Solution Selling in Telecommunications Infrastructure Business: Case Study S Tietoverkkotekniikan diplomityöseminaari Joakim Knutar Valvoja: Heikki Hämmäinen

Agenda Background – Research Problem – Objective Solution Selling Case Study Results Conclusions Joakim Knutar - Master Thesis presentation

Background Solution Selling has been implemented at the case company since 2005 At least 6 different programs since 2005 that deal with transforming the organization into a solution-centric organization Beginning of 2008 top management started asking about proof of the improvements gained so far Joakim Knutar - Master Thesis presentation

Background Research problem – Have the case company been able to produce higher margin in solution selling deals? Objective – Case study about the profitability for solution selling deals – Identify possible profitability drivers for solution selling at the case company Joakim Knutar - Master Thesis presentation

Solution Selling – Consultative engagement – Proactiveness – Customer business problem Solution – “a custom-made offering made out of products (HW/SW), services, and 3 rd party components combined to solve the customer’s business issues and give value to both the customer and the supplier” Joakim Knutar - Master Thesis presentation

Solution Selling Proactive prospecting Opportunity management Stimulating interest Relationship Power people Value creation Account management Knowledge management (repeatability) Joakim Knutar - Master Thesis presentation

Case study Profitability information about solution selling deals not retrievable from financial systems Only way to get to the profitability is by conducting a case study – Interviews with sales people – “let’s investigate a statistically good number of deals” Joakim Knutar - Master Thesis presentation

Case study Sales funnel to provide information about deals Deal identification Opportunity is identified without RFX-process (latency criteria) Opportunity is scoped consultatively around customer commercial obstacle to be removed. Scoping is done in stream of workshops together with customer’s empowered delegation (scope criteria) Scoped opportunity is quantified to contain high value in customer’s commercial performance improvement (high value impact criteria) Opportunity is identified without RFX-process (latency criteria) Opportunity is scoped consultatively around customer commercial obstacle to be removed. Scoping is done in stream of workshops together with customer’s empowered delegation (scope criteria) Scoped opportunity is quantified to contain high value in customer’s commercial performance improvement (high value impact criteria) Joakim Knutar - Master Thesis presentation

Case study Interviews – July 2008 – December 2008 (data still received in February 2009) – 30 minutes per deal – 223 deals investigated – Needed information retrieved from 166 deals (161 meetings held) Focus on – Solution selling or not?- Uniqueness of solution – Scope- Match to customer need – SW/Service content- Latency – Pain point- Reusability – Value creation- Financials – Consultative engagement Joakim Knutar - Master Thesis presentation

Results Ordinary sales vs. Solution selling Retrieved financials compared against regional and global reported profitability July July Joakim Knutar - Master Thesis presentation

Results Ordinary sales vs. Solution selling Retrieved financials compared against regional and global reported profitability July July Joakim Knutar - Master Thesis presentation

Results Deal size impact on profitability Joakim Knutar - Master Thesis presentation

Results Truly latent deals – 22 deals – Gross margin 73% Proactiveness Scoping Commercial value Relationship Reusability Power people Standard SW components Joakim Knutar - Master Thesis presentation

Results Profitability driver framework Gate 2Gate 3 Gate 4 Gate 5Gate 6 Go / No go Bid / no bid ApprovalsWin / LossStart delivery Value Engagement (power persons) Architecture, design, and build The scope of the deal Uniqueness of innovation Match to customer need Excellence in execution Project/contract/chang e mgmt Services Reusability 3 rd party share Software (standard/customized) External drivers Internal drivers Joakim Knutar - Master Thesis presentation

Conclusions Results indicate that solution selling gives better gross margin Financial system need to provide this info in the future Knowledge management utilization Need for change Joakim Knutar - Master Thesis presentation