Understanding your company’s imperative for change

In this section, we will analyze your company’s situation through various methods to be able to determine the vision for your Salesforce project.

To help exemplify the methods used, let us first introduce the scenario company that we’ll follow throughout this book.

Introducing our scenario company – Packt Manufacturing Equipment (PME)

Let’s look at some initial facts about the scenario company:

• Company name: Packt Manufacturing Equipment (PME)
• Industry: Manufacturing
• Annual revenue: 300 million USD
• Number of employees: 2,000 FTEs
• Geography: Operating and selling globally; direct in mature PME markets, and through distributors in emerging PME markets

Meet the PME Salesforce taskforce charged with shaping the project in the pre-development phase:

• The business owner: Kalinda Keen. Kalinda is a manufacturing industry veteran. She has held multiple roles, in many functions, within PME. Currently, she is working in the global commercial excellence department, responsible for building capabilities for local marketing, sales, and customer service organizations. Kalinda is closely aware of the market trends and forces affecting PME.
• The tech owner: Cary Sharp. Cary is a rising star in the global IT department. Cary is a solution architect transitioning to an enterprise architect position and is extremely interested in cloud computing. He has worked at PME for 4 years and is well aware of the PME system landscape.
• The PMO representative: Alicia Fast. Alicia is new to PME, having joined recently from another industry. She has lots of project management experience, and her recent job involved managing a Salesforce implementation.
• The executive sponsor: Diane General. Diane is a Senior Vice President (SVP) of global commercial excellence, reporting to the CEO of PME. Kalinda reports to Diane. Diane has been with PME for over 10 years, in multiple managerial positions ranging from country leadership to functional management roles. She is well liked and trusted within the organization and has been part of PME’s board committee on digital transformation strategies.

After getting to know the scenario company, PME, let’s return to your company.

Your company’s environment, situation, and challenges

To lay out a path, in addition to knowing where you want to go, you also need to understand where you are coming from and, critically, why you need to move. Your first activity in the pre-development phase is, therefore, to analyze and establish your company’s situation.

In the following section, we will cover basic methods of understanding how your company is organized, who your customers are, and the products and services you sell.

Important note

Your role as part of the Salesforce taskforce should not be to produce the analysis output, but to consolidate and understand what over arching forces drive your company’s imperative for change.

Understanding how your company is organized

Before you endeavor to perform any strategy analysis, you should first seek to establish how your company is organized. The simplest way to achieve this is by looking at your company’s org charts. Charts is a plural intentionally, as there will be many layers.

You will want to understand the following regarding your company’s structure:

• Your local organizations’ structure:
  • How many countries does your company directly operate in?
  • How are the countries or local organizations typically organized?
    • Does each country have its own leadership team or does each country’s sales, customer service, and marketing team report directly to group sales, customer service, and marketing management, respectively?
    • How much variation is there among the structures of your local organizations?
  • How many people are employed in each country or sales organization?
    • How many are employed per country or sales organization?
    • How many are employed in marketing, sales, and customer service functions, respectively?
    • Beyond sales, marketing, and customer service, which other functions do local country or sales organizations manage, and to what extent? This could be back-office sales support functions, local logistics, and local IT support.
• Your group-level organization:
  • This would typically be an org chart of your company’s group management
  • Pay special attention to IT governance:
    • Is group IT responsible for setting guidelines and providing ad hoc advice, or do they firmly own the enterprise IT landscape and work to ensure compliance? It may be somewhere in the middle but be sure to get a good understanding.
• Your partner, reseller, or distributor network:
  • If your company sells its product or services through partners, how are the relationships with those partners managed?
  • Are the partner relationships managed at the group level or by the local sales organization? Or at some intermediary level?
  • How many partners does your company have agreements with?
  • What countries do your partners cover?
  • Do your partners sell all your company’s products and/or services or only a subset?

Tip

Engage with your HR department to understand how your internal company is structured. Regarding your partner network, you may have to do some investigation internally to find out who manages those relationships.

Be aware that organizations are dynamic and that small organizational changes happen frequently, and larger changes also occur from time to time.

To understand how an org chart could look, let’s look at PME’s company structure in the following diagram:

Figure 1.3 – PME org chart

In Figure 1.3, you see the CEO of PME at the top. Reporting directly to the CEO are the CFO, COO, and CIO. At PME, also reporting directly to the CEO are the SVPs of each of the three PME regions: AMER, APAC, and EMEA. Reporting to each regional SVP are the local country organizations of PME; some have a country leader responsible for multiple smaller countries. The regional SVPs at PME are also responsible for managing the relationships with the distributors operating in the regions.

