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Yogin Vora
Table of Contents
1 Introduction................................................................................................. 1
1.1 Background ......................................................................................... 1
1.2 Purpose and Outcome ......................................................................... 2
1.3 Purpose Discussion ............................................................................. 2
1.4 Target Groups ..................................................................................... 2
1.5 Definitions........................................................................................... 3
1.6 Delimitations....................................................................................... 3
2 Problem Description ................................................................................... 5
2.1 The IT Industry ................................................................................... 5
2.1.1 Characteristics of the IT Industry ................................................... 5
2.1.2 A Focus on Applications and Total Solutions ................................ 7
2.2 The Industry Channel: Definitions and Participants........................... 7
2.2.1 The Industry Channel...................................................................... 7
2.2.2 Solution stack.................................................................................. 7
2.2.3 Hardware Vendor............................................................................ 8
2.2.4 Independent Software Vendor (ISV) .............................................. 8
2.2.5 System Integrator (SI and CSI)....................................................... 8
2.2.6 Distributor (VAD)........................................................................... 9
2.2.7 Reseller (VAR) ............................................................................... 9
2.2.8 Eco-system...................................................................................... 9
2.2.9 ISVs and the Hardware Vendor .................................................... 10
2.2.10 Partners’ Platform Influence ..................................................... 10
2.2.11 Conclusions............................................................................... 12
2.3 Hewlett-Packard................................................................................ 12
2.3.1 General Information...................................................................... 12
2.3.2 Organisation.................................................................................. 12
2.3.3 The HP Market Offering............................................................... 14
2.3.4 Characteristics of HP’s Market Offering ...................................... 16
2.3.5 Market Segmentation .................................................................... 18
2.3.6 Customer and Sales Management................................................. 20
2.3.7 Independent Software Vendors (ISVs) ......................................... 21
2.3.8 Collaboration and Partner Programs............................................. 22
2.3.9 Conclusions................................................................................... 24
2.4 Analysis............................................................................................. 24
3 Theoretical Framework............................................................................. 27
3.1 Marketing Essentials......................................................................... 27
3.1.1 Strategy ......................................................................................... 27
Antvik and Bihammar Sales and Marketing Strategy in the IT Industry
3.1.2 Product- and Service Marketing ................................................... 29
3.1.3 Push and Pull Marketing............................................................... 30
3.1.4 Business to Business Marketing ................................................... 30
3.2 Understanding and Creating Value................................................... 31
3.2.1 Value as a Cornerstone ................................................................. 31
3.2.2 Understanding Value: Customer Needs, Wants and Demands .... 32
3.2.3 Definition of Value ....................................................................... 32
3.2.4 Customer Satisfaction and Loyalty............................................... 34
3.2.5 Creating Value .............................................................................. 35
3.3 Delivering and Promoting Value ...................................................... 37
3.3.1 Marketing Channels ...................................................................... 37
3.3.2 Sales Channel Strategy ................................................................. 37
3.3.3 Motivating and Evaluating Channel Members ............................. 38
3.3.4 Promoting the Market Offering: The Value Proposition.............. 39
3.4 Organisational Structures for Value Creation and Delivery............. 40
3.4.1 The Value Chain ........................................................................... 40
3.4.2 Value Constellations and Value-Creating Networks .................... 41
3.5 Business Relationships...................................................................... 42
3.5.1 Relationship Marketing................................................................. 43
3.5.2 Relationship Value........................................................................ 46
3.5.3 Relationship Forms ....................................................................... 49
3.5.4 Managing Relationships with Limited Resources ........................ 51
3.5.5 Relationship Retention.................................................................. 52
3.5.6 Reasons For and Against Deep Relationships .............................. 52
4 Problem Discussion................................................................................... 55
4.1 Overview........................................................................................... 55
4.2 Conclusions....................................................................................... 55
4.3 Implications....................................................................................... 56
4.4 Detailed Objectives........................................................................... 57
4.4.1 The Objectives .............................................................................. 57
