We, in the Channels and Alliance team at Pelorus International, spend most of our professional life working with high-tech sales and marketing teams to help them create "go to market" alliances. Regularly, in the first few minutes of an engagement, the client mentions the "T" word! "Carol, they don't trust us! We don't trust them! We don't trust each other!" Almost all parties, without exception, will rate trust, and the building of it, as the critical success factor for the alliance.
While trust is a key component of a successful partnership, we believe that there are four other key components to building a strong, long-lasting relationship. If these components are absent, you may not in fact have a relationship. Rather, you may have what is analogous to modern relationships in the '90s - casual sex without any clear long-term commitment or desire for exclusivity. Sure we meet, we date, we get our needs met. But if someone else comes along, heh! we'll sleep with them too. Sound familiar?
However, there are changes going on in the marketplace that are driving partnerships to exclusivity. The complexity of solutions and the cost to build, market and deploy are causing vendors to make choices about their relationships. Oracle is a good example of a company that was previously reluctant to commit to a platform vendor.
However, today Oracle and Hewlett-Packard have a committed alliance in the e-business space, partnering with Cambridge Technology, BEA Systems and Broad Vision to deliver a complete pre-partnered proven solution.
The capability to build long-term partnerships, whether it be with resellers, VARs, ISVs, system integrators or outsourcers, is a critical component of success for high technology vendors. As said earlier, our consulting practice has identified five key components, of which trust is one, that are critical to establishing and maintaining a partnership in today's market.
Trust. For trust to be established between two or more parties it is key that the advice given is unbiased and honest. Vendors must move away from giving partners just the "party line" to providing open and frank business advice. Decisions need to be made quickly; nothing destroys trust as quickly as the phrase, "I'll get back to you." Delays may indicate to a partner that you have other options (for example, working with a competitor), or that you simply don't value the relationship enough to make decision-making a priority. Keeping small commitments is also key, trust is eroded by the failure to return phone calls or to do what you've said you will do. Be honest: if you can't do something, set the expectation accurately.
If you really want to build trust quickly, bring an opportunity to the partnership or take the lead in an initiative. At a recent meeting in Dallas, the alliance manager for Andersen Consulting informed the team that Andersen "would not trust a vendor unless a lead was brought to the table". It is critical that you find an area in your market or an opportunity within an account and bring it to the relationship.
Shared knowledge. The sharing of knowledge is critical to building trust and, in our experience, trust cannot be established without it. The knowledge shared should focus on the business advantage to the partnership and needs to be two-way. To truly establish trust, someone is going to have to "open the kimono" and talk about future directions, key initiatives and product or account information that is not generally available on the Web.
Innovation. So often, we are asked to help a vendor increase their market share with a reseller, ISV, system integrator or outsourcer. The conversation usually goes like this: "Reseller X has a 20 per cent share with us, a 30 per cent share with IBM and a 40 per cent share with Microsoft. We want to grow our revenue so show us a way we can take share from our competitors!" We will respond to a statement like this with the question, "Of what value is this to your partner? All you are doing is moving the dollars around within the existing revenue streams". What is of value to your partner and you is to "grow the pie". Move into incremental revenue streams and build loyalty through bringing increased value.
A good example of this strategy was employed by Digital when it entered the PC market in Australia. It moved into the number four position in just a few years through innovative revenue growth plans with the reseller partners. The majority of these partners had never heard of Digital when the channel manager walked through the door, and within a short period of time were primarily selling Digital platforms at the expense of HP, IBM and others. Innovation requires both parties to stop relying on past successes, to leave complacency behind, to leverage both parties' core capabilities and to bring new value to the relationship.
Agreed goals. When we ask vendors, "What are your goals for the partnership?" the usual response is to flourish the latest partner agreement. The issue with the partner agreement is that the goals are set by the vendor and agreed to after considerable negotiation with the partner. They are not goals established by both, or bought into by both. Usually the agreement sets up targets and a fiscal relationship, without a clear understanding of the execution required to deliver on these targets.
It is critical for all parties to develop a shared vision with real definable value for all. This vision, or goal, ensures clarity and focus and enables a feeling of purpose and unity. Just as important is the ability for the goals to define the metrics for success so that all parties can evaluate their progress or take remedial steps if the goals are not being attained. Finally, it is key to set clear roles and responsibilities to ensure that expectations are met and that confusion, overlaps and increased cost of sale are avoided.
Balance of returns. The final component of a successful partnership is the one most often overlooked by the vendor. So often we hear resellers exclaim, "They get more out of it than we do!" This "more" is often perceived as more market presence, more profit, more leverage. Often a vendor will not recognise that their resellers or partners feel this way until that fateful day when the vendor checks its partner's Web page and finds its competitor's logo featuring on the banner page. It really is like a marriage, returning home to find that your partner has left town with your best friend because they were not getting their needs met. Be clear about your investments, make sure you share success and keep focused on the returns for both - not only short term, but long term.
There is a significant cost to building partnerships and it also takes time. G2R advises that it can take up to four years to establish a partnership with large system integrators. However, in the emerging e-business and CRM marketplace a delay of even one year to establish a partnership could prove fatal to technology companies. Fast-track the development of a partnership by establishing the five principles and working to develop a plan that adheres to them all.
Carol Johnson is principal consultant for channels and alliance practice Pelorus International. Reach them at: www.pelorusintl.com.au