Integrators are citing a marked rise in partnering across the channel, with many suggesting it is essential to survival. But one analyst has warned not all partnerships offer long-term gains.
UXC managing director, Cris Nicolli, said one of the biggest benefits was broadening the customer canvas.
"As a local integrator, you could cut yourself out of significant opportunities if you don't partner," he said. Over the past 12 months, the ASX-listed company has experienced a marked increase in the amount of partner deals, particularly with multinationals.
Current allies include Accenture, CSC and Cap Gemini. "In my experience, multinationals have superior relationships with clients and a lower risk profile. They also have more complete and overarching skills," Nicolli said. "Quite often, when they look at their own capabilities, they realise they're not strong in particular areas. These could be geographic, or a technology weakness or capability. In these cases, we try to offer good, nimble capabilities.
"Multinationals find it valuable because they get the geographic or quality support plus local content: it's good to have Australian input, particularly if you're dealing with government."
UXC skills used by other integrators include applications expertise in SAP, Oracle and PeopleSoft.
"There's a resource challenge in a lot of these areas. Rather than building up capabilities, they're teaming up with someone who is not threatening," Nicolli said. Queensland-based Data#3 is another systems integrator buoyed by its partnering strategy. General manager, Laurence Baynham, said the game was increasingly about developing overall solutions.
"If we have some competencies, and there's another partner that can make up the whole solution, then we would look to partner," he said. "We are quite happy to partner with a competitor where it makes sense. You have to work out who does what, and define clearly where you partner and where you compete." Gartner vice-president and Asia-Pacific IT services analyst, Rolf Jester, said sub-contracting relationships between channel players were widespread.
There were three reasons for it: increasing capacity; building capability with additional skills; or broadening market access.
"An interesting thing that's begun to happen in services is that a value chain has emerged where a significant minority of a service provider's business is being done with other providers further down the food chain," he said. "So we have an end customer, then an aggregator of services attracting one or more specialists to fulfil a deal. Sometimes it's the customer that wants to see that relationship.
"All service providers are focusing more - so there are things they don't do. But if you need other skills to fulfil the customer need, then leveraging partners or sub-contractors may be advantageous."
However, Jester said integrators needed to closely analyse the potential for long-term gain before taking the plunge.
"The choice to partner should be decided by whether an organisation will make more money. It's that simple," he said.
"By partnering, service providers need to rate the customer and whether it's worth retaining them, as well as the margin on that business. It could wind up smaller if you're pairing with a sub-contractor.
"There's a lot of loose talk in the industry about partnering. It's not always good, and it doesn't always add value to your business. Yes, it's a valid role to act as an integrator or aggregator. But the value in that middle man role isn't always recognised by the customer and if your customer doesn't see it, it may not be worth it. You have to look at it in a hard-nosed way." Southern Cross Computer Systems (SCCS) CEO, Mark Kalmus, agreed partnering was about recognising you couldn't be all things to all people. The Melbourne-based integrator often pairs with other players with complementary technical capabilities.
"For us, it's particularly a case of getting applications expertise - Oracle, JD Edwards, SAP or even in the Microsoft space, with Dynamics and ERP," he said. SCCS also often works alongside a vendor or larger SI for high-end systems management skills in areas like IBM Integrity.
For managing director of Canberra integrator, Dataflex, Brian Evans, the rapid onslaught of new technologies was forcing SME-sized integrators to partner. "We've had a couple of VMware implementations where we have gone to a competitor to partner. We provide the hardware, they provide the services.
And it's worked well," he said. "Because players and technologies are moving so quickly in this marketplace, there are always early adopters in some areas. So why not leverage those? You can't adopt a scattergun approach."
While most integrators argued the spike in partnering was not directly related to the industry skills shortage, some admitted it was lurking in the background.
"I do think integrators are being more conservative about which additional resources they will invest in. The skills shortage also means you have to pay more for them," UXC's Nicolli said. "If you can team up with someone with these skills, it allows you to access those resources without having to change the business model too dramatically."
SCCS's Kalmus said the skill shortage was a contributing factor behind its working with other integrators.
"It's about finding the right people at the right time without having the cost of staff on-board for ad hoc work," he said.
Kalmus brushed aside fears of a partner snatching away business, arguing a close client relationship was the key. "Sometimes you do have to set the ground rules upfront so you know where you stand - there are vendors we trust more than others," he said. Dataflex's Evans said it came down to knowing your strengths.
"As soon as that partner, who is good at the implementation side for example, tries to come into the sales side, they aren't working to their strengths," he said. "You have to be prepared to take a punt on what your skills are and work to those."