5 Methodology ............................................................................................. 61
5.1 Theory ............................................................................................... 61
5.1.1 Methodological Approach ............................................................ 61
5.1.2 Research Approach ....................................................................... 61
5.1.3 Information.................................................................................... 62
5.2 Method .............................................................................................. 63
5.2.1 Work Process ................................................................................ 63
5.2.2 Information.................................................................................... 65
5.2.3 Stakeholders.................................................................................. 65
Antvik and Bihammar Sales and Marketing Strategy in the IT Industry
5.3 Method Discussion............................................................................ 65
5.3.1 Interview Process and Selection ................................................... 66
5.3.2 Degree of Generalisation .............................................................. 66
5.3.3 Sources of Error ............................................................................ 67
6 Findings and Analysis............................................................................... 71
6.1 Introduction....................................................................................... 71
6.2 Reasons for Vendors to Collaborate with ISVs ................................ 71
6.3 Partner Findings ................................................................................ 72
6.3.1 Introduction................................................................................... 72
6.3.2 Partners Agnostic to Hardware Platform ...................................... 73
6.3.3 Hardware Platform Selection........................................................ 74
6.3.4 Products and Technology.............................................................. 79
6.3.5 Importance of Competitive Pricing............................................... 79
6.3.6 Differences in Interests between Vendor and ISVs ...................... 80
6.3.7 Channel Conflict ........................................................................... 81
6.3.8 Ease of Doing Business ................................................................ 82
6.3.9 Joint Market- and Sales Strategies................................................ 83
6.3.10 Perception that HP Services Lack Capabilities......................... 84
6.4 Analysis............................................................................................. 85
6.4.1 HP and Partners: Qualitative Analysis.......................................... 86
6.4.2 HP and Partners: Quantitative Analysis........................................ 88
6.4.3 Competitor Analysis ..................................................................... 94
6.5 Synthesised Analysis ........................................................................ 99
6.5.1 Implications................................................................................. 102
6.6 Closing: Success Factors................................................................. 103
7 Recommendations................................................................................... 105
7.1 Selection of ISV Partners................................................................ 106
7.2 Categorisation and Management of the ISV partners..................... 108
7.3 Partner Engagement ........................................................................ 113
7.3.1 Decide and Promote the HP Value Proposition.......................... 113
7.3.2 Ease of Doing Business .............................................................. 115
7.3.3 Joint Business Planning and GTM Strategies............................. 116
7.3.4 Agree on Rules of Engagement .................................................. 117
7.3.5 Joint Market Offerings and Triangulating Opportunities ........... 119
7.4 Implement and Measure.................................................................. 121
7.5 Resource Requirements .................................................................. 123
7.6 Closing ............................................................................................ 124
8 Reflections .............................................................................................. 127
9 References............................................................................................... 129
Antvik and Bihammar Sales and Marketing Strategy in the IT Industry
List of Figures
Figure 2.1: Industry Eco-System (Sumich, 2004) .............................................. 9
Figure 2.2: Partner Platform Influence Cycles (Sutton, 2005) ......................... 11
Figure 2.3: HP Organization Chart (HP, 2004) ................................................ 13
Figure 2.4: The Adaptive Enterprise Framework (HP, 2004) .......................... 17
Figure 2.5: Customer Segmentation (HP, 2004)............................................... 19
Figure 3.1: Total Value Metric (Johansson et al., 1993) .................................. 34
Figure 3.2: The Value Chain (Porter, 1985) ..................................................... 40
Figure 3.3: Value-Creating Network (Kothandaraman & Wilson, 2001) ........ 42
Figure 5.1: Work Process.................................................................................. 63
Figure 7.1: DSPP Segmentation ..................................................................... 110
Figure 7.2: Implementation Steps ................................................................... 121
List of Tables
Table 2.1: Solution Stack (Healy & Shooter, 2004) ........................................... 8
Table 2.2: Internal SWOT-Analysis of HP’s Market Situation........................ 25
Table 5.1: Methodological Approaches (Lekvall & Wahlbin, 2001) ............... 62
Table 6.1: Ranking of HP's Market Offering.................................................... 90
Table 6.2: SWOT-Analysis of HP's ISV Situation ......................................... 100
Table 7.1: Recommendations.......................................................................... 106
Appendices
Appendix A: History of the IT industry
Appendix B: Additional Information about HP
Appendix C: Computer Definitions
Appendix D: External Interview Questionnaire
Appendix E: ISV Survey Information
Appendix F: Information about the Interviewed Companies