You have now established how your company and partners are organized. Let’s move on to understand to whom your organization sells, and what you sell.

Understanding who your customers are

You should seek to understand the following key aspects of your customers:

• How many customers do you have?
• Do you have a few large customers that make up the bulk of your revenue or is revenue spread across many customers? Is there a change in this split?
• How large are your customers typically in terms of revenue and number of employees? Seek to understand your median customer revenue.
• What industries do your customers belong to?
• Who are your customers’ end customers or consumers?

Understanding the products and services you sell

You should seek to understand the following key aspects of your products and services:

• What challenges do your products help your customers overcome?
  • If you have many product categories and/or customer segments, you should attempt to consolidate the answers into three to four key groupings for clarity and comprehension
• How many products do you have?
  • Do you have a few products that make up the bulk of your revenue or is revenue spread across many products?
• Are your products and services finished, pre-packaged products and/or services, or are they highly configurable?
  • Ensure you also determine whether your company has any plans for making your products and services configurable in the future

Tip

Engage with sales and marketing leaders at both your company’s local and group levels to get an understanding of your customers and how your products and services add value to them. You may also request help from your finance or BI departments for data and insights about your customers.

Introducing the basics of strategy analysis

While the literature on business strategy is vast and growing, some fundamental analysis of your company is needed to understand its situation and the imperative for change. In this section, we will cover the most used methods of analysis.

Tip

If your company has its own framework of strategy analysis, you should utilize insights from that strategy analysis to understand your company’s situation.

PESTLE analysis

The decade of the 2020s has begun with economic turmoil following the Covid-19 pandemic, supply chain pressures, a new war in Europe, continuing wars in other parts of the world, and inflation. These are all macro-level phenomena that – in varying ways, depending on your industry and geography – impact your company’s situation.

Using PESTLE analysis, you categorize these impacts into six factors:

• Political: Political factors include any potential or realized political decisions that are impacting or may impact your company, such as taxes, subsidies, and reforms. Your executive sponsor and senior management can quickly list the key current political trends they are keeping an eye on.
• Economic: These factors are numerous; some key examples are inflation, interest rates, consumer confidence, business confidence, and GDP growth of the markets your company serves. Your CFO or finance business partner is your go-to source for input on economic factors influencing your company.
• Social: Social factors cover the demographic makeup and trends of your markets’ populations, as well as their cultural preferences. Your marketing department should have great insights into shifting trends in your target demographic – consumer- or business-wise.
• Technological: These factors include advances in technology that may enable you (and your competitors) to produce and deliver your products and services more efficiently at a lower production cost, as well as being able to market and sell your products and services more effectively. Common examples include automation in manufacturing, and more efficient truck engines or electric vehicles. Leveraging customer insights for better segmentation and targeting to market and selling more effectively are other examples of technological factors. Talk with your company CTO or head of innovation to gather these insights.
• Legal: Legal factors include legal precedents relevant to your industry and operating geographies, as well as any specific legal issues and risks your company may be exposed to. The general counsel of your company, your CFO, or the head of risk management will be able to discuss the legal factors with you, though you will not be able to gain insights into all areas as some may be confidential.
• Environmental: These environmental factors include key trends of the physical environment in the geographies your company operates in. Obvious examples are climate change and the direct and indirect effects of climate change. Although the direct impact of climate change may have less impact on your company, the indirect effects, such as political instability, change in consumer and business preference, and shifts in product and service demand may have a greater influence on your company’s situation. Your executive sponsor and senior management can tell you whether any environmental factors are particularly influential to your company.

Having established the macro factors influencing your company, let’s move on to understand the competitor situation of your company.

Porter’s five forces

This is a standard method created by Michael E. Porter, the renowned Harvard Business School professor of strategy and competition, for analyzing the forces that impact a business’s competitive situation.

