It's one thing to perform major surgery on a business that's struggling to stay afloat; after all, what do you have to lose?  But when the patient is already healthy and profitable, is any sort of radical procedure really a good idea? 

It certainly can be, according to Ken Ramoutar, head of product marketing for the applications business of Sterling Commerce in Dublin, Ohio.  Sterling Commerce, an early pioneer of electronic data interchange and secure file transfer technology which enjoys annual revenues in the $500 million range, clearly falls into the healthy group.  Its client roster sounds like a class reunion of the Fortune 500.  And now, two years after being acquired by AT&T, it enjoys respect and recognition, as well as very deep pockets. 

But, according to Ramoutar, the company's first 30 years were merely prologue; Sterling Commerce today has much higher aspirations.  And the responsibility for figuring out how to achieve them has fallen to its product management and marketing staffs.  "Our company has a growth strategy that's been mapped out the next five years," he said.  "We are targeting significant year over year growth for the next 5 years"

So what will it take to get there?  "We think it means we'll have to re-orient the way products in the company are formulated, reorient the way we sell them, and change the way decisions are made about what we're going to invest in and in what timeframe," he replied.

Under the knife

"The surgery is fairly major because when you have a company that is not used to aggressively growing their business, you find they don't really have the internal processes in place to do that.  You have to be a lot more customer- and market-focused.  You need to shift priorities that traditionally were managed through the engineering organization.  So product management and product marketing have to lead in terms of market sizing - what products to build, and why.  And that's not something that companies who are in a stable mode, and not growing very well, are used to doing." 

For Sterling Commerce - which for years made a profitable business of selling tools and technology products for less than $100K a clip to hard-core technologists deep inside its customer's IT departments - finding new growth opportunities meant looking beyond its traditional comfort zone.  "We used to go to technical folks in the organization and try to match what they needed against what we had," Ramoutar recalled.  "It was either deal or no deal.  Now we're attempting to approach executives with line-of-business responsibility about pervasive business issues that span the organization.  We had to start thinking more about being an enterprise software company, moving up the value chain from technology and tools to becoming more of a applications provider that leverages our infrastructure technology "

"When you think about growth, you're generally thinking about bigger deals, selling up the value chain to the various executive constituencies," he said.  "So our customer profile shifted much more toward executive selling - selling outcomes and value.  You have to get up to the levels where the problems are significant enough that bigger deals can get done and a true partnership with the vendor is needed." 

Partnership risks

That can also bring new dangers. "When you become more of a strategic partner, you want to meet all your customer's requirements.  But that puts you down a path of having to make hard decisions about what's custom and what's going to be applicable to broader markets.  That's a much bigger challenge than it used to be because everybody has specific requirements," he said. 

"The challenge is to avoid becoming a custom development shop for a specific customer - not promising functionality and putting it in your roadmap at the expense of growing the broader market.  The easy answer is to tell them we'll build everything in our product you need.  But that will take you down the road of building things that are very specific to only a few customers.  So you have to be very, very careful," he cautioned.  "If you've done the homework of trying to understand your market, you'll have something concrete on which to base those decisions.  Otherwise you'll be dragged into every customer deal, and they'll ask you to do very specific things.  Pretty soon, all you have is a roadmap of customer enhancements and nothing that's going to change and grow your business." 

Sterling Commerce's strategy?  "We want to become a partner in solving major challenges around, for example, supply chain execution, or order fulfillment, or cross-channel selling.  These are big, thorny issues for many companies," Ramoutar said.  But doing so requires a different approach.

"As you climb up the value chain, you find that buying often happens by committee and sponsorship.  So it's not just who has signing authority as an individual; it's that the buying process itself changes.  As a strategic partner, you have to understand all the constituencies on the committee - and how to prove value to them," he said.

Strategic selling

"We've focused on two areas to try solving that problem," Ramoutar said.  "First, we focused on our own sales teams.  We've had to invest more in the solution selling process versus feature-function selling."  A lot of the onus falls on product marketing and product management to help the sales teams make the transition.  "It's incumbent on the product marketing group to be very, very solution-oriented.  So we have tried to change the model to be very value-oriented and solution-oriented in terms of what we sell," he said.

The other area is internal.  "You've really got to constantly define and educate your staff about what product management is and what product marketing does, and how it's going to affect the company.  You have to formally lay that out and take all the opportunities you can to bring it in front of the organization," he said.  "And make sure you're getting in front of new hires because they don't know what these organizations are supposed to be doing."

But no approach, however well planned and executed, consistently yields orders for the company's full solution.  "Few prospects buy everything out of the gate," Ramoutar noted.  "Even though you've positioned it as an end-to-end solution, you'll often find that the pressure points they're facing and the priorities they have will lead you to a different entry point.  But you still need to show breadth, otherwise you are automatically devalued as being a niche player," he said.  "One of the keys is to be modular enough to have many points of entry because the pain is going to be slightly different with every customer."

Growing together

For companies like Sterling Commerce, a major component of growth centers around integrating its own acquisitions.  "How do you assimilate product roadmaps, go to market plans, and your own story quickly enough that you can go to market and actually get value from that acquisition?" Ramoutar asked.  "By learning from mistakes."  One of the biggest lessons Ramoutar learned was the value of getting an integrated roadmap out to customers and analysts as quickly as possible - at least within the first 90 days.  "Uncertainty about what you're doing with the combined solutions causes angst within the customer base," he said. "Which products are you keeping?  Which products are you sunsetting?  Which products are you going to continue to develop?  And what does that mean to me as a customer?" 

Industry analyst involvement is another key.  "You need to build allies with the analyst groups very quickly because they are hugely influential on customers.  So keep them in lockstep; keep them in the communication loop.  Get them to be part of the process.  Set up strategy sessions with them.  Sit down behind closed doors, walk through where you're headed, and get their input.  At Sterling Commerce, we do that on a regular basis.  One session might be on our product integration roadmap, another might be on our marketing strategy or marketing positioning strategy.  Not only does that help you, when you're all done, they become your advocates because they were part of the process."

But there is also damage control to consider.  "It breaks a lot of things in companies when you say let's move from a renewal growth model to one where you have to go out and generate new business in new markets with large footprint solutions they're not accustomed to doing," he said, reflecting on his nine-month tenure at Sterling Commerce. 

"That's where Sterling Commerce is at.  And that's one of the reason's I'm there.  It's interesting to be in a company that has not been used to these processes and then try to lead change within it."

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