Sales & Marketing

Why service companies need to prioritize brand

December 15, 2021 by Megan Lynch Adler Leave a Comment

For product and consumer-oriented companies where name recognition and brand preference are so important, it may seem obvious to invest in branding from the onset. Yet services companies often overlook the value in doing the same for their own businesses. When people are your product and differentiation is hard to come by, having a solid brand (and ensuring your company embodies it) may be even more important.

Here are just a few examples of what investing in your brand will do:

It builds trust and loyalty — internally and externally. A differentiated and consistent brand that truly reflects who you are as a company will help people remember you and stick with you. This is true for customers and employees alike. Brand advocates and evangelists are created when people connect emotionally with your approach, mission, values or philosophy. This is the foundation of a brand. The visual identity and messaging just brings it to life.

It can help you make money. Being the preferred brand in a competitive space, gives you pricing power. Customers will pay more for a brand they trust and who they know does quality work, which means you can charge more for services than a non-name competitor.

It creates the foundation of your marketing operation. Having a solid brand will provide you with the “how” to do everything. How you talk about your company, how you talk about your services, and provides consistent design elements and language that can be used across all your marketing (from your website to your events to the boilerplate on your press releases). When it comes to brand, consistency is critical.

It makes it easier for your sales team to talk about your company. If your sales team has a solid understanding of who you are as a company, what you do and what you stand for, it will make their jobs of selling the benefits of your services and what it’s like to work with you that much easier. That can directly translate to your bottom line.

It can help you save money. Having a well defined brand will also help you get staff and freelancers up to speed quicker and more efficiently, and reduce rework. Without a brand guide to inform them on what voice to use, messaging to lean on, and designs to utilize, you’ll end up with a splintered, inconsistent experience and a lot of extra cycles.

It helps you stand out from competitors. Take one look at Salesforce AppExchange (pictured below) to see what I mean. A whole lot of blue, and a whole lot of clouds. Thousands of companies list their services on AppExchange, and the ones that stand out are those who have not chosen the Salesforce-inspired visuals. When you dive deeper, some of their messaging has the same problem – it all sounds the same.

If your brand is differentiated, it will automatically make you stand out from the crowd and will make it easier for customers to remember you and keep coming back to you.

The basics of branding for services

Needless to say, the benefits of having a strong brand are endless, if done right. So how do you make sure you have a strong brand? Below is an overview of the basics:

Talk to your customers. The best way to know who your customers are, how they buy and why they like working with you, is to ask them. Customer interviews are invaluable and can give you insight into what they value, why they are buying, why they chose you over competitors, and what they want in the future. This can help you position your brand and ensure it’s connected in a real way to customer needs and pain points.

State your mission. Your brand’s mission should explain to the world why your organization exists. This clear and concise message should be something that both inspires and motivates. It should also benefit people outside of the organization. If your mission starts with “to be the leader in…”, time to start again. That’s a goal, not a mission. Your mission should be your organization’s North Star. One that helps define you but also guides your strategy and decisions. A great mission will also help you attract and retain talent. Employees who believe in a company’s mission are more likely to not only stay at a company, but perform better, too.

Define your values. Values are the principles and beliefs of a company that shape culture and drive behavior. Essentially, they are how you need to act in order to make your mission a reality. They should be in an active voice, clearly stated, differentiated, and there should not be 10 of them. Consumers and employees want to spend their time and their money with brands whose values align with their own.

Think about how you position your brand in the market. Do you know what makes you truly different from your competitors? This starts with knowing your customers (per the first point), the space you play in, and the competitive set. This is why it’s important to do real research into your competitors, where they are weak, and how you can stand out. Get to the heart of that, then infuse it into your brand and use it to position yourself in the market.

Find your brand voice and personality. Just as every human has a personality, so do brands (yes, even yours). Is yours confident with a dash of curiosity? Adventurous with a specific destination? Or more professional and straightforward? Your personality should reflect your culture while keeping the audience in mind. Brainsell is one example of a brand that I think conveys their personality – witty, snarky, and smart – both thoughtfully and consistently throughout its marketing. The key here is knowing what works for your customer base.

Language is important. When it comes to talking about your services, the most important thing is to frame them in the same way that your customers think about buying. If your customers are looking for integration services, just call it that. Don’t try to name your service “systems synthesis” or something else that customers can’t relate to.

With that said, while you should certainly be straightforward about the services you offer, there is room to take something like “people centric” and reframe it in a way that’s playful and clever, like how Korn Ferry states that they are “a radically human organization”. Personally, I find metaphors work well. Just as your design helps you differentiate your brand, so do your words.

