Start Strategic Account Management Programs as Business Initiatives: Honeywell Industrial Automation and Control Solutions


Honeywell Industrial Automation and Control Solutions (IACS) has a long, successful history of close working relationships with its key customers, most of whom are huge integrated oil and chemical companies. As those customers faced increasing competitive pressure and demand for higher financial returns in the mid-1990s, they pushed Honeywell to reduce costs, accelerate performance, provide global consistency, and demonstrate increased investment returns. Some customers instituted strategic sourcing programs designed to select one or two key suppliers for all future global automation investments.

Honeywell had been responding to these market demands tactically, on an account-by-account or project-by-project basis, which dramatically increased selling costs. Coupled with competitive pressure to discount prices, Honeywell's profit margins were severely squeezed.

Honeywell had been responding to these market demands tactically, on an account-by-account or project-by-project basis, which dramatically increased selling costs. Coupled with competitive pressure to discount prices, Honeywell's profit margins were severely squeezed.

Honeywell's challenge was to implement a process that strategically responded to the market demand, created sustained competitive advantage, and ensured long-term growth and profitability for both customer and Honeywell IACS. The program was profit-, strategy-, and process-based.

In 1996, Honeywell formed the Strategic Corporate Accounts Program to provide this systematic approach to strategic account management. Even its title refers back to the accounts' ownership: strategic corporate accounts. This program was and is focused on establishing strategic account management as a core competency within Honeywell IACS. The division began to create and implement consistent processes, bringing discipline to managing these strategic account relationships. Honeywell IACS's Strategic Corporate Accounts organization currently manages 11 global petrochemical and energy companies, representing some 35+ percent of Honeywell IACS's total global revenue.

Honeywell has a process-oriented culture. Instead of charging into an account management process, as many firms have done, Honeywell developed, with cross-functional help, a program vision, responsibilities, interdependencies, account selection criteria, and some very special dedicated resources to link Honeywell IACS (the firm) with strategic corporate accounts.

The vision for Honeywell's Strategic Corporate Accounts Program was "to create value through a world-class, relationship-centric strategic approach that complements Honeywell's technology leadership and differentiates its value from that of its competition." To support this vision, the Strategic Corporate Accounts Program has a number of responsibilities, including:

  • Establish and manage strategic business relationships worldwide.

  • Facilitate the global introduction, integration, and adoption of framework/processes.

  • Measure and report the total value and ROI of Strategic Corporate Accounts.

  • Communicate and coordinate internally and externally to achieve organizational alignment, ensure consistency, and transfer knowledge regarding strategic relationship development and management.

We have chosen these four responsibilities because sales alone cannot accomplish them. These tasks require the coordinated efforts of many folks in many Honeywell functions on many continents.

When strategic corporate accounts went after accounts, they looked for customers who:

  • valued automation as strategic investment that produces competitive advantage;

  • showed a commitment to Honeywell IACS as a strategic first-choice supplier;

  • were strategically aligned with Honeywell IACS;

  • were willing to create a joint value proposition;

  • were globally positioned, with clear global requirements and a desire for global consistency; and

  • merited an investment in a strategic relationship, which included:

    • a relationship manager;

    • a senior executive champion;

    • an executive steering committee; and

    • technology interaction

Honeywell used these criteria—and others—to begin distinguishing customers meriting a strategic corporate approach. And while sales might do some of the research, achieving strategic alignment and making a business case for a potential strategic corporate account takes a significant time investment by numerous functions beyond sales.

To support the strategic corporate account activities, Honeywell IACS created a cross-functional support group that combined competencies in Strategic Businesses, Business Process, Technology Alignment, and global linkages. Honeywell IACS believed the key to a successful strategic corporate accounts program was balancing the need for a common and consistent account management process with a structure that accommodated the unique, value-differentiating needs of each specific customer.

Honeywell created two functions—Business Resources and Technology Alignment—to support the common elements of the account management process.

The Business Resource team develops and manages the framework and processes to manage IACS's strategic business relationships. This team provides overall support for Strategic Corporate Accounts, including: business planning, identification and application of internal and external best practices, and Strategic Corporate Account organization communication and reporting to the other business units.

Honeywell IACS believed the key to a successful strategic corporate accounts program was balancing the need for a common and consistent account management process with a structure that accommodated the unique, value-differentiating needs of each specific customer.

Another common element to all Honeywell IACS's strategic relationships is the customers' desire to achieve competitive advantage through automation. The Strategic Technology Alignment function ensures that the solutions Honeywell IACS develops do, in fact, meet the specific, prioritized needs of its strategic accounts. The technology alignment function also ensures those solutions realize superior value for both Honeywell IACS and the customer. Technology Alignment communicates the strategic corporate account's technology requirements to any Honeywell Strategic Business Unit that is helping craft a solution for that customer. In addition, the function supports planning technology directions, resolves common technology issues, and quantifies value propositions for technology applications in Strategic Corporate Accounts.

For managing the unique elements of each strategic relationship, every Strategic Corporate Account has a full-time, dedicated business manager with a dedicated support team and defined global linkages. These business managers are accountable for the pro-forma global P&L of each strategic relationship. These managers also support framework/process implementation and continuous improvement within assigned account relationships.

Honeywell IACS is currently moving toward a Six Sigma approach to account relationship management. Traditionally a tool to lessen variation in manufacturing, Six Sigma potentially will allow Honeywell IACS to achieve the next level of excellence in strategic/global account management. And Honey-well realizes that sales alone will not be able to control all the potential variables in managing a strategic corporate relationship, such as establishing and managing parallel linkages between all critical functions at the supplier and account. To create firmwide relationships, Honeywell worldwide must work together to continually meet and exceed the targeted accounts' expectations.

The Honeywell IACS Strategic Corporate Accounts Program demonstrates positive business results achievable when a firm's multiple functions re-engineer the supplier-customer interface.

This story started with high costs of sales and lessened profitability. What impact has the strategic corporate accounts program had on Honeywell IACS? Between 1997 and 1999, Honeywell IACS:

  • Reduced overall selling cost by 40 percent.

  • Grew 61 percent in a flat-to-declining business environment.

  • Increased annual per-strategic account manager sales productivity by 100 percent.

  • Improved divisional profitability by 20 percent.

During 1995–97, Honeywell IACS also reduced some customers' per-project service costs by 15 to 30 percent. One example: Honeywell IACS developed an automation co-sourcing option for procuring instruments for a strategic corporate account's plant, a $250 million project in which the account received huge annual benefits: $60 million in yield benefits, $9 million in reliability improvements, and a $20 million after-tax incremental cash flow, beginning in the first year.

Our conclusion? The Honeywell IACS Strategic Corporate Accounts Program demonstrates positive business results achievable when a firm's multiple functions re-engineer the supplier-customer interface.

When a supplier like Honeywell IACS sets out to institutionalize alliance behavior across the organizational boundaries of the business relationship, it removes barriers, shares information, develops trust, and enables both supplier and customer to achieve superior business results.




The Seven Keys to Managing Strategic Accounts
The Seven Keys to Managing Strategic Accounts
ISBN: 0071417524
EAN: 2147483647
Year: 2003
Pages: 112

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