I finally found an electronic copy of the Crosskeys article in Silicon Valley North (Feb 00). I found it at westpark.com
but it will surely be added to the www.silvan.com website .
Crosskeys - Creating niche leadership - Part I
We're declaring absolute leadership in M3 - the ability to give our customers an M3 space.
By Peter Fillmore, Managing Partner
January 2000
To win in a growth market, you have to establish leadership in a carefully chosen segment. It is not enough to meet your revenue target and be number three. Only the very top players have a chance at gorilla status. The effort requires careful attention to marketing, technical, sales and financial resources sustained over time, and adjusted (often dramatically) as your chosen market matures. Painful surprises are normal.
At CrossKeys Systems, a Newbridge Networks affiliate, I talked with Ian McLaren, President & CEO about market-building progress. The company was founded to create network management software products as companions to Newbridge switching gear. The applications included performance management, service level management, and enabling interconnections between different vendors installed at a telecom carrier (5 to 10 different vendors is typical).
In the early days at CrossKeys, the revenue build-up was great, but they had a mix of services and products. The largest service contract was with Siemens, and this contract grew substantially. There were two problems, however - it distracted CrossKeys from the software product mission, and it ended about 6 months before expected, suddenly putting the young company into an unprofitable situation. ?But with the Siemens revenue gone,? commented McLaren, ?we had a chance to really focus on ?products.? We had to build up our sales force, both direct and through channels, and build the culture of a products company.? This gave a good opportunity to consider a new financial goal - seeking market leadership in a profitable growth segment.
Here are a few thoughts on creating niche leadership:
Lead your people to a common view of key strengths - This is more than just technology. Partnerships, future product capabilities, teamwork, and established momentum in terms of customer base and visibility all provide competitive advantage. ?We knew we had a great technological advantage,? commented McLaren, ?but we had to get our people to believe we were just at a ?base camp.? Thus ?let?s climb the mountain? became the theme of our new focus. We got the whole company thinking we were situated here with great products in a huge and growing market. Our products were installed at over 170 world-class carriers - we just had to take the lid off and build momentum for the growth opportunities,? said McLaren. With a new focus and a new attitude CrossKeys committed $15 million over three quarters, to ?look & feel like a growing vibrant products company,? according to McLaren. Overall, staffing has increased during the year from 250 to 325 and growing.
Chose partners to support leadership perceptions - Partnerships help build leadership perceptions. Choose them to provide complementary strengths, and help you stay away from weaknesses or distractions. At CrossKeys the addition of major telecom vendors was a priority, given their chosen place in the emerging value chain of carriers and deregulated service providers. For example, system integration partners can handle ?specials? and allow developers to focus on product development. Leadership perceptions include technology, but are mainly driven by marketing and sales impact. The market gives credibility points for your associations with known brands. In marketing partners, CrossKeys saw value in expanding beyond the dependence on Newbridge as a channel. ?We now have arrangements announced with other major Telecommunications Equipment vendors (Lucent and Siemens) and System Integrators (EDS, Logica, OSI, and Tivoli - a subsidiary of IBM)? commented McLaren.
Declare leadership - Promote with consistent, well-framed messages. The first step is to think carefully about the niche definition. CrossKeys? category definition was initially just telecom carrier networks. Now they seek a broader position as the ?end-to-end? carrier software supplier, including the last mile to the end-customer. ?We?re declaring absolute leadership in M3 - the ability to give our customers an M3 space. M3 means software for:
multi-vendor (e.g. Newbridge, Nortel, Lucent),
multi-technology (e.g. ATM, IP, frame relay), and
multi-platform (e.g. Sun, HP, OpenView) networks.?
?Also, we are leaders in ?scalability,?? said McLaren, ?we can grow a network from 50,000 nodes to millions of nodes. That?s how we won British Telecom.?
Progress for CrossKeys - The backlog is now about $10 million, up by one third over a year ago. The ?frontlog,? or list of active selling opportunities, has tripled over that time. Also, the revenue mix is shifting in the right direction - latest results show 92% of revenue from ?products,? a very healthy evolution.
Next month - Part II on creating niche leadership. |