Invest in a differentiated design. The reality of service-based businesses is that many different companies may be offering the same service out there. Therefore, as I noted earlier, it’s worth making sure your design will stand out in a crowd visually to help differentiate your brand. A few ways to do this include:

Colors. Perform a color study to look at what competitors are doing and find out what colors you can use to position your brand to stand out.
Photo Styles. We’ve all seen the generic stock images of hands on a keyboard, generic men shaking hands, and workers in an office. Don’t do it! Your brand should be a representation of who you are as a company, your culture, and your personality. Think out of the box when it comes to imagery. Imagery taken from a different angle or in unusual lighting, for instance, can make a difference. You can also consider applying a treatment such as filters, or adding illustrations, textures or patterns to the image in order to make it unique and eye-catching. Hakkoda is a great example. We used stock images to create beautiful collages that represent the company’s culture — including mountains, flowers and beautiful patterns that hail from Costa Rica, where the company has a large presence. The images are all treated and brought together in an interesting way to make it look totally unique.

Consistency. When you’re creating graphic styles, think about the need for consistency across all touch points. Be strategic about how it all looks, from your website and social feeds, to your invoices, and everything in between.

Establishing your brand at the onset is no small task, but it’s one that will pay dividends in the long run. When you think about the most successful companies out there – whether product or service-based – chances are you’re remembering them because of their brand. A brand that is memorable, easy to identify, reflective of who they are and one that you connect with personally.

Don’t you want your customers, partners and employees to feel that way about your company?

A view into Salesforce’s evolving talent ecosystem

September 27, 2021 by Michelle Swan Leave a Comment

Last week was a big week for Salesforce and those who are building businesses off the back of the CRM juggernaut. Dreamforce was finally back in-person (albeit on a much smaller scale) and Salesforce took the opportunity to talk about everything from new product integrations with recent acquisitions to how the company is tackling data regulation and climate change.

During its analyst day, Salesforce also raised its FY22 revenue guidance and initiated FY23 revenue guidance to $31.8B, labeling itself the “fastest growing enterprise software company ever.” Investors have taken notice and Salesforce’s stock price has been on a run.

But the news extended beyond Salesforce itself, with two new research reports highlighting Salesforce’s growing partner and talent ecosystem.

First, IDC released its annual report on the “Salesforce Economy” stating that this year the use of Salesforce and its ecosystem’s cloud services will create $308B in new business revenue. That’s expected to more than double by 2026 to $724B. While that’s impressive on its own, I found the next stat even more interesting. “Today, the ecosystem of Salesforce partners delivering cloud services to customers is five times as big as Salesforce itself, and will be more than six times as big in 2026.”

Another report highlighted the rise in talent demand for talent in this ecosystem. Every year 10K, a consulting partner and marketplace for independent Salesforce talent, releases its Salesforce Talent Ecosystem Report analyzing LinkedIn profiles, job boards and AppExchange data to understand talent supply and demand trends. This year’s report found demand for Salesforce experts was up an astounding 364% YoY!

This all points to a huge market opportunity for entrepreneurs in the Salesforce ecosystem, but (and there’s always a but) it also highlights how the ecosystem is evolving – and the opportunities and challenges that come with these changes. To understand some of these trends in more detail, we sat down with 10K founder and CEO, Nick Hamm. Here’s some of the takeaways.

A growing imbalance between supply and demand

Let’s start with the demand for talent. According to 10K, job listings for Salesforce experts have increased exponentially in the last year. In 2020, global demand was down 7%. Today it’s up 364% YoY.

According to 10K, job listings for Salesforce experts have increased exponentially in the last year. In 2020, global demand was down 7%. Today it’s up 364% YoY.

This is happening for a few reasons. Part of it is the pandemic. In 2020, a number of companies laid off or held off hiring. Now that the economy has bounced back, everyone is hiring at the same time. However, the biggest driver is the increasing investment in cloud, remote work platforms and digital transformation.

IDC predicts that cloud-related technologies will account for 27% of digital transformation IT spending this year, growing to 37% in 2026. With Salesforce positioning its Slack-first Customer 360 Platform as the new “digital HQ”, it’s in a great position to capitalize on that spend and that opens up enormous opportunities for its partners.

Unfortunately, capitalizing on this opportunity won’t be easy. Simply put, Salesforce talent supply is slowing. While it’s still growing 23% YoY, that’s a 21% decrease in growth rate from last year. In 2020, the supply of Salesforce talent grew 29% YoY. In 2019, it grew 151% YoY. Some regions fared better than others (see graph below) but it’s down across the board — at a time when demand is off the charts.

It’s no wonder the Salesforce talent market has become the wild west. And a competitive market for talent is about to get more competitive as other cloud vendors enter the space and look to move up-market. Third-wave cloud ISVs like Twilio, Okta, Snowflake, ServiceNow and HashiCorp understand that customer success in the B2B enterprise market requires people, and they’re taking a page from Salesforce’s playbook to build out their own partner ecosystem. The war for cloud tech talent is going to get worse, not better.

The talent supply is shifting

While North America remains the center of gravity for Salesforce talent, supply trends are shifting focus to other regions — with a growing emphasis on Latin America. According to 10K’s report, India still leads in the global share of Salesforce developers, but South America experienced the highest supply growth overall at 42% YoY.

