Strategic Alliance Business Development

Developing and Leveraging Alliances for Strategic Reasons...

 

Example Case Study - Xerox and EDS

 

Xerox, and EDS. 

 

In 1992 I was asked to join a start-up with a network management product that had proven very hard to sell. My assignment was to find some ways to sell enough of it to make the start-up valuable enough to sell the little company to a larger technology company, and for a few million more than the VC's had invested in it.

 

I targeted Xerox Corporation, after I learned they had an exclusive support agreement with EDS, and it was with EDS that I wanted an OEM agreement. Plus, Xerox had a large number of the devices my product helped to manage.

 

I used the Internet's news-group services to identify engineers within Xerox who, because of where they posted questions, would have an interest, and started a individual email campaign just to them. Over several months I developed correspondence with just under two hundred of these engineers, setting them up to influence their own business decision makers with, at least, positive responses when asked about the product. And to that business group, when invited to present to them as a consequence of this internal promotion, I offered to the business people, a new license model: proposing to charge "per use", instead of as a traditional license. This allowed all parties to mitigate their risk in adopting an unheard-of product, from an also unheard-of start-up. I won a contract with EDS, permitting them an OEM license for the tool, putting EDS forward to their client, Xerox, as the responsible very large company who would sell and support the tool to Xerox.

 

For a subsequent agreement with Ford, with HP as the middle man, I added a new concept of "hosting" the application on a third party's hardware platform, accessed over the Internet, so it was even easier to try, since they needed to buy no new hardware. The hosting idea also allowed the software's somewhat incomplete nature, and other shortcomings, to be much less obvious to the customer. This business model became called an ASP model, and has since morphed into what is now known as SaaS and/or Cloud Computing, a much heralded 21st century business model.

 

The Xerox deal resulted in sale by EDS to Xerox of $1.3M, which was 100 times larger than any previous transaction, and so was the large OEM contract with EDS. With this and 2 more like it with Ford, and Hewlett Packard, my CEO was able to forecast a compelling revenue stream, and subsequent valuation curve, and negotiated an acquisition by Seagate Technology, and for.. a few million more than we hoped. 

 

Although some tactics are omitted in this narrative, the main strategy was to target one specific prospect at a time, market to a specific group of influencers, internally only, start a viral spread of positive information to other groups, create a special business model attractive to the business people, negotiate OEM licensing agreements for revenue with the target or with an intermediary, setting-up an eventual M&A interest. 

 

I have other examples. Ask about Legato Software, and EMC.

 

I operate as a Strategic Business Development coach or consultant, helping clients acquire or expand alliances, to influence revenue or M&A outcomes.