Appendix G: List of Abbreviations and Acronyms
1 Introduction................................................................................................. 1
1.1 Background ......................................................................................... 1
1.2 Purpose and Outcome ......................................................................... 2
1.3 Purpose Discussion ............................................................................. 2
1.4 Target Groups ..................................................................................... 2
1.5 Definitions........................................................................................... 3
1.6 Delimitations....................................................................................... 3
2 Problem Description ................................................................................... 5
2.1 The IT Industry ................................................................................... 5
2.1.1 Characteristics of the IT Industry ................................................... 5
2.1.2 A Focus on Applications and Total Solutions ................................ 7
2.2 The Industry Channel: Definitions and Participants........................... 7
2.2.1 The Industry Channel...................................................................... 7
2.2.2 Solution stack.................................................................................. 7
2.2.3 Hardware Vendor............................................................................ 8
2.2.4 Independent Software Vendor (ISV) .............................................. 8
2.2.5 System Integrator (SI and CSI)....................................................... 8
2.2.6 Distributor (VAD)........................................................................... 9
2.2.7 Reseller (VAR) ............................................................................... 9
2.2.8 Eco-system...................................................................................... 9
2.2.9 ISVs and the Hardware Vendor .................................................... 10
2.2.10 Partners’ Platform Influence ..................................................... 10
2.2.11 Conclusions............................................................................... 12
2.3 Hewlett-Packard................................................................................ 12
2.3.1 General Information...................................................................... 12
2.3.2 Organisation.................................................................................. 12
2.3.3 The HP Market Offering............................................................... 14
2.3.4 Characteristics of HP’s Market Offering ...................................... 16
2.3.5 Market Segmentation .................................................................... 18
2.3.6 Customer and Sales Management................................................. 20
2.3.7 Independent Software Vendors (ISVs) ......................................... 21
2.3.8 Collaboration and Partner Programs............................................. 22
2.3.9 Conclusions................................................................................... 24
2.4 Analysis............................................................................................. 24
3 Theoretical Framework............................................................................. 27
3.1 Marketing Essentials......................................................................... 27
3.1.1 Strategy ......................................................................................... 27
Antvik and Bihammar Sales and Marketing Strategy in the IT Industry
3.1.2 Product- and Service Marketing ................................................... 29
3.1.3 Push and Pull Marketing............................................................... 30
3.1.4 Business to Business Marketing ................................................... 30
3.2 Understanding and Creating Value................................................... 31
3.2.1 Value as a Cornerstone ................................................................. 31
3.2.2 Understanding Value: Customer Needs, Wants and Demands .... 32
3.2.3 Definition of Value ....................................................................... 32
3.2.4 Customer Satisfaction and Loyalty............................................... 34
3.2.5 Creating Value .............................................................................. 35
3.3 Delivering and Promoting Value ...................................................... 37
3.3.1 Marketing Channels ...................................................................... 37
3.3.2 Sales Channel Strategy ................................................................. 37
3.3.3 Motivating and Evaluating Channel Members ............................. 38
3.3.4 Promoting the Market Offering: The Value Proposition.............. 39
3.4 Organisational Structures for Value Creation and Delivery............. 40
3.4.1 The Value Chain ........................................................................... 40
3.4.2 Value Constellations and Value-Creating Networks .................... 41
3.5 Business Relationships...................................................................... 42
3.5.1 Relationship Marketing................................................................. 43
3.5.2 Relationship Value........................................................................ 46
3.5.3 Relationship Forms ....................................................................... 49
3.5.4 Managing Relationships with Limited Resources ........................ 51
3.5.5 Relationship Retention.................................................................. 52
3.5.6 Reasons For and Against Deep Relationships .............................. 52
4 Problem Discussion................................................................................... 55
4.1 Overview........................................................................................... 55
4.2 Conclusions....................................................................................... 55
4.3 Implications....................................................................................... 56
4.4 Detailed Objectives........................................................................... 57
4.4.1 The Objectives .............................................................................. 57
5 Methodology ............................................................................................. 61