While North America remains the center of gravity for Salesforce talent, supply trends are shifting focus to other regions — with a growing emphasis on Latin America.

IDC’s research shows a similar trend. New business revenue is expected to grow faster in LATAM than any other region between now and 2026. For LATAM countries, 2026 CAGR rates are projected to be between 32-42%, while rates for the US (14%), Canada (17%), Europe (mid teens to 20%) and Australia (20%) are substantially lower. Even India, which continues to be a big focus for Salesforce and its partners, is expected to only grow at 27% through 2026. Here’s a cool Tableau visualization on these stats.

LATAM’s trajectory is reminiscent of India’s Salesforce ecosystem in the early days. As more investments are funneled into the region, founders looking for talent should pay close attention to the supply and demand trends in this market and get in early if they can. LATAM will be a bigger player in cloud talent in the years to come.

The overall makeup of the talent ecosystem is also evolving. Salesforce has been vocal and proactive about increasing diversity within its ecosystem, knowing that it drives both innovation and performance. It looks like those investments are starting to pay off.

According to 10K’s analysis of more than 3,200 LinkedIn profiles in established markets there is steady progress. The concentration of female versus male profiles in Salesforce-related roles continues to increase YoY. Europe saw the most progress, with a 10% increase in female profile concentration across all roles (Administrators, Developers, Technical Architects, and Consultants). Administrator roles continue to be the most gender diverse.

Unfortunately, diversity continues to be a problem in the higher-paying more experienced technical roles. Males still account for nearly nine out of ten Technical Architect roles and two out of three Developer roles within established markets.

Hiring and retaining a diverse workforce must be a focus area for any partner in the Salesforce ecosystem.

While gender is only one facet of diversity, these stats make me optimistic, even though there is clearly more work to do. Hiring and retaining a diverse workforce must be a focus area for any partner in the Salesforce ecosystem. Salesforce is pushing hard on partners in this area, and it will be more of a requirement than a nice to have for those looking for long-term growth.

Opportunities and challenges for Salesforce consultancies

The Salesforce consulting partner ecosystem is experiencing a similar trajectory as overall supply trends – still growing in the double-digits, but slowing. According to 10K’s analysis, the number of Salesforce consulting partners listed on AppExchange grew by 14% YoY, about half as slow as new partner growth last year. It’s also the slowest growth rate 10K has reported since starting their research in 2018.

The slowing growth rate is to be expected given the size and maturity of the consulting partner ecosystem, however, the make-up of this sector is interesting to watch as Salesforce expands. Of the 1,859 consulting partners listed on the AppExchange, 1,720 of the firms have fewer than 50 certified experts. Two-thirds of all consultancies have 10 or fewer certified experts.

The fastest growing segment over the last 4 years according to 10K are mid-size firms – those with 50-500 certified experts. However, if you look at the number of consultancies in this segment, it’s relatively small. This is partly because it’s not easy for services companies to make the jump past $10M or $15M in revenue – it often requires capital and a different approach to growth. It’s also due to the sheer amount of M&A happening in the space. There have been 67 acquisitions of Salesforce consultancies in this year alone, and many of the firms being acquired come from that sweet spot. If talent is a gating factor for growth in services, expect more M&A in the year to come.

What does all this mean to founders?

To me, all this data points to 5 things:

First, there is a huge opportunity remaining in the Salesforce ecosystem. We’re 20+ years into the journey, and while Salesforce does have some challenges to work through to reach that $50B revenue goal in FY26, the TAM is huge and Salesforce has a track record of delivering.
Partners are going to continue to play a big role in Salesforce’s strategy (as well as with other cloud vendors). IDC found that partners stand to make $6.19 for every $1 Salesforce makes by 2026.
Talent is going to be the gating factor to growth. Capital is not the hard part. Finding, growing and retaining the people who can make the Salesforce platform sing will be far a bigger challenge, especially as more cloud vendors enter the space and vie for that talent.
Where that talent is coming from and what it looks like is evolving. Firms looking to win in today’s talent wars need to get proactive and creative with their talent strategies – prioritizing diversity, retention, training and new sources of talent like LATAM.
The Salesforce partner ecosystem is evolving too, presenting both opportunities and challenges to entrepreneurs. There’s plenty of land to grab still, but it’s getting more crowded – especially at the lower end of the market.

If you’re a cloud consultancy looking for capital and counsel to take advantage of these opportunities in the Salesforce ecosystem, shoot us a note.

Redefining a successful go-to-market strategy in the cloud’s third wave

August 11, 2021 by Jeff Kaplan Leave a Comment

Crafting a successful go-to-market (GTM) strategy is essential for any company seeking to win in a rapidly changing marketplace, and cloud services can be described as exactly that. Demand for new cloud services, and the expertise to put them to use inside a business, is exploding. This is providing not only an opportunity for professional services firms looking to capitalize on customer demand, but a challenge when it comes to standing out and being seen as a partner of choice in an increasingly crowded market.

