2008 ITSMA Excellence Awards Case Study Sharpening Brand & Competitive Differentiation CompuCom: “David vs. Goliath” - There are Bigger IT Outsourcing Companies, but not Better Summary Suffering from a lack of marketing dollars and a mature marketing function for years, CompuCom Systems, Inc. faced an uphill battle and a fundamental decision in 2007 on whether or not it wanted to invest in marketing to grow its IT services business in a crowded, highly competitive industry dominated by IBM, HP and EDS. With aided brand awareness at a mere 6%, it took a bold move to pull the trigger but management quadrupled funding, approved new resources and agreed to a plan that literally rebuilt the way it marketed itself from the ground up. It was a ―David vs. Goliath‖ type situation from a couple of perspectives. The first association being the fact that CompuCom wanted to compete with the giants in the IT industry. The second and probably the most important comparison related to the challenge that faced a small, poorly equipped marketing team, and how they were going to implement a best-in-class marketing program to deliver tangible business results in less than a year. It was a heroic task to be achieved. However, by viewing marketing as a process, establishing the right best practices upfront, and using unique ways to get noticed, even a small team can accomplish giant results. Some of the fundamental lessons learned that made the program a success: Determine business outcomes with management upfront: gain agreement and have a clear understanding how success will be measured from the very start. Uncover a unique insight: develop a deep understanding of your target audience and market trends to uncover unique insight that can be exploited for competitive differentiation. Leverage best practice processes: develop consistent and repeatable processes to create efficiency and agility that will enable even a small team to achieve big results. Define a clear roadmap: know where you are going and use defined milestones/gates to check progress and deliver in ―bite-size chunks‖— measure results often. Make employees your brand heroes: motivate your employees to become brand ambassadors – every market interaction they have is a touch point that can make a positive brand impression. Get noticed by design, not by accident: get innovative. A simple value proposition told in unique ways can drive increased levels of brand awareness – such as how the ―Rubik‘s Cube‖ and the ―Coal to a Diamond‖ comparison were used to dramatize and reinforce core messages. The results in 2007 were significant. Sales revenue grew 8.5% year over year, aided brand awareness grew from 6% to 16% and the sales pipeline grew by 49%. Due to the success, management has once again increased its investment in marketing and has doubled the budget in 2008. Situation Overview Dallas-based CompuCom Systems, Inc. is one of the few remaining, successful PC value-added resellers founded in the 1980s that has successfully grown and evolved its business model to include IT outsourcing which delivers higher profit margins than what is achievable with hardware or software sales. With the downturn that marked the onset of the millennium, CompuCom—a public company at the time— cautiously disbanded the corporate marketing function and drastically reduced investments in marketing. A few years later, Platinum Equity, a California-based M&A&O firm, acquired CompuCom in late 2004, resulting in one of the largest public-to-private transactions of that year. In an effort to accelerate the company‘s market growth, Platinum Equity also acquired GE IT Solutions at the end of 2004 and merged the two companies' operations. By 2006, while CompuCom remained profitable, more than five years had passed since it had an organized marketing function in place that was responsible for proactively promoting the company and managing the brand in the external marketplace. In late 2006, faced with slowing organic growth from existing clients, and with no immediate acquisition on the horizon, the leadership team had a critical decision to make on how best to move the company forward to increase revenue. Should they finally make the investments needed in marketing to compete with the big boys or continue to limp along and try to squeeze more business from existing accounts? In December of that same year, a marketing executive was hired, a war room was set up, and the next two weeks were spent developing a comprehensive marketing plan that would support the recommendation. Based on an in-depth analysis of the marketplace, a reassessment of the company‘s strengths that included a SWOT evaluation, and gaining advice from leading analyst firms, the following conclusions were reached: CompuCom‘s fundamental business model of delivering tier one IT service quality at a tier two cost was a competitive strength and it was a strong value proposition that would resonate in the marketplace Market trends moving away from mega-deals and moving towards smaller, more specialized IT service providers played right into CompuCom‘s sweet spot – size, agility and expertise in infrastructure management represented a competitive advantage against larger outsourcers Its historical focus on delivering high IT service quality and long tenure with existing accounts (nearly 90% of CompuCom clients have five years or better tenure) provided a strong foundation and valuable proof points that could be leveraged to create market credibility Affectionately known as the ―quiet company‖ internally, CompuCom always had a great story to tell, but the problem was that it never told it. In late December, the plan was presented and approved by the executive board, and the decision was made to aggressively attack the marketplace. Understanding Customer/Market Needs The process of understanding customer needs/pain points and developing a unique value proposition that would resonate with the target audience was an important and critical cornerstone of the CompuCom marketing plan. To gain this valuable insight and build the right strategies that would ensure the greatest success, the following actions were completed: Conducted a competitive review and a SWOT analysis to pinpoint company strengths and identify