Figure 1.4 – Porter’s five forces

Let’s go through each of the five forces:

• Industry rivalry: You should seek to establish answers to these key questions when describing your company’s industry rivalry:
  • Nature of your industry’s rivalry: How are your company and your competitors competing? Examples include price cuts, guerilla marketing methods, and locking in customers with exclusivity contracts.
  • Competitive situation: Is your company a dominant player or one of many competitors in your operating markets? Who are the biggest competitors? Who is gaining and losing market share? Use the last reporting year versus the previous reporting year to see this trend.
• Threat of new entrants: Are there any indications of or actual new entrants entering your industry? What is their operating model and means of differentiation?
• Threat of new substitutes: Are customers using alternative products or substitute products in new ways to meet their needs?
• Bargaining powers of suppliers: If your company (and general industry) is relying increasingly on a smaller number of suppliers, then they will have an increase in bargaining powers with the result being increased prices.
• Bargaining powers of buyers: Similar to the bargaining powers of suppliers, if you sell to a highly concentrated group of customers, your company will have less bargaining power.

Market development

Determine whether the markets your company is operating in are growing, stagnant, or declining. Compare the market developments of your key markets. Also, note whether there are any cyclical patterns and seasonality in your market. Your CFO or finance business partner is your source of information here.

Company’s financial performance

You may easily have access to these key figures from your company’s latest annual report (for example, if your company is publicly traded). If not, work with your executive sponsor and their finance business partner to get a perspective on your company’s financial situation.

• Top-line revenue growth: This tells you whether your company is growing or not. If it is growing, great! But seek to understand this in the context of the overall market growth. If your company is growing slower than the market, your company is losing market shares to the competition. You should then seek to understand the reason for this. The leaders of your sales and marketing organizations should be able to help you determine this.
  • Your finance business partner will be able to help you understand the drivers for revenue growth. Ask for a price-volume-mix (PVM) analysis for the revenue growth of last year versus the previous year to understand whether your revenue is primarily growing due to more products or services being sold, higher prices, or a change in the mix of the products and services sold.
• Gross margin %: Determine whether your gross margin percentage is increasing or decreasing. This is a sign of your company’s viability. Compare your company’s gross margin % with your key competitors. If it is lower than your competitors, your competitors are either able to command higher prices for their products and services or are more efficient in producing their products at a lower cost, or both.
  • Your finance business partner will be able to help you understand the drivers for change in gross margin % using the same PVM analysis method
• Operating profit %: Determine whether your company’s operating profit % is increasing or decreasing. This figure is the result of multiple factors in your company’s profit and loss statement. It is a sign of your company’s financial sustainability.
  • Request the help of your finance business partner to interpret – and put into perspective – your company’s operating profit %

Analysis of your company’s financial performance is the last component of your strategy analysis. Next, we will put all the analysis together.

Summarizing your company’s strategic situation

The last step of your strategy analysis is to consolidate and structure the key, most important, and influential facts, factors, and trends into an easily comprehensible overview. Let’s explore the classic Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis model:

• Strengths: What are the key strengths of your company that make you stand out from the competition?
  • Review your findings in Porter’s five forces analysis as well as your company’s financial performance analysis for input on this
• Weaknesses: What are the key weaknesses of your company that make you vulnerable to the competition?
  • Review your findings in Porter’s five forces analysis as well as your company’s financial performance analysis for input on this
• Opportunities: What are the key opportunities present for your company to pursue?
  • Review your PESTLE analysis as well as your market development analysis for input on this
• Threats: What are the key threats against your company that your company should actively mitigate?
  • Review your PESTLE analysis as well as your market development analysis for input on this

To understand what a SWOT could contain, let’s have look at the SWOT analysis of our scenario company, PME:

• Strengths:
  • Trusted brand by existing customers
  • Large and experienced manufacturing capabilities to produce superior products versus competition
• Weaknesses:
  • Company’s financial performance. Top-level revenue growth is slower than the competition – losing market share. PVM’s driver is simply volume
  • Lack of modern system support for a modern commercial organization
  • Declining customer experience and customer satisfaction (CSAT) compared to the competition
• Opportunities:
  • Turning the service department into a profit center by commercializing service offerings
  • Several sub-segments in various geographies that are currently unserved
• Threats:
  • Existing and new competitors are rapidly developing new ways to modernize their companies' go-to-market strategies, thus gaining more market shares. The competition is providing customers with automated and personalized marketing communication, seamless omnichannel buying experiences, digital self-service, and predictive maintenance solutions.
  • Some competitors are also leveraging the Internet of Things (IoT) and artificial intelligence (AI) technology to provide advanced predictive and prescriptive insights to enhance their customer’s experience.

Having gathered insights into your company’s strategic position, now it’s time to put the insights to use to create a vision for your Salesforce project.