Using strategic alliances to grow
sales in wide area networking software

The company was a high-tech start-up and primary innovator of managed wide-area networking (WAN) services. Its technology shortened set up time for customers from 6 months to 6 hours, and eliminated significant related costs (IT overhead cost, eventual scale-up cost, and cost of equipment obsolescence). The start-up was funded by leading venture capital firms and was under pressure to accelerate its revenue growth – a key metric toward a future round of VC investment.

Transformed the go-to-market sales model from direct sales to channel partnerships.

 

  • In 24 months, established 25 strategic alliances with channel partners globally, including
    • telecoms, value-added resellers, and systems integrators
    • geographic reach across Asia, Europe, North America, Sub-Saharan Africa
  • Increased revenue from $5 million to $50 million
  • Given the expanded network footprint, the company opened offices in London, Singapore and Seoul, with staff to grow geographically
  • The company succeeded in receiving additional investment totaling $60 million.

Helped to develop, build and implement a new alliance strategy, transforming the go-to-market sales model from direct sales to channel partnerships.

 

Determined the most attractive market segments based on location, size, growth, level of vendor concentration, and the attractiveness of the customer base, i.e. globally distributed multinationals

 

Identified three market channels to reach these segments, including

  • Telecoms
  • Large value added resellers
  • Systems integrators

 

Prepared a preliminary long list of candidate channel partners, and screened them based on

  • Profile of the customer base (% of multinationals)
  • Level of relationship with target customers
  • Their value proposition
    • selling wide-area networking technology equipment
    • recommending and/or reselling telco international lease lines, content delivery networks, virtual private networks
    • familiarity with content delivery networks, virtual private networks, WAN optimization technologies, network security
  • Market performance
  • Financial performance
  • Capabilities
    • scale of operations
    • geographical scope
    • customer engineered solutions

 

Performed a second screening of candidates by gauging level of interest by initial contact.

 

Conducted exploratory face-to-face discussions with qualified prospects to cover the following topics:

  • Verification of company data
  • Presentation of concept and technology
  • Typical commercial value proposition (general structure of proposed partnership models)
  • Revenue potential
    • Number of customers in place
    • Frequency of demand for wide-area network performance improvement
  • Follow-up meeting based on
    • Technical proof of concept
    • Review of commercial contracts

 

Held several rounds of discussion to exchange information

  • Joint business case
    • Existing customer base
    • Market potential
    • Technology
    • Value proposition
    • Work plan
  • Commercial structure of the partnership

 

Negotiated terms of the formal partnership agreement

  • Revenue sharing
  • Cost sharing
  • Direct investment in expanding the network infrastructure
  • Risk sharing