competitors' weaknesses that could be exploited. Process evaluated: IBM, HP, EDS, CSC, Siemens, Getronics, and BancTec. Compiled market scoping data and major industry trend information gathered from industry analyst firms, research companies and articles from technology publishers. Intelligence was used to identify major trends and emerging services that could be used to craft the go-to-market approach, and to exploit for competitive advantage. Commissioned research study with CIO magazine to test brand awareness levels, gauge the overall market perception of the brand and uncover buyer insight. With both a quantitative and qualitative section, the two-part study provided valuable data that helped fine-tune the value proposition and craft go-to-market messages, and also served as a valuable benchmark that would be used in ‘08 to evaluate progress. Held analyst meetings with Gartner and Forrester to further test market approach and to gain valuable input on how best to position the company against the competition. Key market trends and customer insight that was identified and leveraged: 70% of IT budgets are spent on basic infrastructure support services leaving minimal funds for more strategic projects. Influenced by hype around new technologies, many IT executives overestimate the maturity level of their IT infrastructure and have neglected the use of more basic IT integration advancements that can lower support costs and drive greater business value. Mega-deals are a thing of the past, with organizations moving away from one-size-fits-all vendors offering a wide spectrum of services to more agile partners that concentrate on managing a logical subset of IT processes. Large outsourcing deals lack innovation. Broad-based outsourcing deals during the first generation of outsourcing had ambiguous contracts that did not explicitly address the importance of innovation and continuous process improvement. Moving to plug & play services. The use of ITIL frameworks would soon enable added flexibility and scalability to be able to switch in and out IT service providers and to pursue flex-sourcing strategies. Top CIO priorities: o Increasing business value from IT investments o Reducing IT costs o Improving/enhancing IT security o Improving the quality of information o Improving service levels to end users Understanding the key priorities of the target audience and issues they faced with broad-based, large outsourcing deals revealed competitive weaknesses that could be used to differentiate the CompuCom brand: o Position CompuCom as a more agile, innovative and cost-effective alternative. o Promote CompuCom‘s Integrated Infrastructure Management™ (IIM) solution as a way to eliminate siloed processes and to further reduce infrastructure support costs – allowing companies to free up IT funding for more strategic, longer-term IT projects. Innovation Innovation came in many forms; from the new internal marketing processes created that had never existed before to the way the Rubik‘s Cube was leveraged to make the message memorable. However, the most complex and compelling innovation that was introduced to support the core message was the development of an automated assessment tool used to evaluate the maturity level of a prospective client's infrastructure. Promoted as a free assessment and valued at $10,000, the tool was offered as a complimentary service used at major industry events as part of the interactive offline/online direct marketing program, and with outbound appointment-setting telesales programs to highlight the value of the IIM solution. The free Infrastructure Maturity Assessment Tool (IMAT) measures an organization‘s infrastructure maturity level and processes associated with IT service delivery and support by using a scale from 1 to 5 to show the resulting maturity level. It provides a comprehensive assessment of the prospective client‘s IT operations by comparing 21 best practice areas, then aligning the results with a Gartner benchmarking database that compares the results against peer group information, complexity of services in their industry, and the number of seats under management. As a result, the tool allowed CompuCom to quickly make evaluations and provide recommendations to the client on how to: • Better integrate the management of an organization‘s IT services, hardware and software • Favorably rebalance an organization‘s ratio of on-site, remote and self-assisted support Charts 1 and 2 show the five levels of maturity used as part of IMAT and sample assessment outcome using a red to green gauge. The tool also provides a recommended roadmap and next steps that are needed to be able to move up in maturity levels to drive greater IT cost savings and higher levels of productivity. Subsequently, Gartner reinstated an assessment tool they had used several years ago and it is rumored that other large providers are building a similar tool for their IT services businesses. Execution Due to neglecting marketing for many years, CompuCom had many fundamental problems at the beginning of 2007 that were the result of minimal investments made in people, processes and tools. It took a heroic feat by a small marketing team of eight to quickly recognize the issues, develop a new set of best practice processes, and execute an aggressive, two-phased plan that meant reinventing the marketing function. The team basically started from scratch. There were several major issues: No formalized brand management system created a confused and inconsistent brand image and conflicting messages being delivered to the market. Highly static and rudimentary Web site had not effectively been updated for many years. That represented an embarrassment for a technology company (site traffic averaged fewer than 6,000 visitors a month - an extremely low volume for a $1.6B company). Inadequate sales support tools were available. CompuCom lacked basic elements such as a corporate brochure, sales presentation, fact sheets, case studies, etc., which led to home- grown sales rep materials that only compounded the branding issues. No consistent product management process led to the use of different industry terminology, service descriptions, product names and value propositions that were used across the company, leading