THOUGHTWORKS CASE STUDY

Due Friday, 27 April 2007

Provide recommendations to ThoughtWorks managment regarding the issues raised at the end of the B
case.

Remember that in addition to the final recommendation I am looking for a full analysis of the issues. Be
thorough and detailed in considering the possible alternatives.

A. Challenge: On the basis of the information that Guerriere has, (1) how would you position
ThoughtWorks to the target of Type A firms? (2) What assumptions about Type A firms underlie the
positioning that you propose and (3) how can market research explore the validity of those
assumptions?

B. Positioning Impact: How would the client survey results affect you previous positioning
recommendation for Guerriere (ignore?)? Draft a new positioning statement for ThoughtWorks,
considering both the short- and long-term implications for brand evolution.

GROUP TIMELINE

Monday, 16 April 2007 - Post positioning statement and other comments on Wiki.

7:45 PM, Wednesday, 18 April 2007 - Conference call (402.756.9100, Access Code 685969#)

Sunday, 22 April 2007 - 1st draft of paper completed on Wiki

6:30PM, Monday, 23 April 2007- Conference Call

23-27 April 2007 - Fine-tuning, minor edits, etc.; TBD

PAPER

our position statement:

In a world of risky IT projects, we deliver success when failure is not an option. ThoughtWorks completes
major IT projects on time, on budget and on target with our efficient and flexible Agile Delivery Method
and the most talented and motivated consultants in the world,

paper outline:

I: Intro/State position statement- isabel

II: how is it meaningful/ targets customers - isabel

III: how is it different from competitors- james

IV: how is it able to deliver at profit- helen

V: how is it able to convince customers-eric

(VI): Alternative & why it wouldn't work- jeremy

Alternative

Segmentation:

Segment Marketing:

“A market segment consists of a group of customers who share a similar set of wants.]” TW consulted
with a firm to develop a segmented market with respect to IT companies technology adoption. This
broad market segment included companies that would not be interested, those that would be
somewhat interested, and those that were considered likely to be interested in TW. Of those three
categories, TW identified Type A firms as those who would be interested in TW. Type A firms accounted
for 30% of all IT companies in the field. Therefore a broad based segment marketing plan would not
distinguish TW from its Big 5 competitors. TW had already identified itself as working in a Niche market,
and with its relatively small staff and marketing budget can focus on a specific segment of Type A
accounts which they believe they will be much more successful in obtaining. The further segmented
market is a Niche market rather than a segment market.

Niche Marketing*:

“A niche is a more narrowly defined customer group seeking a distinctive mix of benefits.[[#_ftn2|[2]]]”
TW further narrowed their target segment to identify a target Niche market, specifically IT service firms
needing custom application and systems integration. These firms are pioneers of advanced technologies
and are aggressively adopting high-risk strategies to gain high-potential rewards, particularly those
organizations that have adopted Agile or are aware of Martin Fowler.

Local Marketing:

“Targeting marketing is leading to marketing programs tailored to the needs of local customer groups
(trading areas, neighborhoods, even individual stores).]” IT firms operate and compete in the global
market, making local markets nonexistent. Therefore it is appropriate to utilize Niche marketing to
identify target segments.
Customerization:

“The ultimate level of segmentation leading to ‘segments of one’”], where companies individuals their
products to the point where each product can be individualized. This type of individualization is
incorporated in all IT consulting companies as the nature of the industry is to meet the need of the
customer through individualized application development, software development, or consulting. Since
the industry as a whole creates customized solutions, this cannot differentiate TW from its competitors.
Therefore Niche Marketing is a more appropriate strategy.

Targeting:

Points of Difference:

· Success with high-risk high reward projects

In a market where nearly 80% of projects are over budget or late, TW is able to complete projects on
time and under budget.

· Agile Delivery Methods

TW is a pioneer of Agile Delivery Methods and employs one of its key developers Martin Fowler. Agile
Methods are gaining more notoriety, and more of the top 1000 IT firms are adopting the strategy.
Martin Fowler and the rest of the TW staff have published numerous books and articles supporting their
strategies.

· Talented Consultants

TW considers itself the “McKinsey” of the software development industry, hiring only 1 in every 200
applicants and experiencing a staff turnover rate of only 8% well below the industry average.

Competitors:

· In-House IT staffs

Represent the easiest alternative for companies to just rely on current staff to perform necessary tasks.
“With software projects failing (over-budget and late) at an alarming rate of 80%]”, TW is able to
position themselves with their proven track record of finishing projects on time.

· Big Five Consulting firms

The Big Five represented the largest consulting firms, employing much larger consultants than TW. They
were shifting towards outsourcing solutions, and while not as focused on application development they
were the incumbent firm at many of TW’s targeted firms. As other firms have moved to outsourcing as
their key business strategy, TW’s remains one of the lone leaders in its IT consultancy methods.