A strong GTM strategy is the answer. A great strategy, combined with execution, can mean the difference between a company growing 100% year over year, and one growing in the single digits. This element of a company’s corporate strategy has always been important, but when it comes to the third wave of the cloud, the rules of engagement have changed.

GTM – The Basics

The basic point of any effective GTM strategy is to put a plan and the necessary organizational pieces in place to deliver on a company’s unique value proposition to customers and partners in order to achieve competitive advantage and run a profitable business. While that may be a mouthful, it’s even more complicated than it sounds. Which is why only a handful of companies become true market leaders in their respective sectors.

Let’s start with the basics. A traditional GTM strategy usually starts with the four P’s of marketing:

1. Product – the good or service being produced and sold
2. Place – the target issue/market being addressed and served
3. Price – the packaging and pricing model being used to provide the solution
4. Promotion – the value position and differentiated messaging to stand out in the market

A GTM strategy establishes the objectives and tactics to put the four P’s into action.

Historically, many technology companies – especially product companies — tend to focus their GTM strategies around the product and pricing component, focusing primarily on the technical qualities of an offering and how it’s better than competitors. Those fundamentals are still important, but the emphasis over the last decade has shifted to the business value that those technical qualities provide (productivity, innovation, cost savings, agility, customer satisfaction, etc.), and almost as importantly, the experience that surrounds the product or service.

Too many companies make the mistake of believing that a successful GTM strategy starts with marketing and ends with sales.

Too many companies make the mistake of believing that a successful GTM strategy starts with marketing and ends with sales. However, cloud companies and a growing number of managed service providers that rely on a pay-as-you-go pricing model, understand that it doesn’t end with landing a customer. It’s about crafting a great customer experience and expanding their reliance on the solutions over time. Customer engagement and loyalty are the key to long-term growth and profitability.

GTM Strategies Have Shifted with Cloud Adoption

When you consider how much things have evolved over the last two decades, it’s not surprising that overall GTM strategies, and the market segmentation, pricing, channel programs, messaging and promotional techniques used within that strategy, would evolve as well.

In the first two stages of the cloud, customers were still getting comfortable with the cloud model. Cloud consultancies that wanted to gain a competitive advantage, aligned themselves with the leading cloud vendors – Salesforce in particular – and demonstrated their horizontal implementation and integration skills through customer success stories and thought-leadership promotions.

Strategic partnerships, customer success stories and thought-leadership campaigns are even more important in the third wave of the cloud. However, rising customer expectations, intensifying competition, maturing platforms, and the move to digital interactions have added another layer of GTM requirements to the mix.

GTM Strategies for Third Wave Cloud Consulting Leaders

Here are some of the most significant GTM changes the next generation of consulting leaders must address in the third wave of the cloud:

Marrying business and tech capabilities.

In the past, promoting a consultancy’s proficiency in a specific technical platform was the primary objective. As cloud vendors marketed the technical advantages of their on-demand solutions over traditional on-premise applications, their consulting partners rushed to show how they could help enterprises quickly swap out the old systems with these new cloud services.

Today enterprise customers are looking for more than implementation help or generic “lift and shift” projects. They want to create unique and seamless digital experiences that utilize an expanding set of cloud applications and platforms, which requires third wave consulting leaders to be as much business consultants as IT technicians.

When it comes to rethinking important business processes or customizing cloud solutions to meet specific corporate needs, consultancies need to demonstrate through their positioning, services and workforce that they offer far more value than just implementing another new application.

Leading with vertical market requirements and industry-specific expertise.

In the past, solving the generic needs of specific departments was the primary objective of most cloud consultancies. Today, addressing the business process challenges that cross enterprise boundaries requires a more intimate understanding of vertical market dynamics and industry-specific requirements. Cloud platform vendors are seeing this shift as well, and adjusting their own GTM accordingly.

As such, third wave consultancies must go beyond application-specific skills to demonstrating true domain expertise in specific industries. They also need to attract professionals with the experience to fully understand the business objectives of their clients. This means cloud consultancies must position themselves as a vertical market specialist as well as a cloud solution expert, and create the culture, brand and marketing initiatives that will not only win new clients but also attract the talented people needed to deliver on those promises.

Tightening strategic partner relationships while adding multi-cloud capabilities.

In the past, only a handful of cloud consultancies were able to garner a lion’s share of the professional services opportunities being generated by cloud vendors. Today’s proliferation of cloud players – both vendors and services firms – has created a buyer’s market for customers that want to select the perfect solution and the perfect partner to transform their operations. While the larger addressable market means more opportunity for cloud consultancies, the growing number of consultancies vying for a piece of the action makes it far more difficult to win customers, and gain the attention and full support of the cloud vendors.

Third wave consulting leaders must now demonstrate their ability to add value to a cloud vendor’s functional capabilities, while also showing they can work well in an enterprise’s multi-cloud environment. This means working closely with the strategic vendor’s field sales team, as well as collaborating with its alliances, marketing and service delivery teams – investing in their partner’s success as well as the customers.