to confusion and miscommunication. In addition to lacking the basics that were critical to executing phase one, the team had minimal experience with interactive direct marketing, telesales, trade advertising and participation in major industry conferences necessary to implement phase two of the plan that involved a fully integrated marketing program. Years leading up to 2007 mostly focused on analyst and public relations activities which suffered in effectiveness from the lack of a more robust and balanced marketing approach. Start with the End in Mind Any good plan requires you to first determine where you want to go in terms of business outcomes, and second to understand where you are starting from, and then to develop a roadmap to identify necessary steps to get to where you need to end up. After completing a full analysis of the marketplace, and an assessment of the company‘s ability to make inroads, it was important to define the strategic game plan. Developing a measurement plan and including benchmark data were also critical elements of the marketing plan in order to evaluate results. The following ramp-up plan was created in January ‘07: Chart 3 depicts landscape chart showing two-phased marketing approach. View Marketing as a Process Developing and executing an effective go-to-market plan requires following a well-defined process. New best-in-class marketing processes and tools needed to be created: Identity Management Process to develop the value proposition, messages and consistent graphic approach to deliver a more unified brand image Gold Standard Documentation and Repository Process used to develop and maintain consistent mission/vision statements; company core values statements, value proposition, messages, business factoids, etc. Playbook Development Process used to define and create consistent descriptions and develop sales tools needed to support the service offerings 30/60/90-Day Execution Reviews were used to hold gate review meetings to track progress and resolve barriers/issues Defining these processes early in the development phase was critical to ensuring that direction was fully vetted, aligned and agreed upon with management to create the foundational elements on which all the go-to-market activities were based. Weekly review meetings were held to gain closure on key decisions and maintain a rapid pace of completion. The following charts show the value proposition, messaging and playbook development processes that were introduced to integrate and strengthen the brand approach: Charts 4 and 5 show step-by-step playbook and value proposition development processes created. Get Noticed by Design, Not by Accident Once the development of the strategy, core marketing and communication content, and processes (developmental, governance and tracking/measurement) were complete, it was time to focus on the development and introduction of external communication activities to: Create increased brand awareness and interest Promote CompuCom‘s thought leadership Generate sales leads The program targeted: Primary audience: o IT executives from prospective companies with 5,000 employees or larger o Tier one analyst firms Gartner and Forrester o Technology press Secondary audience: o Current clients purchasing hardware and software services but not IT services o Intermediaries and other industry influencers Core brand messages: o We Solve IT: CompuCom takes the puzzle out of infrastructure integration – used Rubik‘s Cube to dramatize IIM solution and promote free IMAT evaluation o There are Bigger IT Outsourcing Companies, but not Better – used coal/diamond example to highlight key company differences/benefits (agility, quality, value, etc.) Phase one was focused on introducing fundamental sales support deliverables and educating employees on the new brand approach. Here are some of the critical elements that were new to CompuCom: Total redesign and re-launch of Web site that was more robust, dynamic and consistent with new value proposition, messaging and service descriptions. Brand identity manual covering logo usage, design, color palette and overall usage guidelines. Brand ambassador program launched internally with a contest that allowed employees to test their understanding of the brand. Winners who answered 90% of questions correctly received logoed gifts. The second part of the program included a nomination program where good brand ambassadors received recognition on the internal intranet site and received a gift check. Corporate brochure and sales presentation materials to deliver unified brand and positioning messages. Product fact sheets covering IIM solution, IMAT, Desktop and Service Desk services. IMAT application used as a maturity assessment tool and a free promotional offering. IIM white paper to promote thought leadership and CompuCom's point of view on Infrastructure Management best practices. Case studies used as proof points to add credibility to the brand message. MarketFlash and SalesFlash internal communications launched to keep employees aware of new marketing activities and significant sales wins. Phase two was focused on external communications using a combination of push/pull online and offline program tactics. Each activity was orchestrated and timed to be introduced using a staged approach to ramp up in intensity as the program advanced through the year. As prospect contacts were generated, they were managed and nurtured through a formalized funneling process. These two charts illustrate some of the strategy work: Charts 5 and 6 show strategic plans developed to create push/pull programs and manage prospective leads. The phase two program also included the objective to test various activities to gain valuable intelligence and metrics that would be used to fine-tune the ‘08 marketing plan. For example, three separate outbound telesales companies were tested to judge which firm was the most effective. Here are some of the key elements of phase two. The majority of activities were totally new to CompuCom‘s marketing mix: Expansion of analyst relations program to increase the number of briefings and contacts made. Expansion of press relations program to increase the number of client testimonials, awards and new services press releases issued. Expansion