· “Offshore” Development Firms

These firms could supply labor at close to 1/10 the cost of American or European labor, but struggled
with “communication gaps, inferior quality, or rapid requirement changes necessitated by shifting
business climates.]” TW is positioning themselves to deliver outsourcing alternatives with their
innovative Distributed Agile practices and success in completing projects.

Type A companies*:

These companies were targeted by TW as potential cliental due to their fit in the Niche market. In
reviewing TW place in the IT consulting market, TW is positioning itself as a leader in its success rate
with high-risk high reward projects by combining their innovative methods and superior staff.

TW views itself as a leader among its competitors in market for Type A enterprises due to its previous
success rate, the word of mouth of cliental, its current relationship with IT industry analysts, and the
growth of Agile Methods in the Global 1000 IT organizations. This is supported by Garnter Consulting
ranking TW as a key Niche player and Visionary company, even though it is by far the smallest company
among its competitors.

Type B companies:

This type of company is the most widespread, and while wanting to stay in competition with its
competitors they avoid using unproven technology. In addition they are willing to take moderate risks
when implementing new technology.

Type C companies:

These companies tend to be cautious and risk adverse. This type of company is shrinking in the market
place from historical levels of 30% to current estimations of 10%.

While TW is moving forward with a Niche marketing philosophy, type C companies are not the niche
that would place much value in TW. TW is positioning itself as a pioneer in new technology and
processes, with their product being priced at a premium. TW would be unable to create meaningful
points of difference for itself in this market because TW’s focus on delivering solutions using innovative
new strategies while employing the most talented consultants does not represent a current need of
these companies. Type C companies are not implementing the newest innovative strategies or initiating
risky investments. They implement strategies that are proven successful and investments that are safe.
Consequently they would not need new software creation or innovative consultants to support on
challenging projects.
Type C companies want consistent strategies that work and are cheap, making them a perfect candidate
for “Offshore” Development firms. TW’s is ill positioned to compete in this market because their product
is priced at a premium.

Positioning:

Agile & Martin Fowler:

Martin Fowler is a pioneer of Agile Methods. Agile Methods are being incorporated among many of the
top IT firms and are recognized as innovative strategies. While the press for Agile and Martin Fowler is
positive, in TW’s internal evaluation of its clients it could not find a relationship between awareness of
Agile and Fowler and the purchase of large TW projects. The cliental survey results indicated that TW’s
ability to save problem projects, successfully complete high-risk projects, and deliver projects on time
and budget were the key reasons customers hired TW. Creating a positioning campaign around Martin
Fowler would set TW to be raided by a more powerful consulting firm. If Martin Fowler is the only
reason companies use TW, then Martin Fowler would be an economic rent which would eventually lead
TW to pay all of its profits to TW or risk losing him to a rival firm. Focusing on

People:

TW is an innovator in using “a battery of personality, aptitude, and technical assessments during

hiring.]” These rigorous hiring practices lead to only 1 in 200 candidates being hired by TW’s. While
touting rigorous hiring methods sounds good, it doesn’t distinguish TW from any of its competitors, it
provides no points of differentiation, since everyone will say they have the best staff. More important
than staff is results which those people obtain, therefore positioning on people would not be as effective
as positioning on results and Agile Methods which would allow TW to create points of differentiation.

] A Framework for Marketing Management p. 117

] A Framework for Marketing Management p. 117

] A Framework for Marketing Management p. 118

] A Framework for Marketing Management p. 118

] ThoughtWorks A, page 2

] ThoughtWorks A, page 3
] ThoughtWorks, page 5

VII: Conclusion- helen

(VIII) other thoughts- we can work this into the paper

!!!! 1st draft due by sunday night

!!!! conference call at 6:30pm, Monday 4/23

POSITIONING STATEMENTS

Enter your positioning statements here. Note your entry with <Your Initials> at start and end of your
points (e.g. <HSK> ).

<JL>

Since TW’s Reputation and well known for:

- Extremely high success rate

- Deliver on time and under budget

- Extremely efficient with low number of defects

- High quality of TW consultants

- Beating the delivery date

Key Differentiation point:

- Get the job done right on time and within budget

Here is my cut at the positioning statement:

ThoughtWorks is a leader in IT systems integration that provides exceptional service to its clients
because it "gets the job done right on time and within budget."

<JL>

<HSK>

Positioning Statement: In a world of risky IT projects, we deliver success when failure is not an option.
ThoughtWorks completes major IT projects on time, on budget and on target* with our efficient and
flexible Agile Delivery Method and the most talented and motivated consultants in the world, including
Martin Fowler.

- Position: Best choice for success for high-risk projects.

- Value to customers: TW completes projects on time, on budget and on target*

(*we might want to change this last phrase. I was trying to think of something that referred to
quality/efficiency...?)

