Technology Entrepreneurship

Case Study 9.1 HMS Ltd. Written by Svante Andersson, Halmstad University, Sweden.

HMS (Hassbjer MicroSystems), a high-tech company situated in South-west of Sweden, was founded in 1988 by Nicolas Hassbjer. The company originated from a student project at Halmstad University for measuring paper thickness. Staffan Dahlström, who is the CEO today, was the second person in the company, and he was responsible for the marketing strategies in the company’s first international expansion. The founders of the company realised the need to connect devices to different fieldbuses and industrial networks. Hence, the product “Anybus” was developed – a network card that connects any device to any network. The network card is designed for OEM (Original Equipment Manufacturers) and the product is integrated into industrial applications such as PLCs, Drives, Robots, Weighscales, Valves, Controllers, etc.

Already from inception, the company aimed for a global market, and Hitachi from Japan was one of the first large customers. Other important customers are Siemens, Rockwell Automation, Schneider Electric, Toshiba, Sony, Panasonic, ABB.

We got the advice from business counselors to start our internationalization in Denmark. However we thought, Denmark, it’s no big market. Japan is much more interesting for our products. (Staffan Dahlström, CEO)

The company’s core values are customer commitment, growth and innovation, long-term approach, building relationships and cost awareness.

In 2012, HMS had 240 employees and operations in ten countries: Sweden (Halmstad), Germany (Karlsruhe), United States (Chicago), Japan (Shin-Yokohama), Denmark (Copenhagen), China (Beijing), Italy (Milano), France (Mulhouse), UK (Coventry) and India (Pune). HMS has also distributors in more than 50 countries. In 2011, the revenue was 383.6 million SEK (42.5 million EUR, 59 million USD) Marketing Strategies

The company started with little planned and systematic marketing research. The company originated from technology development and sales activities towards important key customers. The product was branded Anybus. Sales activities have always been in focus, and today a marketing communication department is supporting the sales activity in the company. Top management points out the importance of sales and customers.

It is especially important for a technology oriented company as HMS to highlight the importance of customer orientation and sales. (Staffan Dahlstrom, CEO)

In the Anybus area getting large numbers of new customers is extremely impor-tant. HMS top management has identified four different phases in the sales process: the hot issue phase, the critical business phase, the win phase and the follow-up phase. A “battle room” is used to discuss how to go through the different phases. A team with responsible sales personnel and the top manage-ment team are all involved in the discussion in the “battle room”.

It is important that all members in the top management team are involved in our largest projects. A new large order affects all parts of the company includ-ing finance, R&D, HRM and production. (Staffan Dahlstrom, CEO)

Innovation and product development is also pointed out as an important corner-stone in the company’s marketing strategies. With more than 30 per cent of the staff involved in R&D, HMS pioneers new technology and customises solutions for specific needs.

Customers are good at incremental changes but not at radical innovations. We need to create a system to create radical innovations there. HMS is driving the process but still are influenced from the customers. (Jorgen Palmhager, COO)

Segmentation

HMS has two different main segments. These two segments are dealt with in different ways. • Anybus

The largest segment is Anybus, which represent 70 per cent of the company’s turnover. In the Anybus segment close relationships with customers are vital for sales. It takes a long time to sell in the product to a customer, but when the customer has chosen HMS’s products, the accumulated sales turnover can be very high over the years. There are several thousand potential customers around the world and the product is either standard or custom made for specific customers. Communication systems are different in different nations and HMS can adapt it for different contexts. Field application engineers in HMS are working in close connection with development engineers at the customers to integrate HMS products inside customer’s devices. There are many participants in the buying process, and it is important to influence and have good relationship with actors with different buying roles. Often the alternative to use Anybus is to develop the technology in-house by the customer. Therefore it is important to influence the in-house technician that Anybus is a better solution than their own developed technology, which can take time. Products are priced as a premium product and high quality is more important than low price. However when the products are sold in large volumes, the price per unit will be lower. The customer relation-ships for the four most important customers are managed by global key account managers.

• Gateway The gateway segment constitutes 30 per cent of the company’s turnover but is growing fast. Gateway are sold to electrician companies and there are hundreds of thousand potential customers in the world. It is too costly to have direct rela-tionship with customers in this segment, so these products are sold via distribu-tors. HMS tries to influence the distributors to focus on their products and to sell more by supporting with information materials and trade fair arrangements. HMS personnel is spending whole weeks by distributors to educate them in new prod-ucts and taking part in customer visits. Strategies for Developing Stakeholder Relationships

The relationships with the current customers are crucial as they are covering 90 per cent of the turnover. The large customer is very important for HMS, especially in the Anybus segment, and global key account managers are responsible for these. In this segment, nine international sales companies are dealing with the most important markets. Product managers are responsible for developed prod-ucts, both regarding technology and sales. They develop manuals and educate salespeople. It is important to visit customers to listen to them and to present different sales argument for different actors with different roles in the buying process. For example, in contact with technicians, prototypes and videos are shown to present the technical advantages with the product. For person respon-sible for economic decisions, calculations are presented that show the value for the customer. There are also international differences in sales argument. In Germany and Japan technical arguments are important, while in the United States, economic and “value for customer” is more important. Distributors are key stakeholders in the Gateway segment. Important for building and maintaining relationships with key customers and distributors is education. HMS is offering education to customers and distributors. HMS has also sponsored a textbook in the industrial network area. This textbook is written of academic key-opinion leaders in the area. For a growing company, as HMS, financing is also vital. HMS strives for fruitful relations with banks, private-equity companies, and since 2007, the company is listed on the stock exchange. HMS also needs personnel to grow; recruitment and HRM are important factors. A good relationship with Halmstad University, with internships and student projects, is fostered to have a source for future employees. Case Questions

1. How does the offer differ between HMS’s different segments? 2. Which distribution channels have HMS in different segments? Discuss why they have chosen different channel strategies.

3. Describe and discuss the buying decision process by HMS customers? 4. Discuss the importance of different relationships for HMS development?

Case Study References

http://usa.um.dk/en/news/newsdisplaypage/?newsid=87a2c1c0–0acf-49d0–9e6c-4877bf66ad96. http://www.embarcadero.com/press-releases/daintel-builds-award-winning-ehealth-so-lution-using-embarcadero-delphi-xe. http://www.daintel.com. http://www.itb.dk/Arrangement/Dokumenter/Daintel_præsentation_01062012.pdf.