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Sink or swim

Sink or swim

Is partnering the last lifeline to a successful business? Richard Noone investigates the issue of partnering in the channel.

With the IT industry in a constant state of flux, it's little wonder that partnering is as certain as death and taxes for managers looking to keep their heads above water and out in front. And the ones who stand to gain or lose the most are resellers whose whole business, the value add, is what holds at bay the tide of vendors going direct.

"Like in a personal relationship, communication, mutual respect and time are very important," said Brian Epp, managing director of reseller Hexagon Technologies.

"A corporate decision that you're going to partner is good at the higher level, sometimes it gets you press. Out at the coal face where things have to be done, that's where the local people must be committed as well," he said.

Epp has an extensive set of considerations when deciding to partner with another company. Company stability and longevity, strong research and development, support and training and a local presence are prerequisites but the decision ultimately hinges on the people.

"You can have all of those things but if you don't have the people and you don't trust them at a personal level then it's not going to work," Epp said.

Hexagon has had a long-standing partnership with business intelligence software vendor Cognos in Australia and North America and, according to Epp, it's a partnership that goes beyond financial statements.

"I don't know whether Cognos could categorically state that they can measure the quality of our partnership ultimately on a pure black-and-white, bottom-line basis," he said.

"It probably starts to get more into a gut feel."

Rebekah O'Flaherty, channel manager for Hewlett-Packard, asserts that for HP the starting point in looking at partnering is first with the customer and then with the market.

She claims that HP, through partnering, concentrates on serving customer needs that aren't currently being met by HP's existing partners. "Is there a market out there we're not serving?" she asks. But again, the final decision often rests on the cultural fit between the two companies.

Simply put, O'Flaherty asks, "Do we want to work with these people?"

Epp's counterpart at Cognos, Peter Kokinakos, marketing director Asia-Pacific, claims: "The only way that these global alliances or global partnerships work is when the local people get together and actually make something happen.

"That is where you can tell the partnership is successful, when both parties are successful and the way that they work together is actually complementary rather than conflicting," he said.

Epp claims that while the decision to adopt a partnership model for vendors addresses the idiosyncrasies of the local marketplace there will always be problems in a relationship. "At some point you know you're going to walk into a room of unhappy people. And you've got to deal with it."

Kokinakos reiterates these sentiments with a view to a solution. "It's hard to predict when you sit down and say we're going to work together what's going to happen and try to remove any problems.

"But the resolution is always communication. So the sorts of problems always come back to a misunderstanding of what role we play and what role our partners play and who needs to do what."

The value add

Kathleen Bailey, general manager of distribution channels, IBM Australia and New Zealand, claims strategic partnering is an "important and integral" part of IBM's business with about 35 per cent of the company's revenue coming from business partners last year.

Bailey claims partnering is all about "winning in the marketplace", so from IBM's perspective it revolves around the value add that partners bring to each other. Having that joint purpose will alleviate potential problems, she says.

High on the agenda for IBM, claims Bailey, is the commitment of partners dedicated to being the best partner they can be. "IBM is looking for partners who are committed to our business directions." However, "commitment by its very nature is a two-way street".

In many ways partnering allows companies to focus on core competencies while riding on the coat-tails of multinationals in terms of marketing and support. Dale Corrigan, managing director of software manufacturer Surefire, explains how the company partnered with US vendor NCR in a relationship which sees NCR effectively reselling Surefire's software with NCR's hardware.

Corrigan claims that from a developer's perspective it's vital to the longevity of a local company to "utilise the marketing machine" of the big players, leveraging their dollars, size and name.

"Where other developers fall apart is they grow too big and turn away from their core business of development. They get caught up in installation and support," he said. "Partnering is the only way you can keep up. You've got to be able to get your hands on the latest technology before your competitor."

Another major benefit Corrigan sees for a local company partnering with a global player is in the ability to "get inside the loop" and network within the company, thus opening up the global market.

Despite the leveraging made possible by partnering with these companies, Corrigan is not without his expectations or reservations. He warns that companies can't afford to be totally dependent on the partnership with the multinational to sustain business and must have mechanisms in place if the partnership should end or the company has to look elsewhere.