This can be a tricky balance for firms that want to be a long-term, trusted partner for customers. They can’t just operate in a vacuum, but must recognize the other cloud solutions that enable clients to achieve their corporate objectives and prevent unnecessary vendor lock-in.

Shifting from projects to ongoing customer relationships.

In the past, being adept at chasing immediate project opportunities was the key to quickly building a cloud consulting business. But, too often this approach led to pricing compromises and less than optimal outcomes, which in turn resulted in frustrated clients and consultants, as well as operating inefficiencies for the consultancy. In today’s highly competitive marketplace just winning project opportunities is no longer a sustainable business model.

To win in the third stage of the cloud, consulting firms must adopt new engagement models that create an ongoing business relationship with clients. In some cases, this will mean adding a set of ongoing, managed services to their portfolios. In other cases, it will mean broadening their service portfolios to add strategy consulting, change management, productized offerings, or other value-added capabilities to their toolkits to create a full lifecycle of services and establish tighter bonds with their clients.

Some of the more mature firms are also experimenting with outcome-based pricing, or establishing co-innovation centers to demonstrate they see themselves as an extension of the client team and are invested in the client’s long-term success.

Moving from physical to virtual engagement techniques.

With the ebb and flow of this pandemic, it isn’t likely that we’ll ever return to the old normal of relying heavily on face-to-face sales engagement. Some conferences will return and some on-site visits will be necessary, but many enterprise decision-makers will be happy to continue to rely on remote, virtual interactions going forward.

Getting the attention of these decision-makers will be increasingly difficult, and demonstrating a consultancy’s unique capabilities via virtual channels will be an escalating challenge. This will place even greater pressure on cloud consultancies to carefully craft (and test) their marketing messages, target their marketing campaigns, invest in tools to hone and support their sales efforts, and track their success to continually optimize their performance.

What worked in the first wave of the cloud simply isn’t sufficient in the third wave of the cloud.

The ideas we’ve presented here are just some of the ways that GTM strategies and tactics have to change in the third wave of the cloud. However, they are by no means the only ways. The rise of marketplaces and peer review sites, the growing importance of account-based marketing and content marketing, and newer mechanisms to drive customer loyalty and community engagement are just a few of the other GTM tactics we haven’t even touched on here.

I’ll close by saying the rapid adoption of cloud-based solutions accelerated by COVID has created unprecedented opportunities and challenges for a new generation of cloud consultancies, but capitalizing on those opportunities and overcoming those challenges will require an ever-evolving GTM strategy. What worked in the first wave of the cloud simply isn’t sufficient in the third-wave of the cloud. That statement applies to more than GTM as well. If you’d like to learn more, I’d encourage you to check out Tercera’s ebook on what it takes to be a services leader in the cloud’s third wave.

27 questions to create your country playbook when expanding internationally

June 18, 2021 by Jean Manaud Leave a Comment

For first-time CEOs and founders, the decision to expand internationally can be both exciting and daunting — as it should be. Expanding into new regions can spur growth and open up a world of possibilities, but it also adds a level of complexity that not every leadership team is ready for, especially without first-hand experience operating in that region.

In part 1 of my blog series on international expansion, I shared a strategic approach for how services firms can tackle international expansion, based on my own personal experience. It covered topics like when to expand, where to go first, how to work with partners, and ways to mitigate risks like culture dilution and financial readiness.

In part 2, I’ll dive deeper into what happens once you decide to make the move. Specifically, how to create a global operating framework that can support your expansion into each new country — what I call your country playbook.

What is a country playbook?

A country playbook is in essence an operating framework for international expansion, providing structure and information needed to expand into a new country or region in a disciplined, repeatable way. It’s the operating manual that brings your strategy to life.

A country playbook can align the leadership team with the new leaders on the ground in a new region. It can reduce risk, speed decision making and guide the new team to operate with the same vision for customer experience, culture and employee experience while still allowing for local flexibility.

While a country playbook should provide enough detail to answer the most common questions about expansion, it doesn’t need to be long or formal. It just needs to provide your leaders with the direction they need to understand and execute on your strategy—and feel empowered to make decisions that will benefit everyone involved.

What are the components of a country playbook?

There are two parts to a successful country playbook: a global overview and country specifics.

The global overview provides a high-level structure that can be used across countries, covering items like company positioning, sales differentiators, the scope of services to be provided, the customer value proposition, financial modeling and governance frameworks. This part of the playbook also includes information to help country leaders with hiring, providing clear expectations about alignment with your culture.

The playbook must also address country-level nuances linked to your overall strategy. For example, the specific roles you might need in-country for delivery versus what you can centralize through a center of excellence model. It might also include specific services or capabilities that best fit the customers and partner maturity in that market.
Since each country and situation is unique, this article will focus on the 5 areas that should be part of the global overview: 1) culture; 2) team; 3) services & go-to-market; 4) governance; and 5) financial model.