5.1 Theory ............................................................................................... 61
5.1.1 Methodological Approach ............................................................ 61
5.1.2 Research Approach ....................................................................... 61
5.1.3 Information.................................................................................... 62
5.2 Method .............................................................................................. 63
5.2.1 Work Process ................................................................................ 63
5.2.2 Information.................................................................................... 65
5.2.3 Stakeholders.................................................................................. 65
Antvik and Bihammar Sales and Marketing Strategy in the IT Industry
5.3 Method Discussion............................................................................ 65
5.3.1 Interview Process and Selection ................................................... 66
5.3.2 Degree of Generalisation .............................................................. 66
5.3.3 Sources of Error ............................................................................ 67
6 Findings and Analysis............................................................................... 71
6.1 Introduction....................................................................................... 71
6.2 Reasons for Vendors to Collaborate with ISVs ................................ 71
6.3 Partner Findings ................................................................................ 72
6.3.1 Introduction................................................................................... 72
6.3.2 Partners Agnostic to Hardware Platform ...................................... 73
6.3.3 Hardware Platform Selection........................................................ 74
6.3.4 Products and Technology.............................................................. 79
6.3.5 Importance of Competitive Pricing............................................... 79
6.3.6 Differences in Interests between Vendor and ISVs ...................... 80
6.3.7 Channel Conflict ........................................................................... 81
6.3.8 Ease of Doing Business ................................................................ 82
6.3.9 Joint Market- and Sales Strategies................................................ 83
6.3.10 Perception that HP Services Lack Capabilities......................... 84
6.4 Analysis............................................................................................. 85
6.4.1 HP and Partners: Qualitative Analysis.......................................... 86
6.4.2 HP and Partners: Quantitative Analysis........................................ 88
6.4.3 Competitor Analysis ..................................................................... 94
6.5 Synthesised Analysis ........................................................................ 99
6.5.1 Implications................................................................................. 102
6.6 Closing: Success Factors................................................................. 103
7 Recommendations................................................................................... 105
7.1 Selection of ISV Partners................................................................ 106
7.2 Categorisation and Management of the ISV partners..................... 108
7.3 Partner Engagement ........................................................................ 113
7.3.1 Decide and Promote the HP Value Proposition.......................... 113
7.3.2 Ease of Doing Business .............................................................. 115
7.3.3 Joint Business Planning and GTM Strategies............................. 116
7.3.4 Agree on Rules of Engagement .................................................. 117
7.3.5 Joint Market Offerings and Triangulating Opportunities ........... 119
7.4 Implement and Measure.................................................................. 121
7.5 Resource Requirements .................................................................. 123
7.6 Closing ............................................................................................ 124
8 Reflections .............................................................................................. 127
9 References............................................................................................... 129
Antvik and Bihammar Sales and Marketing Strategy in the IT Industry
List of Figures
Figure 2.1: Industry Eco-System (Sumich, 2004) .............................................. 9
Figure 2.2: Partner Platform Influence Cycles (Sutton, 2005) ......................... 11
Figure 2.3: HP Organization Chart (HP, 2004) ................................................ 13
Figure 2.4: The Adaptive Enterprise Framework (HP, 2004) .......................... 17
Figure 2.5: Customer Segmentation (HP, 2004)............................................... 19
Figure 3.1: Total Value Metric (Johansson et al., 1993) .................................. 34
Figure 3.2: The Value Chain (Porter, 1985) ..................................................... 40
Figure 3.3: Value-Creating Network (Kothandaraman & Wilson, 2001) ........ 42
Figure 5.1: Work Process.................................................................................. 63
Figure 7.1: DSPP Segmentation ..................................................................... 110
Figure 7.2: Implementation Steps ................................................................... 121
List of Tables
Table 2.1: Solution Stack (Healy & Shooter, 2004) ........................................... 8
Table 2.2: Internal SWOT-Analysis of HP’s Market Situation........................ 25
Table 5.1: Methodological Approaches (Lekvall & Wahlbin, 2001) ............... 62
Table 6.1: Ranking of HP's Market Offering.................................................... 90
Table 6.2: SWOT-Analysis of HP's ISV Situation ......................................... 100
Table 7.1: Recommendations.......................................................................... 106
Appendices
Appendix A: History of the IT industry
Appendix B: Additional Information about HP
Appendix C: Computer Definitions
Appendix D: External Interview Questionnaire
Appendix E: ISV Survey Information
Appendix F: Information about the Interviewed Companies
Appendix G: List of Abbreviations and Acronyms
!! Keep on rocking budyy.