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New Service Development Process

New Service Development Process. A Report to GreatWhite Technology Group New York, NY October 23, 2005. GWTG Background. US$100M IT services business Core Competency – Application Integration Financial Management Regulatory Compliance Challenges Low margins Commoditization

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New Service Development Process

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  1. New Service Development Process A Report to GreatWhite Technology Group New York, NY October 23, 2005

  2. GWTG Background • US$100M IT services business • Core Competency – Application Integration • Financial Management • Regulatory Compliance • Challenges • Low margins • Commoditization • Independent contractors • Offshore threat

  3. Recommendations • 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.) Strategic Strategy Architecture & Design Implementation Operations Tactical

  4. The 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)

  5. 1 2 3 Stage 0 Stage 1 Stage 2 Stage 5 Stage 4 Stage 3 5 4 The Development Process – A High Level View The Idea Factory Initial Scope Business Case Review Launch Market Test & Validation Service Development

  6. Critical 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

  7. Cross-Functional Development Team • CEO – Executive Sponsor • Marketing – Program Manager • Delivery Management/PMO • Sales • Channel Partner Management • Recruiting/HR

  8. Stage 0 – The Idea Factory “Nothing is more dangerous than an idea when it is the only one you have” – Emile Chartier, Propos sur la religion, 1938 • 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

  9. Gate 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

  10. Stage 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

  11. Gate 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

  12. 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 Stage 2 – Business Case

  13. Gate 3 • Unique in • Entire market • Geography • Industry • Minimum projected project GM% • Approve development plan & budget • Is business case thorough? • Approve resources for development

  14. Stage 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

  15. Gate 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)

  16. Stage 4 – Market Test & Validation • Pilot at “friendly” client • Offer reduced rate for test clients • Execute with partner at their existing clients

  17. Gate 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

  18. Stage 5 – Launch • Marketing / Demand Generation • PR & media • Events • Partner co-marketing • Lead generation • Relationship mining • Events

  19. Review • Total revenue against plan • GM% against plan • Client satisfaction • Partner satisfaction • Adjust revenue & resource forecast

  20. Process 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

  21. Roadblocks 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

  22. Managing 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)

  23. Thank You!

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