When thinking about each of these areas, look to expand through fractal growth. By this I mean branching off from an existing offering or point of strength, which helps to create consistency and alignment between regions. Below is an illustration for how this might look as you expand your market interactions, people processes and customer experience into a new country.

Culture

Solidifying and scaling your existing company culture should be top of the list when it comes to global expansion. You have to get it right, and so do the country leaders hiring your new team. Your country playbook gives you an opportunity to embed your existing culture into each new market from the start, weaving your mission and customer experience into the fabric of each country’s operating framework.

To help you get started, your playbook should address questions such as:

What is your stated vision, values and brand promise as a company?
When your company hires a new leader, how can the team make sure they’re aligned with your values and cultural DNA?
What are your norms and rituals as a company, and what can you/should you bring to the new region?
What kind of differentiated experience do you expect to provide to customers and employees in this new market based on existing brand expectations in other markets?
How can you translate your corporate culture into how you manage processes, performance and compensation while leaving room for local nuances?

Team

Thinking through how teams will be structured within and across regions in advance will not only create efficiencies of scale and limit conflicts down the road, it will also speed up recruiting and productivity. Your country playbook should provide guidance on how you will manage customer relationships inside and between regions, what kind of support will be provided from headquarters versus what talent is needed locally, and what you can serve out of nearby regions. This is especially important for customer-facing and leadership roles.

Certain economies of scale can come from centralization and filling some roles from nearby regions, however, these decisions must take into consideration regulatory, cultural and language differences between regions. You will likely want to fill in-country customer-facing roles (e.g. country management, sales, project managers, solution architects) by hiring local/native people, while leveraging global support functions for scale. Some companies will fly-in top experts or tap into global virtual delivery teams, or, when you have a first team in place and some traction, use nearshore and/or offshore facilities.

Your playbook should address questions such as:

What leadership roles are needed, and will those be hired locally or through existing leadership?
What is your delivery model? What are the services you need/intend to deliver locally or globally?
What is your partnership strategy for a given market?
How are you going to train your employees and manage their competencies?
How are you going to staff projects?
How are you going to structure work arrangements with subcontractors?
When it comes to forecasting how can you anticipate and prepare for demand?
How are you going to manage customer satisfaction?

Services and GTM

When it comes to the services, you’ll want to build a country-tailored portfolio mix and go-to-market strategy. This strategy should be based on the size and potential of the targeted market, the offerings most needed by your partner ISVs in that region, and the competition analysis you conducted prior to making the decision to expand. That portfolio shouldn’t reinvent the wheel, but instead be grounded in the services that already set you apart in your home market. For example, if 80% of your customer references are in the financial sector or are of a certain size, it makes sense to focus there in the new country.

Your playbook should address questions such as:

What specific services should we offer in each country?
What is the value proposition of those services?
To what extent will our offering differ from what we sell elsewhere in the world?
How does our pricing in this country compare to the rest of the world?
What markets or services do we want to say no to (e.g. public sectors, staff aug, etc.)?
What is your local plan to build/develop your customer-facing brand?

Governance

Governance frameworks and approvals should also be built into the playbook, breaking responsibilities down locally, globally and regionally. This part of the playbook should address who makes the decisions, and how that relates to your strategy and services.

Your playbook should address questions such as:

What level of decision making or approvals are needed when it comes to customer contracts?
How do we handle fixed-price proposals?
What are the thresholds on approvals and who needs to be involved?
Who makes the final decisions on hiring? Does that vary by role?

Financial model
Last but not least you will want to define your financial model and the budget implications of decisions being made. Your playbook should address structural models like how you’ll manage the P&L, and think through those decisions.

Your playbook should address questions such as:

Will we manage P&L by country, region or globally?
How do we align and create consistency between our P&L philosophy, incentives, compensation policies and governance?
How do we cope with intercompany subcontracting to ensure that countries/markets who host our expert resources are incentivized to support the start of new markets?
Who is financially responsible for budget overruns?

Once you have your global framework in place, you can dive deeper into the specific country-level detail. This should also be an evolving document. It will only continue providing value if it remains up to date and considers lessons you learn as you expand into more countries. So leave room for growth while ensuring your current playbook alleviates misunderstanding and miscommunication. Revisit the questions in here and add to those based on the situations that occurred in earlier rollouts and talk to your regional leaders to see what else would’ve helped them as they took their first steps.

If you’re a founder or CEO looking to expand internationally, and need capital or counsel to support your move, get in touch with Tercera. Or connect with me on LinkedIn with specific questions. We might be able to help!

How to be a services leader in the cloud’s third wave

May 25, 2021 by Chris Barbin Leave a Comment

Something big is happening in the cloud computing space. Salesforce calls it Cloud 3.0. We call it the cloud’s third wave. Far too many call it simply digital transformation. Whatever you call it, there is a perfect storm happening right now, with multiple forces coming together to drive more mindshare and more money into cloud technology and the vendors that play in that space.

