Overview of a successful model for teaming software firms and SIs.

1. An Alliance Model that Works: Teaming Systems Integrators and
Technology Vendors
By Thomas E. O’Dea
Whether aiming for increased revenue or market share, most technology vendors have
initiated –or are planning-a major alliance with a big systems integrator (SI) and vice
versa. These alliances are never easy and frequently fail. Both internal and external
pressures work to drive the organizations apart. However, blending vision, process,
strong leadership, accountability and a good measure of flexibility can improve the odds
of an alliance’s success.
Technology vendors have a love-hate relationship with systems integrators. While they
value successful implementations of their products, they question whether SIs drive
revenue for them or merely make money off their product’s acceptance by the market.
This suspicion is felt most acutely where the IT firms have in-house consulting functions
that compete with SIs for scarce implementation dollars.
These internal obstacles are familiar to vendor alliance executives. Vendor account
managers are often wary of systems integrators’ motives in the account. Additionally,
they do not always see a value at the transaction level. The vendors’ in-house
consultants, meanwhile, charge that SIs “take money out of our pockets” by doing work
that the consultants could do as well or better themselves.
Systems Integrators face a different set of obstacles. Their consultants see the problem
from a different perspective: Software firms unrealistically expect consulting firms to
shed their veneer of impartiality, or to simply provide leads for new sales opportunities.
They rarely understand what drives consultants’ behavior, and the resultant joint
initiatives rarely address the consultants’ needs.
Seasoned global alliance executives, with the active support of senior “C-level”
executives in both firms, are vital to overcoming these obstacles and fostering the
requisite organizational change. Visionary senior executives understand instinctively that
a powerful joint value proposition can be created based upon the complementary
strengths of technology firms and SIs. The alliance executive fosters this understanding
by identifying, analyzing and presenting examples of successful joint engagements or best
practices within their own firms or in competing companies. Many companies have
scattered examples of such successes in the field. Farsighted leaders will come to
understand that there is money being left on the table; and that a strategic, programmatic
approach to alliance management is the way to recoup it.
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2. Three –Tiered Alliance Strategy
A successful alliance works well at three levels. At the Executive level the vision is
agreed upon, strategy is set, product is broadly defined and the message to the market is
conceived. From the decisions reached at this level, we can begin building the
infrastructure within both firms to facilitate driving revenue at the customer level.
Industry partners and regional sales heads come together to determine how to implement
the vision in their specific market. Here key linkages are made around specific verticals,
such as government or telecommunications, and a framework for going to market together
is created. It is at this level that the broad vision is conformed to local market conditions.
For example: Is manufacturing the best vertical to pursue in Latin America? Do mobile
commerce initiatives make more sense in Europe than in North America?
The most important level, in terms of achieving the goal of increasing revenue for both
firms, is the Account/Client level. Here respective account/client managers, and their
sales support teams, leveraging the vision and infrastructure created by management to
facilitate their success, meet early in the sales cycle to target specific accounts. The keys
to success at this level are a joint account plan with a joint value proposition and specific,
measurable sales goals. The alliance executive can play a valuable role at this level by
providing leadership and direction across vertical industries and geographies.
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3. Concurrently, there may be ongoing tactical and opportunistic teaming at the account
level beyond the scope of the solution envisioned in the Go To Market Plan. This may be
the result of interaction fostered by the alliance strategy, or of earlier interactions. This is
to be encouraged. Intelligence gained today through successful engagements at the client
level, whether as a direct result of the strategy or not, drive tomorrow’s global initiatives.
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4. Executive Sponsorship
Sponsorship is a key component of a successful alliance strategy. Top-level management
of both firms needs to be seen throughout their respective organizations as fully
supporting the alliance, since it requires changing longstanding behavior in both
organizations. Each organization should designate a C-Level executive as overall
sponsor of its most significant or promising alliance relationships. The role of the
Executive Sponsor, with assistance of the alliance executive, is to drive execution down
through the organization and remove roadblocks when they occur. The two executives
should agree to communicate regularly and meet quarterly, or at least semi-annually, to
monitor the progress of the alliance and remove obstacles to implementation.
Once senior executives in both firms understand and support the need for an alliance
strategy, it becomes easier to garner support at other levels of the organization. Indeed,
for an initiative to have a high probability of success, it must have support throughout
both organizations. Ownership, through sponsorship, guided by an overall executive
sponsor, and driven by the alliance executive, is a proven way to achieve this.
