Nothing is more dangerous than an idea when it is the only one you have”– Emile Chartier, Propos sur la religion, 1938

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Gate 1Gate 1

In our competency set? Technology Industry Business process

Active and growing market? Technology is legacy or leading-edge? Many or few competitors? Approve resources for initial scoping

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Stage 1 – Initial ScopeStage 1 – Initial Scope

Talk to some clients informally Determine ability to deliver with existing

skills/resources Determine current market rate for similar

services Growing vs. shrinking market Determine client buying habits in this space

Software vendors vs. service providers Look at competitor’s marketing messages SWOT analysis

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Gate 2Gate 2

Review by sales management Sufficient market rates Technology is feasible Potential IP issues (esp. if replicating a

client project) Approve resources for business case Primary gate for portfolio management

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Stage 2 – Business CaseStage 2 – Business Case

Target market Industry Size Geography

In-depth market research Industry analysts Client surveys Partner surveys Growth projections

Value proposition Development plan &

budget

Delivery model Full-time staff /

subcontractors Skill development plan

Engagement model Resources – type &

number Rates

Distribution Strategy Partners

Choose partner(s) Create joint benefit

proposition

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Gate 3Gate 3

Unique in Entire market Geography Industry

Minimum projected project GM% Approve development plan & budget Is business case thorough? Approve resources for development

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Stage 3 – Service DevelopmentStage 3 – Service Development

Build delivery capability Technical / business training Recruiting

Create delivery methodology Phases and deliverables

Create marcom plan Create sales forecast Create sales comp plan Setup partner rules of engagement Sales training – internal & partner Create customer service plan

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Gate 4Gate 4

What’s our ability to execute? Technical delivery Work with partner

Is it easy to buy (not necessarily easy to sell*)? Review minimum projected project GM% Approve resources for testing

*Moore, G., “Crossing the Chasm: Marketing and Selling High Tech Products to Mainstream Customers” (New York: HarperCollins, 2002)

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Stage 4 – Market Test & ValidationStage 4 – Market Test & Validation

Pilot at “friendly” client Offer reduced rate for test clients Execute with partner at their existing

clients

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Gate 5Gate 5

Evaluate ability to execute Technical Project Management

Analyze test project metrics Duration Resourcing Quality of deliverable GM% Client & partner satisfaction

Was testing thorough? Approve resources for launch

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Stage 5 – LaunchStage 5 – Launch

Marketing / Demand Generation PR & media Events Partner co-marketing

Lead generation Relationship mining Events

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ReviewReview

Total revenue against plan GM% against plan Client satisfaction Partner satisfaction Adjust revenue & resource forecast

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Process Rollout Plan – Next StepsProcess Rollout Plan – Next Steps

Gain support of senior management Identify current practices Created detailed process design with input from cross-

functional teams Management approval Evangelize – need to build mindshare up and down the

organization Create support materials – guides, etc. IT support for collaboration, project tracking, financial

modeling, etc. Training Migrate current projects to the new process

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Roadblocks to SuccessRoadblocks to Success

Ignorance – “What should we do?” Lack of skills – “How do we do it?” Underestimate the tasks in the process Faulty process “We already know the answers” No leadership In a rush – cut corners Too many projects, not enough resources

Cooper, R.G., “The Invisible Success Factors in Product Innovation,” Journal of Product Innovation Management, 16, 2, April 1999

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Managing the Services PortfolioManaging the Services Portfolio

Goals Maximize value Balance Strategic alignment Allocate scarce resources

Score and rank projects according to: Strategic fit Market attractiveness Feasibility etc.

Compare scores across projects with the goals in mind Implement at Gate 2 (after the initial scoping)

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Thank You!Thank You!