The first force is no surprise to anyone — the pandemic. COVID dramatically accelerated digital initiatives inside most companies. As Satya Nadalla, the CEO of Microsoft put in, “we saw two years’ worth of digital transformation in two months.” Those initiatives aren’t slowing. In fact, they’re accelerating.

The second force is the maturation of cloud computing. Businesses of every size have bought into the cloud model, and are finding new and creative ways to embed it into their business and customer-facing processes. A maturing space also brings a bigger, more diverse group of vendors, which means more choice for customers, and unfortunately, more complexity.

A third force is the surplus of capital in the market today. Consider just some of these stats:

Cloud companies now have a $2 trillion market cap (Bessemer)
In 2020 alone, $186 billion was invested into private cloud companies (Bessemer)
In Q4 2020 alone, five cloud vendors generated $37 billion in revenue (Cloud Wars)
45 cloud consultancies were acquired in the first 5 months of 2021 with an aggregate value of more than $3 billion (Tercera/451 Research)

Most entrepreneurs and investors will tell you at least 50% of success is being in the right place at the right time, and for those in cloud services, you couldn’t pick a better time. But being in the right place at the right time is only half of the equation. The other half comes down to execution, and building and scaling a business (especially a services business) in the cloud’s third wave looks far different than it did 20 years ago.

As an operator in the services space for more than 25 years, a founder of one of the earliest cloud consultancies, and now an investor and advisor to the next generation of cloud consultancies, I’ve seen the evolution of cloud services first hand. So has Jeff Kaplan, the founder of THINKstrategies, a strategic consulting firm focused on the business implications of transitioning from product-centric to services-centric business models.

Jeff has been a thought leader in both services and cloud computing for three decades. He’s a respected industry analyst, and is now a strategy and go-to-market advisor for Tercera’s portfolio companies. He’s seen A LOT over the years, so when it came down to documenting what’s going on at the intersection of cloud and services right now, I couldn’t think of a better partner.

Our newest ebook, What It Takes to Be a Services Leader in the Cloud’s Third Wave, covers the evolution of cloud computing, the new players in the space, as well as the business models, labor models and skills that consultancies need if they want to succeed in the third wave.

Jeff and I will be holding a webinar and live Q&A about the third wave and some of the concepts in this ebook on Thursday, June 3 at 10am ET. To join that webinar (or access the recording), register here.

We hope you’ll join us!

Building a smarter strategy for international expansion

May 18, 2021 by Jean Manaud Leave a Comment

Today, international expansion is top of mind for most professional services firms. Expanding into new territory can not only strengthen your market positioning, help drive revenue growth and expand your customer base, it can also diversify your businesses and give you greater access to talent. That last aspect may be the most urgent need these days, as companies around the world scramble to find people with the tech skills needed for the third wave of cloud computing.

Expanding into new regions and countries can bring a host of benefits, but it shouldn’t be taken lightly. It requires capital to build a new presence in a new location, as well as time, focus and resources from a firm’s leadership team.

Global expansion can be costly and bumpy if you aren’t ready, so getting the timing right is important — something I’ve learned first-hand after two decades in professional services, leading international operations across 40 countries, and founding one of the first Workday and ServiceNow consulting firms in Europe. This 2-part blog series is meant to relay what I’ve learned about the opportunities and challenges of international expansion based on that experience.

In this blog, I’ll cover topics such as how to know when it’s the right time to expand, how to prepare for the risks that come with that expansion, and how to think about an effective strategy. In part 2, I’ll talk about how to execute an operating framework for expansion, which I call “the country playbook.”

Let’s start with the first big question.

Is it the right time to expand?

Services companies initiate global expansion for any number of reasons. Maybe it’s an opportunity that can’t be missed, like a proactive request from an important customer or your main technology partner. Perhaps it’s a need to diversify your revenue or customer base. Maybe it’s something being pushed by your board, or a suggestion from the leadership team to capitalize on your momentum and desire to become a global leader.

No matter what the catalyst is for these conversations, it’s easy to get caught up in the idea of a new opportunity and hard to take a step back and think: “Is this the right time?” or “What is the optimum pace?” So, how do you know when you’re ready to expand? There is rarely a black and white answer to this question, but consider the following questions:

Are you currently thriving in your home base? Is your business stable?
Have you passed a critical size in your home country?
Do you have a strong leadership team and culture in place to be a foundation for other regions?
Do you have the necessary financial resources or capital to expand?
Do you have commitment from your board and broader management team to make the leap?

If you can answer yes to most or all of these questions, it may be a good time to make the move.

Are you prepared for the risks?