The sponsors assigned to a joint go to market initiative around CRM in the
telecommunications vertical in Europe, for example, may look something like this:
Alliance Ownership IT Vendor SI
Executive Sponsor EVP Global Sales Managing Partner
Initiative Driver VP Product Dev., or VP Industry Lead Partner or
Europe Sales Geog. Lead Partner
Account Level Account or Regional Mgr. Bus. Dev. Or Client Partner
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5. The alliance executive leads the identification of sponsors at the Regional level based on
criteria such as area of responsibility and interest. In the above example, the VP of
European sales would be the likely candidate for this particular initiative, but other
executives such as the VP of Product Development or even the VPs of Support or
Professional Services might be good candidates, based on their level of interest in or
support of the alliance. The overall executive sponsors should be encouraged to make
clear that, in their sponsor roles, the responsibility and impact of the initiative cosponsors
will extend beyond their normal bailiwicks. The European VP and his or her SI peer, for
example, will take the lead in launching and guiding the telecommunications initiative
beyond the borders of Europe by sharing best practices, reference account information,
lessons learned, sales plans and contacts. The alliance executive will insure that these
“best practices” are disseminated in other geographies or verticals that look to be fertile
new ground for the initiative.
Principles of Engagement
The overall executive sponsors agree upon the behavioral guidelines of the relationship
early on. They serve as principles for engagements and a benchmark against which
subsequent organizational behavior can be gauged as conducive or harmful to the
development of the alliance. The alliance executives should promulgate these principles
within both organizations. The initiative drivers have the responsibility of seeing that the
principles are enforced within their area of responsibility or, in the case of the overall
executive sponsors, organization-wide. The principles are a good tool for dealing with
resistance to change, particularly if they are seen and acknowledged as reflecting C-level
executive sponsors’ view of the new style of alliance.
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6. Often a history of competition or antagonism in the field can be an obstacle to
implementing the principles. Ignorance of the scope of the new alliance relationship or
simple resistance to change can also hinder progress. Problems left unresolved can fester
and poison the overall alliance. A skilled alliance executive can usually overcome these
organizational challenges by educating on the wider goals of the alliance. A discrete
escalation process is also a useful tool. The process facilitates the communication of
problems up the management chain until they are resolved. The escalation process
designates representatives from both firms at each level of escalation, as well as time
limits at each stage to insure that issues are resolved expeditiously.
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7. Execution
The vehicles for the successful implementation of the alliance are: a) the joint workshops
and b) the joint account planning session, and c) the quarterly review. The product, or
deliverable, of the first is a Go To Market Plan. The deliverable of the second is a joint
account plan for a specific, targeted account.
The workshop is the domain of the Industry/Region tier of the alliance strategy.
Workshops are planned by the alliance executives around a proposed initiative or set of
initiatives that are expressed in terms of solution, target vertical and geography. Ideas for
initiatives come from the overall executive sponsors, sales, clients or the alliance
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8. executives themselves. Workshop attendees are senior level; they represent the decision
making tier of the constituencies whose cooperation is needed for the initiative to
succeed. For example, a proposed initiative to focus on business intelligence in the
retail sector in North America may consist of the VP of North America Sales, the VP of
Product Development, the Director of Retail Marketing or their senior level designees
(depending on the size of the vendor). From the SI side, the retail partner, BI partner and
key client partners may participate. The goal is to validate the market potential for the
initiative(s), agree on the outline of a value proposition, and assign one individual from
each firm to drive a Go To Market plan that can be rolled out to the sales and/or business
development functions in each firm. It is essential that executives with the authority to
make these kinds of decisions participate in the workshop.
The workshops should run no longer than a half day. The alliance executive needs to do a
great deal of preparation and follow up to insure the attendees’ time is used as
productively as possible. For example, initiatives can be identified and vetted with the
attendees individually beforehand to gain consensus and eliminate non-starters. The field
sales or business development organizations in each firm can be polled on the feasibility
of the initiatives. They should also be asked to recommend potential target accounts for
promising joint initiatives.
At the conclusion of the workshop, the alliance executive from each firm will have the
information necessary to produce a written Go To Market Plan containing: a) the
solution/vertical/geography(ies) b) the joint value statement c) a preliminary list of target
accounts and d) a measurable objective for the initiative over a specific period of time,
and e) the names of a sponsor or driver for the initiative from each firm. The alliance
executives will then work with the drivers to roll out the initiative to the sales teams.
The tool for success at the account level is the joint account plan. The alliance executive
and/or the initiative driver bring the SI and vendor account teams together to create this.
As preparation for that joint meeting, the alliance executives will present the goals of the
alliance to the sales force at the regional or account level. The objective is to gain their
support for the initiative by apprising them of: a) the goals of the overall alliance b) its
importance to the firm c) executive sponsorship d) principles of engagement e) escalation
process f) the joint initiative in question and g) the combined value proposition. This is
also a great opportunity to provide a partner overview, best presented by a partner
representative, to cover a description of the organization, advantages of working with the
partner, and a list of key partner contacts.
