Nallatech

CASE STUDY: DRIVING VALUE THROUGH PRODUCT MANAGEMENT

Founded 11 years ago in Cumbernauld, Scotland, Nallatech is a world-leader in the highly specialized market for high-performance computer systems based on FPGA semiconductors – Field Programmable Gate Arrays, to be precise. Its founder, Allan Cantle, now company president, developed an architecture for designing super-computers to tackle a wide variety of applications. Nallatech’s primary focus is the US defence and security markets.

The company is backed by $11.4m of equity and debt funding from a team of investors, led by 3i and Scottish Equity Partners. Its CEO, appointed at the beginning of 2006, is Craig Anderson, formerly FD of Voxar.

Nallatech’s primary business has historically been in the design of bespoke customer solutions based on distinct FPGA designs. The company had grown in this way to over £5m of revenues in 2004/5, much of those revenues driven by its sales team based in the US under Business Development Vice-President Ed Hennessy. But its management team and investors recognized that the optimum way to achieve real long-term value was to focus more sharply on the primary defence market, particularly in North America, and to develop standard products that could be sold to a wide variety of customers, rather than a continual stream of one-off development projects which were not scalable. In other words the company had to move towards becoming a market-focused business rather than a product-focused business.

Solution:

By the spring of 2005 Nallatech had started to establish Product Management and Channel Marketing functions, in line with those deployed by its customers and competitors. The company was identified by Scottish Enterprise Lanarkshire as a company likely to benefit from the 2in10 Step-Change Programme. The work fell into two parts:

• An initial intensive training process using 2in10’s own Product and Channel modules through a series of half-day workshops
• The secondment of two managers from the company to the Austin, Texas plant of Freescale Semiconductor, for a fortnight’s intensive immersion in the culture and processes of a US computer systems giant

Implementation:

2in10’s first step was to determine the status of Nallatech’s Product and Channel functions. For example, the company had historically relied mainly on its extensive direct sales operation in the US, supported by a smaller European-focused sales force. Channel responsibility lay with the company’s US-based sales team, which was developing individual channel programmes for specific products and geographies.  The initial focus was on the Cumbernauld-based Product Management and Marketing functions, which came under the company’s Marketing Group.

“We understood the conceptual benefits of Product Management and Marketing, but it was coming to appreciate the true benefits that really made the difference for us,” says Craig Sanderson, one of the two Product Managers who were selected for the placement. “The training validated what we were doing and gave us confidence that we were on the right tracks.”

Central to progress was changing the way the company sold its technology. “It had become clear that if we continued with a customer-led sales effort, rather than a market focus, it would require an enormous sales team to achieve the revenue growth we wanted,” added his colleague, Craig Petrie. “It was quite clear that a Product Management approach was required to secure repeatable sales.”

At the time of the placements, in autumn 2006, Nallatech was reviewing its new product introduction process to ensure a quality product on time, on budget and on spec. “We were able to see the same process in action at Freescale and that was very beneficial,.” observed Petrie.  “We were also able to see their Product Steering Group at work. We were impressed by how they carried out their Competitor Analysis which was the responsibility of one dedicated person, looking to make strategic recommendations on how they drive improvements to enable the company to compete more effectively.”

Benefits:

These fell into two camps: verification of the work that Nallatech had already put in place, and confirmation of the steps the company had still to take. Today the Scottish company operates:

• A Product Management and Marketing Group which for the past year has been working on product roadmaps to fit specific marketing needs in its key industry sectors
• A full requirements gathering process based on a Market Requirements Document (MRD)
• Competitor analysis on a much more systematic process than in the past
• Techniques of tactical marketing including pricing

“The placement was key to the benefit that we took from the whole programme: to go and see these processes applied in real time was crucial,” said Petrie. “It really served to demonstrate the realities of the training work that we had done before we went over to Freescale. We could go into that environment and hold our own, without having to ask repeated questions of our hosts.”

“Over the next 9-12 months we will start to see the benefits of this product management function in sales results,” says Craig Sanderson. “We have improved quality and reduced lead times by 30%, so we have addressed real problems that the company once had. Those are the best indications that what we are doing is actually working.”

“We now have a very high degree of confidence that the new products that we are introducing will sell very well for the company. We have been able to get a more exact handle on our return for that investment, whereas previously it was a bit of a guess, a bit of a gamble that it would sell.”

The importance of channels as primary routes to market for the company in the US have not been overlooked. “The company is now much better placed to assume a Channel Partner Management and Marketing function within the marketing team,” said Sanderson.

In personal terms, both Craigs are confident that they have migrated into a job category that will give them real opportunities that did not previously exist. “We both come from a technical background as design engineers, but now we regard ourselves as product marketeers,” explained Craig Petrie. “The programme and the placement have been instrumental in that progression.