Investments

As a distributor, partnering takes on another level, looking towards both the vendor and reseller relationships to bolster business. Steven Bragg, storage business unit manager for distributor Simms International, argues the majority of distribution organisations today play a broad-band role where they will partner with anybody they can get their hands on in a select product group.

"Our mentality is very different to that. We say 'lets pick the right partners who have the right philosophy and right type of product to suit our market and then ride with them'," he said.

Bragg claims that the investments made in partnering are not lost to the distributor, with Simms investing in both its own skills and its resellers.

"In making that investment we need to be quite strategic and selective as to who we are offering that infrastructure to," he said. "I see there is a lot of synergies between the kind of vendors we select and the kind of partnerships we have at a customer level as well."

Bragg claims Simms is essentially looking for openness. "A partner who isn't willing to recognise or talk to its customers about key technologies until there's a request for tender on the table or there's an order to be signed the following day isn't conducive to a successful partnership," said Bragg.

From a vendor perspective, Bragg claims Simms is looking for vendors who are ready to support the distributor through training, marketing support, working side by side and with a certain level of trust.

Rob Kirkey, managing director of Great Plains Australia-New Zealand, believes partnering in the channel offers the best approach for a vendor to accommodate the variety of customers looking for its solutions.

He claims a partnership organisation is going to be more agile and move quicker than a vendor could in meeting the needs of a particular customer, especially in regards to expertise in a certain vertical market or in terms of geographic coverage.

"No vendor can be all things to all customers, but there's enough diversity in the channel such that one of the partners is going to be the things that a specific customer needs," said Kirkey. "A vendor is not going to be able to react as quickly as that."

Cognos stalwart Kokinakos also believes vendors can't meet all of a customer's requirements, claiming there will always be a role for a partner as a problem solver.

"They have a different skill set. It's nothing to do with building products which is our skill set. And I think you'll see that, rather than becoming generalists, the industry will become more specialised. Partnerships fit in there ideally in bringing it all together," he said.

When Great Plains opened its office in Australia in 1997 it had 63 partners covering Australia and New Zealand. Today Great Plains has 31. Kirkey claims the reason for this is the commitment placed on the partners.

"We took the bar and we raised it. We have to have partners who are willing to commit to us. If you're willing to put the investments into the business then we're willing to match or exceed that investment. Approximately 32 organisations neither could nor wanted to reach those same levels of commitment and that's fine; we shook hands and parted ways," said Kirkey.

When it comes to making a partnership work the personal relationships are often the be all and end all. As Craig Neyle, Great Plains director of channel sales, Australia-New Zealand, says: "There's no such thing as an organisation. An organisation is just the people."

Neyle claims the ability for Great Plains' partners to succeed in an environment where some vendors are going direct, is simply a relationship to their training, skills and experience.

"We do not apologise for putting hard criteria on our partners for training and skills; that's the way they're going to get better and that's how our customers will be more satisfied," he said. "Sort of a 'teach the man to fish' syndrome."

Gary Starr, regional channel manager for Nortel Networks Australia-New Zealand, feels that when it comes to partnering, "mutual benefit" is a driving factor beyond straight technology.

"It is a buy-sell relationship, but really it's all about working together, partnering opportunities and leveraging each other's strengths," he said.

Starr claims there are a number of things the vendor is looking for in a partner, including a sound financial background, the skills necessary to deliver solutions or a will to acquire skills, a desire to work together and a synergy in terms of buying into Nortel's vision for unified networks.

"We select partners for the long term because the investments these organisations make in skills development is significant," said Starr. "We do get leverage because the more training they do and the more people they have on the street talking to customers about unified networks, the more successful that partnership will be."

While dedication to a partner is important, Starr recognises resellers have to be able to pool technology from more than one vendor while maintaining focus.

"When we look for a partner, we look for an organisation who is aligned with one or maybe two vendors. But not five or six vendors because there's a lack of focus and a lack of dollars to invest in skills across all five or six vendors," he said.

At the end of the day, the resellers who make the smart partnership decisions are going to be the ones still standing tomorrow. Amid a sea of channel rationalisation, whose hand you can hold onto may make the difference between staying afloat and getting dragged under.


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