Partnering Today: A Dance or a Marriage?

9 March 2004—The continuing shift in the technology industry toward providing high-value solutions puts a premium on successful partnerships. Even the largest companies need to rely more on partners to drive business growth, facilitate change, and provide access to new capabilities, clients, and geographies.

The problem is that a great number of partnerships fail—as many as half, according to the consulting firm McKinsey. Most marketers know intuitively that partnerships are more often talk than action, but this is not the year to be wasting 50% of your resources on doomed ventures.

Three challenges stand out:

• Probably the toughest challenge in partnering effectively is simply making sure that each partner brings to the relationship a clear understanding of the value, objectives, strategy, and competences on both sides. Unfortunately, this is not always the case.

• The rush to market often pressures partners to skip the time-consuming process of structuring an agreement with clear goals and metrics around specified markets and client opportunities.

• Partners often neglect the importance of developing a systematic approach that works across all necessary departments or geographies. This is particularly difficult when, as in Europe, those geographies incorporate a diverse range of cultures and languages, and the strength of the chosen partner varies in each of these geographies against local incumbents.

Was partnering always this difficult? Yes, but it seemed to matter less in the 1980s and 1990s. That was a period of ‘logo partnerships,’ where everyone said that they partnered with everyone else. It was not based on the reality of delivery, but we got away with it because growth was substantial for everyone.

Today, with lower growth and greater buyer scepticism, partnering effectively is much more important to gain access to prospective clients, win deals, and deliver effectively so the client buys again and tells colleagues to buy from you as well. As companies focus largely on short-term revenue, they tend to look for the best partners to help win and deliver on individual opportunities. This is fine as far as it goes, but it doesn’t go very far toward a broad strategy and programme to build strong, ongoing partnerships into the future.

Indeed, as transformational services and solutions become a stronger focus in our industry, the primary partnering model may move to one that’s similar to those in the construction and film industries. In the film industry, for example, companies with clear specialities collaborate on specific projects and then part ways, having learned whether or not they might be able to work together again on similar projects. Few of the companies involved actually work for the overarching production company (such as Universal Studios), which is mainly contributing financial resources and distribution channels. The director is usually an independent ‘solution architect’ who relies on other specialists and often third-party equipment to get the job done.

This opportunistic partnering model makes some sense, given the direction of the industry, but it also makes it much more difficult to successfully address the three challenges outlined above. Most important, if companies rely mostly on short-term and one-off partnerships, they give up enormous opportunity to build productive longer-term relationships that will drive sustainable business advantage.

Because flexibility is important, the answer may lie in a more balanced approach that relies on a tiered system. A well-structured, tiered programme can include a small number of global strategic partners with fully developed relationships for successful long-term collaboration and a larger number of less developed partnerships that enable rapid response to particular opportunities. The three challenges remain central to partnerships at all levels, but the tiering helps identify how to best invest partner development resources.

With just 6% of marketing resources allocated to partnerships in 2004, according to ITSMA Europe research, marketers need to spend money wisely. There may be enough motivation to bring a number of partners to the dance, but creating a successful marriage is another story entirely.

—Bev Burgess, info@itsma.com

ITSMA Europe will highlight the partnering issue at our Annual European Forum on May 18-19, 2004, in London, with presentations from BT and Vega, and then again in an online briefing on June 17.

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ITSMA specializes in helping companies market and sell services and solutions more effectively. As a membership organization, we provide research, consulting, and training to the world's leading technology, communications, and professional services providers to generate increased demand, strengthen customer relationships, and improve brand differentiation. ITSMA is based near Boston, and has offices in London and Tokyo. Learn more at www.itsma.com.