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9. The joint account plan will include much of the same information contained in any other
account plan, with some key differences. For simplicity’s sake, the format used should
mirror that of the existing account plan format. The key difference is the joint value
proposition, which is the value proposition of the joint initiative tailored to the specific
business requirements of the target customer. In addition, the plan will be the
responsibility of the account manger and the SI partner or business development manager,
and it will contain specific, measurable goals for each. Among the first of these goals
will be a joint presentation to the customer, stressing the advantages of the combined
value proposition.
Structuring the Value Proposition
The alliance value proposition needs to be expressed in terms that appeal to all
constituencies without whose active support the combined sale cannot take place. Most
value propositions are crafted entirely from customer’s point of view, and focus
exclusively on customer return on investment. However, a well-crafted customer value
proposition may not necessarily ‘sell’ the SI industry partners on the notion of working
with the vendor sales team, or vice versa. A joint value proposition needs to take these
other constituencies into account as well to be successful. There must be incentive for all
these groups to work together.
For the customer, the joint value proposition must show the added advantage of dealing
with an alliance, rather than with each firm separately. The proposition should be framed
in terms of offering a greater solution than either firm could on its own, resulting in better
or quicker ROI.
For the consultant, the value proposition of teaming must address factors such as longer
and larger engagements, improved client relationships or differentiation vis a vis
competing firms. For the technology sales community, the value proposition can be
crafted in terms of accessing new markets, contracting the sales cycle, or improving the
hit rate. In short, both groups need to believe that partnering will advance their particular
agendas.
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10. Technology sales people are often faulted for emphasizing features of technology at the
expense of business value. A marketing professor of mine used to underscore the
importance of crafting the value message to customers’ needs with a pithy aphorism:
‘customers don’t buy drills; they buy holes.’ SI firms, on the other hand, are adept at
expressing the benefits of technology in terms that C level, Global 1000 executives
understand. Vendor sales teams need to understand how SI involvement can be a critical
element in creating a value proposition tailored specifically to the business needs of their
prospective customers.
Quantifying Success
How do we measure the success of an alliance? Many firms believe they measure
alliance effectiveness well, but few really do. A cursory audit usually reveals that the
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11. information they are collecting is anecdotal and unreliable. Vendors typically begin by
asking account managers to enter the names of partners involved in sales, while not
providing any incentive for them to do so accurately. Such systems rarely differentiate
between partner influence, partner involvement or partner teaming in the sale. Often
sales people will enter the customer’s audit partner, without having worked or even met
with them.
Using a dashboard with a wide set of metrics to diagnose the health and progress of
alliance over time is probably the best approach. These should be benchmarked to similar
alliances to determine comparative strength. The dashboard needs buy in from both
organizations. It should be a core part of the quarterly alliance review with the C level
executive sponsors to assess progress against assigned goals and make the necessary
course corrections. Key dashboard metrics from the vendor are: revenue driven in
targeted accounts, revenue in the joint pipeline, number of joint proposals, number and
quality of reference accounts, and how all of these change over time in comparison with
other similar alliances.
SIs have an advantage in quantifying the success of the alliance if they have an
established vendor practice that accounts separately for service dollars tied to that
vendor’s technology. If the services bookings and revenue number for the vendors’
products is available, that is a good place to start. The SI can also usually provide the
number of dedicated consultants, the number of trained consultants and the number of
dedicated business development heads promoting the vendor’s product or devoted to the
alliance. These numbers can then be monitored over time.
The health of the SI’s vendor practice should be a significant predicator of its influence in
driving vendor revenue, even if the link between practice growth and vendor product
revenue is not easily quantifiable. Research shows that SIs or consultants influence most
large technology purchases. As one executive sponsor stated: “ If I know their practice is
growing heads, that’s less people assigned to our competitors. If these consultants are not
working on our projects, they are going to be working on competitors’.”
Alliance executives may display alliance metrics in an internal, web based knowledge
exchange featuring the dashboard, key partner contacts, Go To Market Plans and other
relevant partner information. Internal users, such as account teams and sponsors, can
access the page to get an up to date snapshot of the state and comparative health of key
alliances.
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12. Revenue driven is easily measured when it is the result of a joint proposal or lead, but
what about measuring influenced revenue? Short of teaming early in the sales cycle - the
most desirable arrangement for the vendor- SIs can influence technology revenue in other
ways. For example, they can recommend the technology as a valid solution to the client’s
requirements. They can provide valuable intelligence to the vendor on client pain points
or a client’s receptivity to the vendor’s product or sales approach. Partners often provide
valuable feedback on the effectiveness of a proposal or demonstration; information the
prospective customer may be reluctant to share directly with the technology vendor.
