Case BasWare

1
Case BasWare

• Kansainvälisen verkoston menestyksellinen
  rakentaminen
• 19992005
• Hannu Vaajoensuu, hallituksen puheenjohtaja
• 8.2.2006

2
BasWare in Brief

• Headquarters in Espoo, eight subsidiaries
• in Europe and in the US
• Presence in more than 20 countries,
• on 3 continents
• 400,000 users globally in 1000 organizations
• Net sales in 2005 approx. EUR 43 million
• 500 employees at end of Jan 2006
• Software for automating financial processes

3
Key Financials 20012005
FAS
IFRS
EURthousand
EURthousand
4
Crossing the Chasm

• Source Jeffrey Moore, Crossing the Chasm

Start up (early market)
Tornado
Main Street
Product leadership Operational Excellence
Operational Excellence Customer Intimacy
Product leadership only
Early adopters
Early Majority
Late Majority
Innovators
Product leadershipoperational excellence
market leadership
5
Phases of Internationalization
Speeding up again
Building Operational Excellence
Focusing on growth
Taking off
1998
1999
2000
2001
2003
2002
2004
2005
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Phase 1 Taking Off

• Foundation
• Profitable domestic operations
• Business oriented mindset
• Customer driven development
• Only little focus on technology
• Sufficient processes missing

• Key drivers
• Killer application was born
• BasWare Invoice Processing
• Pioneering no competition in place
• Own Act with courage attitude

• Action plan
• Establishment of International Indirect Channel
• Sweden in 1998
• Norway, Denmark and the Netherlands in 1999

Taking off
1999
1998
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Phase 2 Focusing on Growth

• Situation
• Product concept was accepted
• Indirect Channel not investing
• in marketing at adequate level
• More funds after stock listing

• Key drivers
• Need for product range expansion
• Internet changes everything
• Overall growth sentiment

• Action plan
• New growth focused strategy
• Aiming at European market leadership
• Own offices in main markets
• Expansion of product range

Focusing on growth
2000
1999
2001
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Phase 3 Building Operational Excellence

• Situation
• Quality challenges in international arena
• Inadequate support for local operations
• Hero organization
• Local development activities in place

• Key drivers
• No other choices to cross chasm

• Action plan
• Management model
• New strategy
• Management by objectives / balanced scorecard
• Systematic planning reporting
• Development of harmonized processes
• Organization
• Introduction of matrix organization
• Investments in global support functions
• Shared services model
• Human resources
• Recruiting international experience
• Deployment of shared values

Building Operational Excellence
2002
2003
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Phase 4 Speeding Up Again

• Situation
• Solid foundation built
• From one product to product suite
• Big markets open, but how to create a tornado

• Key drivers
• The momentum approaching

Action plan See next slide
Speeding up again
2004
2005
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Growth Drivers

• In the turn of 20042005 sales and marketing
  organization was more than doubled in the
  strategic markets (US, Germany, UK)
• Program to acquire new partners
• Increased resources in the Global Sales function

Increased sales activity

• Nordic introduction of Financial Management
  products in Q1
• Nordic introduction of e-Invoicing service in
  2005
• Increased demand for Enterprise Purchase to Pay
  products. This will increase average sales value
• Strengthening operations in France and new
  markets Italy and Spain

Expanding to new markets

• Near term focus on the Nordic home market in 2005
• Acquisition of Iocore AS in March 2005
• Screening of potential acquisition candidates
• Expansion of product portfolio
• Channel development (new customers and markets)
• Strengthening position in the Nordic electronic
  invoicing market

New acquisition strategy
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Managements Focus
Internal Development
New business ideas
On-going business
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Building the Channel Network
13
Building Blocks of Partner Management Concept
2. Partner selection and description
1. Objectives, scope partner type
3. Partner value proposition and roles and
responsibilities
4. Process and meeting structure for partner
management
5. Metrics for analysis follow-up of partner
portfolio
Phase A
Phase B
Q4
Q1
Q2
Q3
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BasWares Objectives for Partnerships
Growth
Profitability

• 2007 Indirect CAGR gt100
• 2007 Indirect (dedicated) sales force 75 AMs

• Profitability objective gt15

Renewal
Manage risk

• Reach new markets and market share targets as
  soon as possible (according to the strategy)
• Create new business models (e.g. ASP
  outsourcing business) through partners
• Reach new segments e.g. public sector

• Lower fixed costs
• Ensure development of shareholder value

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Scope for Partnerships
1. Which customers to be served through partners?

• Medium-sized (through smaller and regional
  partners)
• Large (through global partners)
• Public sector (excluding Finland)
• In case SME is served in the future, it will be
  served through partners

2. Which markets to be served through partners?

• Strategic (UK, FR, D, US) and existing markets
  (Benelux)
• New markets (Italy, Spain, Portugal, Eastern
  Europe, Asia)
• BasWare can have both direct and indirect sales
  approach in one market
• Partners can be either local, regional or global

3. Which products to be provided through partners?

• BasWare Invoice Processing (volume product, in
  general the first product with partners)
• BasWare Purchase Management (growing product)
• BasWare Financial Management (emerging products,
  currently served to Nordic market)

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BasWares Partner Selection Pipeline
BasWares partner portfolio
Partner candidates
Partner market
Gate 1 Must meet criteria
Gate 2Partner evaluation criteria

• Scanning for partner candidates
• Contacts from potential partners

• Definition of partner type
• Evaluation of the partner candidates
• Negotiation with partners

• Classification of partner into gold / silver /
  bronze categories
• Description of partner portfolio

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BasWares Partner Evaluation Criteria
BasWares strategy
Partner concept objectives, partnership promise
scope
Gate 1 Must meet criteria
Gate 2 Partner evaluation criteria

• Product sales function exists
• Sales and marketing, delivery and support
  capabilities available
• Partners customer base consists of medium or
  large companies
• Partner located in the target geographic areas
• No fully competing product offerings) is / will
  be a preferred solution for the partner
• Top managements commitment

• Ability to create customer value
• Offering fit
• Brand fit
• Competence fit
• Geographical fit
• Partners willingness to develop business for
  BasWares solutions
• Business potential
• Performance (only for existing partners)

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The Objective of Partner Evaluations

• Target setting. To achieve the partnership
  targets, both the current and candidate partner
  portfolio needs to be followed up regularly.
• Common perception. The partner evaluation
  criteria lays a common ground and expectations
  for existing partners and partner candidates.
• Basis for internal discussion. The weaknesses and
  strengths of the partner portfolio become
  transparent. The quality of current partner
  portfolio can be discussed.
• Ideas for development of partnerships. The
  evaluation gives each channel manager a view on
  the value of his partners. Each channel manager
  can compare his own partners to each other, draw
  conclusions and decide upon actions based on the
  conclusions.

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Value Propositions Are Differentiated for Each
Partner Type
Procurement management
Enterprise Purchase to Pay
Financial management
Invoice Automation

• Value propositions have been developed for the
  different partner types as a tool for the channel
  managers when presenting BasWares partnership
  program to potential and current partners.
• The value proposition content is partly
  differentiated according to the partner type
• The differentiated content is
• The partnership promise and financial benefits
• The end-customer solutions
• Customer references
• The content that is the same for all partners is
• The partner services
• Partner requirements
• Program road map
• Success stories
• The partner services will in the future be
  divided into gold, silver and bronze categories

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Lessons Learned

• Bring business for the partners, do not steal it
• Ecosystem vs. selective approach
• Set right expectations
• Rewarding agreement models
• Understand partners standpoint meet the real
  decision makers