Views from the corner suites - Embedded.com

Views from the corner suites

Understanding how the people who populate the corner suites think can help the rest of us get with the program.

This article consolidates ideas I've formulated over 15 years of meeting with and observing senior managers from companies that build products with embedded electronics and layered software. These are the individuals who occupy the corner suites in electronic OEM firms. Although no longer characterized as suites and sometimes simply just cubicles, these “corner offices” are home to the CTOs, CFOs, CMOs, and VPs of strategy, product management, engineering, manufacturing, and R&D. Their views and perspectives ripple throughout each organization and directly affect much of corporate and project life.

Each suite occupant has an internal business model that specifies what steps to take to move his or her operating unit to the next level of accomplishment. Sometimes it's a turn-around situation. At other times it requires building out and extending a successful product franchise. In either situation the model is accompanied by a large clock in each suite that ticks out progress, fiscal quarter by fiscal quarter, if not on even smaller increments. Understanding these models and the steps in the suite occupants' plans are critical for accelerating and not obstructing those plans.

Although the steps and plans for each functional area have a different focus, they share common anchor points. These anchors provide the business framework, practices, and processes. To define these anchor points, I've observed that senior managers ask three reoccurring questions: What's the size of my market and how is it changing? How should we differentiate customers and products for legacy and greenfield investments? How do I enhance and maximize my technology choices?

TAM and SAM
Each annual planning and new product discussion in the suites starts with loading spreadsheets with sufficient market data to crunch and determine the size and forecast of the individual markets. To bring the market into focus and set the course for operations, the first step is often working to set the overall market size, or TAM (total available market). The key subset of the TAM is its sweet spot, or SAM (served available market).

TAM and SAM metrics have their own underlying questions. They include concerns for market rates of growth and likelihood of changes to supplier market share. Further, the puzzle needs to be reassembled by geographic economic zones.

It's from these figures that the business mission is hammered out, which is not unlike the engineering choice of what type of processor to develop around. Yet the TAM and SAM are elusive numbers. They can vary greatly based on the definitions. And the underlying demand of users is often a dynamic measurement that is hard to capture.

Also, disruptive and unplanned devices and equipment may emerge over the planning horizon. These unforeseen changes are difficult to take into account. Little of the iPod's impact and shipment numbers were apparent when it was first introduced. The size and growth of embedded hardware platform boards and blades resulting from new architectural standards from PICMG and IBM is still being sorted out. And what will the shape of the market be for embedded Linux middleware given strides made by Oracle and Microsoft into software services and Linux support? These concerns are not academic but instead have the force to set new budgets in place for investments and product growth.

Legacy and greenfield
For suites, at the end of the day, there are fundamentally two groups of customers and products. These are legacy (or well-established) and greenfield (or new and untested). Legacy usually means less risk with longer business relationships and more manageable product lives. Yet, legacy products and customers have changed over the years. The increasing rate of change and adoption of new products has made recapture of engineering costs and investment rate of return more challenging to forecast even with this most stable customer base. The planned decreases that larger customers mandate for product cost curves are often more easily achieved with greenfield products than with legacy products. And it's not uncommon in technology driven P&L statements for greenfield product refreshments at the end of a five-year period to account for 60% of revenues where these products were not in the product portfolio five years earlier.

The suites' focus is still on the customer. Today, selling requires team selling. The costs to close greenfield customers are high. Organizational risks may occur since the greenfield support and service needs don't always fit with the business's current organizational structure. Risk is less under control with the greenfield businesses. More often the greenfields use web solutions that allow a one-to-many response instead of the one-to-one responses of direct support.

Technology wars
The suites understand that technology choice behaves much like a chemical catalyst. Choosing the correct technology will accelerate product value and the potential to generate sales for the product portfolio. But choose the wrong technology and you could be supporting Token Ring or ARCNET for years. It may constrain resources for communications products to benefit from migrating from 10/100 Ethernet to 1-Gbit Ethernet, and then to 10 Gbits.

Choosing a technology too early could result in your company advocating and defending its JVM choices without an exit strategy. The suites understand the need to identify products searching for markets early, and when to put them on end of life.

The suites' strategies and tactics around technology adoption and support are militaristic. At the center are a series of rapid-fire questions. Which standards and SIGs should be joined and at what levels? Which SIGs and standards need to be advocated for and, finally, which ones need to be blocked? Even within a standards group, companies need to advocate and influence those initiatives and ballots to align with the firm's special interests.

The ground rules that apply within the SIG memberships have a military-like precision for the drivers of the SIG. Who's sponsoring the initiative and what have they budgeted in people and dollars? What's the technology and its planned evolution; how will it affect performance, quality, cost, and support? Where will it have an impact on the product first and where will be deployed later? And finally, which other ISVs, OEMs, and suppliers will commit for use.

These three suite perspectives are areas that have a critical impact on engineering and development. With greater insights into suite thinking, the rest of us worker bees can better their understand motives and decisions. More importantly, it provides the ability to encourage richer dialogues for better embedded solutions.

Paul Zorfass is the principal analyst of First Technology Inc. and a strategic partner with Venture Development Corporation. He analyzes end-user vertical industry segments, specifically embedded systems. He is chairman of the Boston chapter of IEEE Communications Society and earned an MA in math and physics from the New York City Colleges and an MBA from Northeastern University. You can reach him at .

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