|
 
|
Crosskeys - Creating
Niche Leadership - Part I
"We're
declaring absolute leadership in M3 - the ability to give our customers an
M3
space."
from the desk of Peter Fillmore
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.
Cognos - Creating Niche Leadership - Part I
Cognos & Crosskeys - Creating Niche
Leadership - Part III
Your comments, questions, and suggestions for future articles are welcome
fillmore@westpark.com
|
|