One rough method to quantify influence is to use the rule of $1 in license revenue for
every $3 in services, and divide the service bookings number by three to gain an estimate
of the license revenue influenced. However, this method has flaws. Typically,
implementation projects are won after the licenses are sold, and the partner may have
exercised no influence at all on that specific transaction. However, SIs may counter that
they cannot recommend what they do not know. Knowledge gained in a successful
installation needs to be employed elsewhere. Perhaps more to the point, consultants tend
to steer clients toward technology for which they have a bank of trained personnel at the
ready, and to discourage clients from technology for which they lack heads. Or as one
sales veteran put it succinctly, “I have never seen a large SI recommend a technology for
which they have no bench.”
A Look at What Works
The key lesson learned is that an effective alliance strategy means consistent,
programmatic engagement at the executive, divisional and client relationship levels. A
strategy that demonstrates value at all these levels stands the best chance of producing
profits consistently for both firms over any significant period.
Challenges to a successful, long term alliances are legion. Many firms’ cultures and
reward systems don’t encourage teaming. Commission plans assign quota and/or pay
commission for activities that compete with partners. Often the sales culture discourages
account managers from partnering by questioning their contribution when a partner assists
in closing a sale. This is probably why tales of consultants ‘losing’ deals seem far more
widespread in vendor sales organizations than those in which they win deals. Yet logic
dictates that if consultants have such a pervasive influence on the client buying decision,
that their influence can just as well be used to promote as dissuade. If vendors are serious
about encouraging their alliances, they will tweak their commission plans to encourage
teaming.
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13. Vendors and SIs often forgo a strategic, programmatic approach to alliance teaming by
depending on one or two executives with “contacts” in a particular SI. This is a short-
term solution that limits the organization’s ability to react to changing market conditions
and take on new alliances and new initiatives over time. And, like any strategy based on
personalities rather than principles, it is only as good as the person(s) in charge. When
that person leaves, the alliance is at risk.
The culture within SI consultants is very different from that of most technology vendors.
Organizations tend to be highly matrixed. Partners are owners of the business and often
monarchs in their particular domains, not easily directed by managing partners. The
alliance function within the SI needs to be especially strong and skilled to sell partners on
the value of the alliance, and to motivate key partners to support it. It is essential for
alliance executives to understand how both consultants and salespeople are paid in order
to understand and influence their behavior. Since partner committees often design SI
incentive plans, they may be exceedingly difficult to alter.
Overcoming these challenges requires strong executive commitment and dedicated
alliance management. Consistent alliance engagement cannot be sustained at the field
level alone. A cross-functional alliance executive is key to driving the alliance by, among
other things, identifying and publicizing best practices and driving initiatives. The role of
the alliance executive is sometimes likened to that of a marriage counselor, resolving
disputes, encouraging communication and always keeping the organizations’ focus on the
ultimate goal: driving revenue.
Ties at the Executive level need to be particularly strong. This is where the vision is
agreed upon, strategy is set, product is broadly defined and the message to the market is
conceived. From the decisions reached at this level come the infrastructure and reward
systems needed to facilitate success in the field.
At the industry/regional level the Go To Market plan is refined and tailored to the specific
needs of the target market. Here key linkages are made around verticals, such as
telecommunications and finance, and agreement on target accounts is reached.
The most important level is the account level. If engagement is not successful here, we
cannot achieve the goal of driving revenue. These are the front lines. Here the respective
client relationship managers, leveraging the infrastructure and competency created to
facilitate their success, meet early in the sales cycle and carry a joint message to target
customers.
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14. Engagement in the field doesn’t always play out as planned; but that’s okay.
Circumstances and priorities at the client level change too quickly to be managed
effectively from afar. Von Clausewitz said that even the best strategy is useless once the
shooting starts. The same holds true for alliance strategies. A business intelligence
initiative might be designed for the transportation market, but the field has success with it
with a telecom firm, which leads to a new product opportunity. That’s fine. What is
important is to keep the ultimate goal in mind, keep the lines of communication open,
maintain executive involvement and advance a multi-level, programmatic approach to
teaming. Once successful, it will develop a momentum of its own.
Thomas O’Dea has over 18 years’ experience in strategic alliance and international
sales management at Oracle, Sequent, Unisys and NEC Corporation. He is currently
Executive Vice President of Sales for KomBea Corporation. He has an MBA from the
American Graduate School of International Management (Thunderbird). For questions
or comments on this article, he can be contacted at catalyst111@yahoo.com
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