- Features: Agile, best consultants, Martin Fowler

- Focus on major projects of high risk (target market: Type A). Would prefer less smaller projects to be
more cost-effective.

- Encourages starting with TW from the beginning, rather than clean-up crew, but focuses on success for
those with failing projects that need sure-thing saving.

Okay, I have a lot more comments, but will add them once we pick a positioning statement and direction
for our paper, which I believe we will do in our conference call, yes?

</HSK>

<ic>
position statement: ThoughtWorks is the proven leader in IT systems integration that delivers winning
results well within time and budget constraints through the best practice of Agile methods, developed
by our own chief scientist, Martin Fowler.

-can further sort type A clients by segmentation:

targets: those who can’t handle projects alone, those who aren’t familiar with Agile, those who’s
decisions are mostly made by middle management

-alternative is to also target type B clients since they are those who want to keep in step with their
competitors, and are willing to employ proven technology.

-for long term- need to increase awareness of ThoughtWorks and familiarize industry with the Agile
method.

<ic>

<jv>

Position Statement: ThoughtWorks is the fastest growing IT consulting firm in the industry because we
do not fail. We employ the best people using the most innovative Agile methods, and our results speak
for themselves. ???

Thoughtworks prides itself on only accepting the best and brightest minds in the consulting industry.

Differentiation

Problem Solvers: TW

People- Internal information indicates that TW people are the main reason why consumers are so happy
with TW.
Agile- Discussion within the community on the successfulness of the Agile methods. More notariety in
research and press. The company believes that Agile sets them apart from other companies and will
drive the future of the company

Cons

Problem Solvers: Nothing unique. Limits them to just problem solving, and the company wants to do
more than just solve troubled projects. They feel that most companies are not utilizing Agile principles.

People- Can they successfully brand a company on just people? How does it make them different? Wont
everyone just say they have the best people.

Agile- Complicated to build understanding of the Agile principle, the name will take a lot of education
before it can be branded, might take a large marketing campaign.

<jv>

<EC>

Postion Statement: With our world-class management team lead by Martin Fowler, ThoughtWorks has
become the undisputed leader in IT systems integration and application development by offering the
highest success rate with our Agile Delivery Method, while meeting time and budget limits with no
margin for error.

Position Statement 2: "We suck less."

I don't want to be repetitive so here are some ideas/comments I've come up with:

The more complex the task, the better. Also, the more there is at stake, the more cost-efficient it will
be.

Successful with finishing up someone's work or starting from scratch.

Something simple and to the point such as position statement 2 may be intriguing to the risky
companies.
 $100K = 25% of annual discretionary budget (so $400K total). Out of $42MM, this is under 1% (low),
not sure how relevant this is.

Low- to moderate-risk companies may need to take a leap of faith if their cautious ways aren't
working.

Since TW is the leader, may be able to show them it's not such a crazy leap of faith anyway.

</EC>

CASE ANALYSIS POINTS

Enter your case analysis points here. Note your entry with at start and end of your points (e.g. <HSK> ).

<JL>

Key Segmentations:

- companies that are unable to handle the project alone

- companies that have projects with high risk

- companies that have projects in trouble

- companies that hired other consulting firms which failed and can’t deliver

- competitor consulting firms that wants to save face with their client

Recommendations:

Leverage the existing client base and targeting Key Segmentations within Type A firms (Short term).

Promote Agile methodology (long term) and become a "visionary" systems integrator in the world.

Alternatives:
- Targeting Key Segmentations within Type A and B firms.

- Partner with Gartner (IT analyst firm) to discover new potential target list with key characterists.

Key findings:

- No direct relationship between client’s perception on Agile method and hiring TW

- CIO are not the key contact point

In addition, here is what I find on TW’s website

http://www.thoughtworks.com

Why we're different

ThoughtWorks is best known for delivering on our promises to our clients and to our people. We get the
job done the right way, the first time. Our pioneering approach, which includes industry acclaimed Agile
best practices, helps CIOs and key stake holders maximize investment performance across their portfolio
of complex, business critical applications, while reducing time and risk.

ThoughtWorks' exclusive focus on end-to-end global solution delivery transforms and revolutionizes
how companies get value quickly from software applications. Leading analysts recognize ThoughtWorks
as a leader in the practical application of Agile techniques for distributed teams leveraging a global
delivery model.

ThoughtWorkers around the world are recognized as software development leaders and are pioneering
the use of cutting-edge, yet practical, technologies and techniques to deliver high-quality, high-value
software. Our Chief Scientist, Martin Fowler, is considered a leading authority on Agile techniques for
software development. In fact, many of our talented people share their experiences and insights at
conferences, in articles and books.

We believe our culture is unique and we think that after spending some time with us, you will too.

For more information about ThoughtWorks, contact us at info@thoughtworks.com