CASE STUDY 1 - Technology Sales, Operational Risk
The General Manager of the US sales and distribution division of a large technology manufacturing company was concerned about variability of margins on large volume sales of specialty computer systems, in spite of impressive gross revenue growth over six quarters. Management had identified two problems: 1) a significant number of potential sales were failing to close during final contract negotiations; and 2) several large volume sales had been renegotiated after earlier projections triggered production orders that ultimately were deleted from the final contract and became costly excess inventory. Several excellent sales persons had also recently quit citing frustrations with their commissions.
Structured interviews with representatives of all stakeholders to the sale process were held either in person or by phone, and all written policies, procedures, agreements, and software programs were reviewed. Three departments, along with executive, legal, and IT functions were also involved. the results of the review led to a clear, holistic picture of the total process as it currently functioned, the operational risks involved, and an understanding of process strengths, dysfunctions, and suggestions for improvements.
Management believed that the three existing software tools were adequate for handling the entire sales process, and IT supported that view, particularly with their recently developed "Dashboard." Each function supported at least one of the tools, but each had real concerns about the helpfulness of the others in supporting their job. managers reported communications breakdowns, absences from sales meetings, suspiciousness, turf battles, and occasional outright refusal to provide requested information. Process participants viewed previous process improvement initiatives as management "cram-downs" that layered new responsibilities with little improvement in prospecting, closing, or their commissions.
The review of background and documentation revealed that the division was a melding of several acquired organizations from three US states, three European countries, and two from the Pacific Rim. Participants in the sales process were physically located in seven US states, all sales decisions were made at the US divisional headquarters, and the legal department was physically located in still another state. Communications were not smooth, and back channel carping was almost universal.
Representatives of all functions were involved in a change initiative that required input of interests and ideas from all process participants. The final sales process design included input from each of the four functions involved. IT rationalized all existing software programs involved in the process for their effectiveness in meeting the changes identified, and a new tool was designed to facilitate the manual components of the improved process. The requirements of each function were embedded in the new tool to ensure that they were honored at each step in the process. Revised outcome measures were tied both to performance indicators and to each required step in the reconfigured process.