NetApp: Case Study
Client Situation
NetApp is a global enterprise storage and data management solutions company based in Northern California. In 2009, NetApp had $4B in revenues and 7000 employees
worldwide. Although the company was growing, it was also facing significant challenges. Through a consultant’s study, NetApp came to realize that their customers were changing how they purchased data management solutions. Instead of buying direct from vendors like NetApp, they started to buy from third party intermediaries that packaged storage solutions with other hardware and software, providing a bundled solution to clients. These third party aggregators and integrators represented global partnering opportunities for NetApp. NetApp, however, had been unable to develop a new go-to-market sales strategy to gain traction with these partners. As a result, the company began to lose market share relative to its largest competitors. NetApp also realized that its direct sales approach resulted in one of the highest cost models in the industry, yielding lower margins and profitability than its competitors. With slower growth, and lower profitability, NetApp’s stock price and market cap dropped leaving it vulnerable to a takeover.
Kotter International Engagement With NetApp
In May of 2009, NetApp senior leaders engaged Kotter International to help achieve three strategic goals:
- Grow market share
- Diversify pathways through the implementation of global partnerships
- Drive efficiencies to achieve lower operating costs
Kotter International began working with the senior team to increase the level of true urgency in the company with a focus on field operations and sales. Although the NetApp senior leadership team and field operations leaders saw the real risk of being taken over, they also saw a window of opportunity to become the #1 storage device company in the emerging cloud computing market. Kotter International helped NetApp gain focus and urgency around this opportunity, ultimately resulting in 65% of all field operations personnel worldwide volunteering to actively help. Kotter International then advised NetApp on a Process for harnessing employee energy and innovation in a coordinated way focused on NetApp’s top strategic initiatives.
Results Achieved By NetApp
The results achieved by NetApp over 21 months were extraordinary:
- Market capitalization grew by $14 billion dollars
- Market share accelerated to #2 from #5 in the market
- Revenue growth accelerated by 44%
- Sales through partners grew by 55%
- Gross profit grew 22%
- Operating income grew 305%