of sales tools started in phase one that leveraged the playbook development process to support all major services with collateral, cases studies and sales presentations. Expansion of white paper program to increase the number of point-of-view papers developed covering IIM, Service Desk, Software Lifecycle Management, etc. Sponsorships at major industry conferences. Attended three major conferences starting with Gartner IT Summit late in phase one to test response to brand positioning/messages. Attended ITSMF (ITIL association) and Gartner ITxpo in the fall as phase two ramped up. Outbound appointment-setting telesales. Tested broader IIM message that included free IMAT and more targeted Microsoft SharePoint services message with three vendors. Trade advertising. Developed new trade advertising and selectively placed insertions in CIO magazine and InformationWeek. White paper inserts in CIO magazine/cio.com. Worked with CIO magazine to develop special inserts on IIM and ITIL best practices. Gartner Magic Quadrant report. Submitted services information and clients to be interviewed for Desktop and Help Desk reports – ranked in leaders quadrant with EDS, IBM and other, larger providers. Interactive direct mail. Developed integrated online and offline program that used personalized Web sitelets to customize the message to prospects who responded to the direct mail piece and logged on to a special online site. Webcasts. Tested the use of live Webinars partnering with several companies. Google Adwords. Launched targeted Adwords program in October and December to test various industry terms and offer free white paper downloads. Online white paper syndication. Used online syndication company to post white papers on various technology sites. Success achieved in 2007 can be attributed to taking a very strategic and well-balanced approach to first establish the right foundation and then expanding the program during phase two to integrate the right blend of traditional and Web-based marketing tactics. Each phase and activity introduced followed a set of best practice processes to ensure high quality execution and enable the rapid expansion of the program as it was ramped up throughout the year. Results from each activity were tracked and measured to gain data and information for 2008 planning. Business Results Results in 2007 were significant in terms of business impact and marketing achievements. Business impact: CompuCom IT services revenue grew 8.5% in 2007 over 2006 revenue – nearly twice the industry average of 4.5% in North America. IT services sales pipeline TCV grew 49% in 1Q ‘08 representing an increase of more than $175M in new sales potential compared to 1Q ‘07 pipeline value. $26M 1Q ‘08 sales pipeline new business value is attributed to ‘07 marketing activities. 2,444 net new prospective contacts were generated and 205 qualified hot leads passed to sales by marketing in 2007. Charts 7 and 8 show net new contacts generated and hot qualified leads passed to sales Marketing achievements: Marketing metrics 1Q ‘08 compared to 1Q ‘07 show increased market interest 323% increase in average monthly Web site visitors (20,380 1Q ‘08 average visits per month) 488% increase in Web site white paper downloads 375% increase in press release views on businesswire.com 556% increase in inquiries made to Gartner regarding CompuCom (39 requests) Brand awareness/readership ad testing/direct marketing program response metrics 16% CompuCom aided brand awareness level was achieved in March ‘08 from a CIO magazine brand study - up from 6% aided awareness tested in ‗07 CompuCom ranked 11 in overall ad readership effectiveness out of 42 other ads tested in th December ‘07 issue of CIO magazine. Ranked higher than: Accenture-14th, IBM-17th, Microsoft- 22nd, and HP-24th Direct mail achieved 25.87% response rate (951 pieces dropped and 246 visits to sites) Gartner Magic Quadrant study ranking Ranked in leaders quadrant for both Desktop and Help Desk 4Q ‘07 studies and placed near IBM, EDS and other larger IT providers (based on evaluation of service quality and vision) Charts 9 and 10 show increase in Web site visitors and quarter-over-quarter % increase in market interest data. Closing Statement 2007 proved to be a pivotal year for CompuCom‘s brand. The bold decision to invest in increased levels of marketing to more effectively compete with the big boys returned measurable results. Due to the success of the marketing campaign, the marketing team has also gained a new level of collaboration, support and respect from peers across the company. The team worked hard to follow a very strategic and measured plan to first establish the right foundation and then expand the program to include increasing levels of marketing sophistication and market impact. CompuCom‘s competitive positioning is stronger and brand recognition has increased in the marketplace. Even before the end of 2007, the marketing team was able to start ramping up for 2008 by adding new resources and capabilities. Management has continued to support and expand the role of marketing: Two new resources were added to expand lead generation expertise and to create a new market intelligence function within marketing The company invested in Eloqua, a marketing automation application, that integrates with salesforce.com to enable greater sophistication in lead management, nurturing and measurement New data base services were purchased to increase prospecting and business development capabilities Marketing investments in 2008 were doubled By viewing marketing as a process, establishing best practice processes, and using unique ways to get noticed, marketing made a significant contribution to the growth of CompuCom in 2007. It was a ―David vs. Goliath‖ type situation that was enthusiastically embraced and accomplished by the marketing team. The results show that by taking the right marketing approach and having marketing viewed as an important business driver, even a small company with a small marketing team can effectively compete against the biggest companies. The 2007 marketing program warrants consideration by ITSMA for recognition based on its strategic focus, quality of brand execution, and ability to tie marketing investment to business value.