Tom Levers

Software Partner Relationships + Customer Transactions = Success

Posted in BUSINESS DEVELOPMENT, Sales by Tom Levers on October 15, 2010

WHY ALLIANCES ARE NOT EASY

The stability of an alliance depends on how well the “partners” work together… that’s right it is a relationship. Often relationships depend on maturity and their rational application of reason during changing internal and external conditions. It is the willingness to renegotiate the “bargain of circumstances” that creates longevity in a partner relationship.

It is NOT Surprising a large number of alliances never live up to their expectation

A successful alliance requires real “in-the-trenches” discussions around the business and individual sales transactions… not merely an  exchange of product and pre-sales when the transaction reveals itself.  Unless each partner places a high value on the skills, resources, products and contributions each brings to the alliance with a commitment to a win-win outcome, one party will not create the needed importance to the Partners original success criteria.

Ask yourself… is your organization in a one-sided Partnerships ?

A 1999 study by Accenture, a global business consulting organization, revealed that 61 percent of alliances were either outright failures or “limping along”.  In 2004, McKinsey & Company estimated that the overall success rate of alliances was around 50 percent, based on whether the alliance achieved the stated objectives.
Many alliances are dissolved after a few years. The high “divorce rate” among partners often are attributed to some of these reasons:
  1. clash of executives,
  2. poor execution on one side of the relationship,
  3. changing conditions making the original reason obsolete,
  4. new or more attractive business/technology into market ecosystem,
  5. no market demand,
  6. and finally competitive change.

Partners are not always built for offensive reasons.

Many alliances are built early where an ecosystem exists to help a company reduce competitive disadvantages quickly… enhancing reach, capabilities, rapid delivery and awareness.
THE VULNERABILITY OF ALLIANCE  PARTNERSHIPS
The “Achilles Heel” is that each is not willing  to exclusively rely on the partners essential expertise and capabilities to deliver strong business value. To be a market leader (and perhaps even a serious market contender), a company must ultimately understand its “Core Capabilities” to develop and own as it’s capabilities… and what not to develop as “Core Capabilities”. This is pivotal to protecting competitiveness and build success with Alliances and Partnerships. Moreover, some alliances hold only limited potential… because the partner guards its skills and expertise.
DELIVER BUSINESS SOLUTIONS NOT JUST “TECH” SOLUTIONS
Another big driver to “partner relationships” is to impact “transactions” to not just using “Tech” alone”. It will  not win sales transactions and often gets discredited in a techonly senerio. Pure techie brilliance gets undone by vendor ignorance/arrogance about the client’s business needs & people needs – or by the client’s own limitations or tech ignorance. Therefore another test of a “partner” may be that the vendor has demonstrated, by delivering business solutions NOT just IT solutions, that they understand and support your strategy & your culture – and will “raise a flag” if your own people’s actions appear to conflict with either strategy or culture.

Joint Marketing Promotion Means More Than Money

Another key area of Partnerships is joint marketing. This is driven around sales of each partner, the availability of MDF (Market Development Funds), objective of relationship by each party. The objective must be individualized. For example Leads – Relationships are always enhanced when Leads are viewed as a balance sheet. How many leads are given or received… and how many leads are jointly closed? If either Partner expends too much effort with no results the relationship will sour. The key is to review joint business objectives,strategy and tactics on a frequent basis (ie. if leads, installation, support  are considered an important KPI by one partner  the 2nd partner must define its expected return for delivering these KPIs.)

Conclusion

Alliances between companies, whether they are from different parts of the world, or right next door… are a key component to life in business today. Alliances  range from no more than a fleeting transaction where both parties have a temporary need, to a  prelude to a full merger of companies’, technologies, and capabilities. Whatever the nature of business alliances, being a good partner is dictated by the relationship between its employees and is a key corporate asset.  In the global economy, a well-developed ability to create and sustain fruitful alliances gives companies a significant competitive perspective that is a key component  to a complete business strategy.

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