The Shining

CM: Sun's iForce program sounds like it's become the glue for a number of these alliances?
Zander: iForce is rapidly becoming the most pervasive thing inside of Sun today. Under iForce, we try to sit down with consultants, together with some ISVs (Independent Software Vendors), and map out a plan for each of these guys — you take Razorfish or you take Scient, Sapient, or Andersen, and you say, "Okay, what's your field of expertise? Is it CRM or is it supply chain?" And what we do is put together a very aggressive go-to-market strategy. So, our salespeople who are calling on these companies understand that in this virtual partnership they can come in and talk to these companies as one.

CM: Will we see consultancies spinning off businesses jointly owned with Sun?
Zander: We've done something with Andersen where it's their business, and we've lent them technology in the area of procurement and outsourcing. But we have a policy to stay focused on what we do best, which is to build product and technology and a base level of services. But getting into revenue streams and profits as some of our competitors are now doing, I think this can be dangerous. At the end of the day, sharing some revenue streams with consultants and ISVs gets pretty gnarly, and while we're often willing to assist with equipment or an investment of equity if need be, on a day-to-day running of the business I think it starts to defocus how we spend our days.
So, we're not saying let's go form an auction or a new consulting service based around a certain technology and share the profits. Instead, what we're doing is making sure we form these partnerships properly, and put money behind training our salesforce to understand what these consultancies offer, and drive go-to-market strategies involving marketing and branding and generating demand, as opposed to trying to monitor the business. I'm not saying the others are wrong for pursuing some of these ventures. I'm just saying that we are sticking to what we're good at and what we want to now go do. CM: What types of capabilities are you looking for in consultancy partners?
Zander: I think it's knowledge. And knowledge does vary among consultants. The first question I always ask a consultant is, "What is your area of expertise?" I want to know whether it's an industry like financial services or telecommunications. Or is it a horizontal, where they may do procurement or Web design? From there, what we do is a business plan, and if you were to look at the relationships we have with Scient, Andersen, or iXL, you'd see that behind each one there's a business plan that talks about how we are going to matrix and market ourselves. It's a plan that maps out our go-to-market strategy and answers the questions: What revenue do we expect? What account types do we want to go after? What investment are we putting forward? And what investment are they putting forward?
This is not just press releases. The most important thing is that our customers are being serviced, and if we are going to bring in a consultancy to partner with, then we have to stand behind them. Now, we're not going to guarantee their work, but these end users are looking for Sun and saying, "We wanted dot-com stuff." We're asked, "Who do you recommend?", and before we recommend a consultancy, we really need to know their core competencies and market focus, and it's a pretty detailed process. I was visiting a consultancy yesterday, and we had an hour-long meeting where the discussion focused on a shared business plan under which we will ultimately go to market together, but there remains a lot of work to be done before we sign them up.

CM: Are strategy firms such as McKinsey attractive partners for Sun?
Zander: The McKinseys and Bains are often called in independent of Sun. What we try to do with the strategy firms is make sure they have an understanding of our capabilities. So if it comes down to a recommendation as far as what companies should be brought into a project or what types of technology a client should be looking at, Sun immediately comes to mind. So, this type of consultancy does play a role, and for us it's matter of making sure they are informed.
CM: As certain companies move to spin out their Internet assets into stand-alone ventures, has Sun found a greater need to build relationships with strategy consultants?
Zander: What we see is that the strategy players like Bain and McKinsey are more involved in the bigger strategy decisions, such as the ones to spin out businesses, and they will sometimes recommend the technology architecture of the spinout, but these consultancies will not always become involved in the equipment purchase. I think what they do, and such is the case with GM and some others, is that ventures are spun out, and what happens here often is that the spinout begins to do the technology evaluation. And while we're not going to register our opinion on the spinout's strategy and whether on-line auctions are good or bad, what we will do is try to make Bain and McKinsey understand that Sun's core competency is in this space and that we have been involved in a lot of different ventures. But we are really the builder of the house and the consultancy is the architect. And we need to work very closely with the architect if we are going to get things right.

CM: Should we expect to see Sun build a larger consulting organization in-house?
Zander: Well, we do have one, but it's a world apart from what IBM or HP has. IBM and HP perform what I call consulting and integration on a large scale. In other words, they want total responsibility for integration of the customer's application. We don't take this approach. We have a services organization that services our products, and we also have a professional services organization that is very product-focused. So, our organization stops at the point of application consulting. It stops at the point of outsourcing. Meanwhile, it starts off with, "What's your company's strategy and focus?", and why I think a lot integrators want to work with us and why we have such a loyal following right now is because we are not competing with them. We are not in that business. We don't want to be in that business. It's not in our genetics. It's not in our DNA. We are a technology products company, and IBM and HP choose to do otherwise.
I'm not saying they're wrong, but it's just not our focus, and it's why we're putting together some of these other programs like iForce, and programs that support go-to-market strategies with consultancies. So, there is a fundamental difference here, and from time to time we do discuss opportunities (inside the consulting business), but at the end of the day, you have to stick to what you are good at, and stick to what you do best, and today what Andersen does, what PwC or Sapient does, is far beyond what we want to do.