As you undertake international expansion, there are many challenges that could impede your success. It’s imperative that you think through each of these challenges and work solutions into your strategy and plans. Here are a few of the barriers and risks that come up time and again:

Financial costs. Don’t underestimate the lead time and investment needed to start and build a presence in a new country. You will need at minimum an in-country team to handle the customer-facing roles (e.g. consulting leaders, sales, project managers and/or solution architects) while you leverage the rest of your organization to deliver projects. It takes time to hire your local presence and time to ramp up a minimum billability.
Cultural impact. In a people-based business, few things matter more than culture. While there may be certain cultural nuances based on the region you are in and the region you are planning to enter, there should be some consistency in how your employees, customers and partners interact with your company. To ensure your culture feeds into your new locations, you’ll want to have a set of guiding principles and processes that in-country leaders and employees can use to ensure your culture is performing, regardless of location.
Management distraction. You need your leaders to be focused on your business, and expanding into new markets will naturally create distractions for your management team. One way to mitigate this is by following a fractal growth pattern, expanding country-by-country and building off existing practice areas or IP rather than trying to open too many countries at once or launching a completely new service line in a new country.
Talent sourcing. You will not establish yourself in a new market without the right leadership and team. If your company doesn’t have an established brand in the market, recruiting the right talent won’t be easy. How will you mitigate this? Will you lift and shift current team members to a new market, or pay to hire a local recruiter? If you move existing team members, how will they work within the region’s cultural norms and languages?

Do you have the right strategy to be successful?

Once you understand the risks, it’s time to create a plan for success. Below are four areas that will help you develop a successful expansion strategy, and at the same time, create an effective business case to get buy-in from your board and stakeholders.

Align with your technology partners

Most services businesses rely heavily on technology partnerships. If that’s the case for your business, which it probably is, the first thing you want to do when developing your international strategy is to align with your primary technology partners or Independent Software Vendors (ISVs).

Here are some questions to consider:

What countries/regions are your ISV partners in today? What is their growth in those regions?
How established are they in these markets?
How strong are they at sales and marketing? Do they need a partner to help them bring in business, or is their biggest need on the service delivery side?
How open or closed is your ISV’s partner ecosystem? Do they welcome new entrants to an ecosystem, or do they prefer to curate their partners? How controlling are they with who gets access to their sales teams and customers in the region?
What certifications will you need to be marketable in the region?
How supportive are they about you entering a particular market?

This last question is especially important. If the country GM and sales leadership for your primary partner isn’t supportive of you entering their region, it is going to be an uphill battle. They need to see how you can help their interests in the region, and know the unique value you bring to their sales team and customer base that others can’t.

Assess the market opportunities

To ensure there is room for your services to thrive within a given country or region, you need to start by evaluating the maturity of different markets, the opportunity in each market and the competition that currently exists there.

Here are a few questions to help with your due diligence:

What is the market’s size, maturity and growth rate?
How saturated is the market today?
How receptive are your partners and customers to you operating in a given market?
How easy is it to enter that market (e.g. language, timezone, understanding of the local culture)
Would your entry reshuffle the ecosystem in the targeted country?
Does this create possible tactical strategies which could create new opportunities and/or de-risk your entry, such as partnering with local Global System Integrators or local management consulting firms?

Consider organizing your expansion by “classes” of countries and then map out your pace. How many can you expand into at once? Some companies will want to enter a market as soon as their technology partners begin to gain any traction there, while others might prefer to wait until there is a bigger customer base to serve. There are risks in each approach. If you go in too early, you may need to invest more time and capital to build demand alongside your partner. If you wait, you risk letting competitors build up competencies and become that valued partner. Again, there may be no perfect answer or time, but it’s important to talk through these risks with your leadership team.

Refine your tactical approach

Having a clear, compelling and consistent value proposition is important for any business, but it becomes especially important when recruiting a new team and establishing yourself with a new set of customers and partners. Start by remembering what made you successful in your home country in the first place – qualities like your founding team’s credentials, your culture, your team’s unique skills and expertise, track record of success, customer network and ability to deliver results fast.

From there, outline how you’ll differentiate your business in this new market and what partners and customers value the most. You’ll want to combine your market analysis with an understanding of your strengths, and build a value proposition that reflects this combination. What intellectual property or potential sales assets can you bring over to this new region, and what you might need to rebuild? Can you localize a preconfigured solution for a specific vertical market or bring an accelerator that is non existent in your new target market?

Refining your approach to this new market requires having an understanding of the customers in that market, not just based on assumptions. There may be an entirely new set of regulations or operating norms for businesses in that region that you aren’t aware of. It might help to start small, by targeting a certain segment of customers or industries where you can leverage your existing references and credentials or launching only a subset of your services portfolio.

Develop your country playbook

Once you are certain you’re ready to expand, have narrowed in on the country or countries you know hold the greatest chance for success, have aligned with partners, and have a basic understanding of how you’ll approach the expansion, it’s time to start building your operating model.

I call this your country playbook, and it’s essentially a documented framework that lays out what you’re trying to achieve for the business at a country level. It’s a more detailed plan for how you will execute in a new market that ensures that you, the teams in your existing home base, and your country leader are fully aligned.

In my next post, I dig deeper into how to create a country playbook, the areas it should address and how it can help you create a consistent, repeatable process for international expansion.