Archive for the ‘channel’ Tag

A Big Step For Microsoft and Cloud Ecosystems, a New Step In My Own Collaboration on Alliances   1 comment

Yesterday I published a new post on the impact of the new service on Microsoft’s partner ecosystem.
I believe this service is much more than a revamping of Hotmail; it is a key development in the impact of cloud business models on partner ecosystems for Microsoft and other platform vendors. It affects the whole partner ecosystem from OEM to distributors and resellers, to systems integrators and ISVs.

This post also marks a new development for me: I have published it as guest on the blog of a fellow alliances professional, Peter Simoons.

I look forward to exploring this collaboration and others among alliances practitioners. It will be interesting to see how alliances develop among alliance managers.


What is Happening in Enterprise ICT Alliances and Channel in Italy – Early Results   4 comments

Italian translation available – disponibile la traduzione italiana. Text revised on 30 Jan 2012.

I am gathering insight on enterprise Information and Communication Technology (ICT) alliances and channel evolution in Italy. Information comes from selected local and global market analysts, large and small systems integrators, resellers and distributors, Independent Software Vendors (ISVs) and software platform vendors (the category including global players such as HP, IBM, Microsoft, Oracle, SAP, and a few others).

More evidence will be required for meaningful conclusions, still I am finding early results interesting and useful for our daily work, both individually and as part of my organization, evolving to develop our alliance teaming capability as well as very high value added resale capability.

My personal understanding so far: ICT partner management, including both asymmetric, one-to-many channel relations and symmetric, one-to-one, essentially peer-to-peer alliance relations, is going through intense and disruptive evolution. I believe this evolution is stronger than standard sales discipline and even response to a challenging economic environment can explain. New categories of enterprise ICT partners are emerging to compete with existing ones, while incumbents are developing new behaviors to answer this competition.
In Italy, this is providing ICT market players with new opportunities to overcome historical fragmentation. Over time, it might even become possible to define new partner business models that leverage local specifics in original ways, somehow like networks of small enterprises in regional districts had innovated manufacturing around the 1980s.  

Let me start by setting some local context. I see two distinguishing features in the Italian ICT partner ecosystem:

  • it is highly fragmented, just as our enterprise ICT customer market (analysts monitor and report on more than a dozen thousand suppliers and intermediaries, and on a number of enterprise end customers that is in the same order of magnitude).
  • credit access is relatively complex for enterprises large and small, so resellers and distributors put significant resources to bridge  customer and supplier requirements on payment terms.

This combination impacts channel operators as well as enterprise platform vendors at the supplying end of the channel.
Resellers and distributors must focus on breadth and transactional efficiency, which reduces resources available for offering innovation, differentiation from competitors, and development of true alliances.
Platform vendors, on the other side, struggle to distinguish among so many partners so alike, to recognize, reward and drive the most effective behaviors, and with them innovation and efficiency in their channel.

In this context, I see two major global trends causing disruptive change, that can have special results in our country.

The first is cloud-enabled globalization: cloud architectures and business models for both enterprise and consumer ICT are helping fulfill the long due promise of global, fully location-independent service delivery for advanced small and medium market players. An independent software vendor from any country can combine their own innovative solutions with relevant innovations from others elsewhere, then deliver the result to customers of both, and to new customers in new locations. This has allowed success of Software as a Service vendors, and much greater market reach for more traditional on-premise software vendors.

The second is really the partner management side of consumerization: new ICT platform vendors coming from the consumer market, with their specific business and partner models, have entered the enterprise market with a vengeance. After few years, we see they have significantly adapted their partner models to this new environment. Established global platform vendors and their channel and alliance partners have been adapting, sometimes scrambling to adapt, applying their partner models more rigorously and innovating them in the process.

Working mostly with large enterprise platform vendors and their channel and alliance partners, I have seen some incremental results of these two trends, and some more innovative, truly disruptive.

Among incremental developments, enterprise platform vendors have increased their investment in partner management discipline, to identify and grow partners that provide the most value. They have introduced, or significantly strengthened, such standard partner management tools as competency certification; they have increased certification requirements, and made competencies more specific and differentiated. They have improved lead registration and reward programs, and the few who could afford to ignore them are adopting them. Those that had long privileged asymmetric channel relations with smaller, more complying partners have now opened up to managing selected relations as more symmetric alliances, each with its specific set of values, objectives, and management practices, tuned to the business model of both partners. Some platform vendors are now segmenting their partner portfolio just as carefully as they do their customer portfolio, and matching partner segments to customer segments more carefully. Many are now much more deliberate in how their direct sales and indirect sales separate, or cooperate.

Most of this is the result of global best practices. Applying it to Italy’s special environment has been complex, with a significant change management effort, if medium term results may well be better than in other countries. Some vendors for instance are still working to obtain from their greater partner management investment and discipline the ability to find and develop those special partners who “pull the most weight”, in terms of vendor business they embed and drive in their own.

Other results of the same trends appear to me more disruptive and innovative.

An important one has been making repeatable, formally defined solutions an essential part of how platform vendors and their partners deliver value to their customers. In addition to improving delivery efficiency, this is helping partners differentiate from each other, and platform vendors perceive this differentiation. Solutions make a more tangible, understandable and rewarding object to team around, sell together and measure success of, than prescriptive behavior models. This value of solutions applies both to asymmetric channel relations with small partners, and with more symmetric alliances among near-peers.
For smaller partners, solutions are really vendor-supplied solution blueprints; each platform vendor challenges and encourages all partners to take up these blueprints, add value to them, and sell the result.
For partners with more complex business models, it’s the partner that proposes solutions to team around to the platform vendor.
In alliances, the approach is closer to joint solution development by both partners, who then cooperate in selling and delivering it, together and in parallel.
For all kinds of partners, solutions become the catalyst of teaming: solutions are what teaming is really about, what makes a given partnership stand out from other similar relations.

Perhaps the most interesting development from innovation trends in enterprise ICT partner management I am seeing in Italy involves Independent Software Vendors. ISVs often benefit from these trends in many ways, for instance:

  • platform vendors, seeking to understand partner value and distinguish among partners, find ISVs and their solutions easier to assess, compare and manage. This helps them choose among ISV solutions, and most importantly makes it easier to measure and reward success.
    In ISV solutions as well as in those of platform vendors, much of the value is embedded in the features of a software product. Measuring and rewarding mutual contribution to success becomes much easier for both partners than when either works with a traditional partner.
  • Small, niche ISVs are in a great position to leverage the opportunity for location-independent value delivery that cloud platforms and internet channels are providing. Truly innovative, valuable ISV solutions can reach global markets with very limited effort.

In my experience, this has happened mostly with international – single-country or global – ISVs working or entering the Italian market. Personally, I have yet to see significant examples of Italy-based ISVs taking similar approaches in working with platform vendors.

What is the result for enterprise ICT partner management overall?
It seems to me that this greater mutual clarity, and better ISV access to market, are allowing more and more, smaller and higher value ISVs to compete with distributors and resellers for platform vendor support and for customer access. In some cases this better access to platform vendor rewards is encouraging ISVs to take sides and focus their product strategy on a single platform among competing ones, as a way to forge more direct connections with that platform’s vendor.
Conversely, I see platform vendors who used to be skeptical about ISVs and propose implementations of their own solutions instead of ISV solutions, now gradually opening to the value that an ISV solution can provide on top of the platform it leverages, as it reaches more easily market niches where the traditional channels would require more complex integrations. These vendors start to team more and more with ISVs for sales.

This evolution challenges more traditional channel and alliance partners, such as distributors, resellers, and general-purpose systems integrators. It happens in at least two ways. 
On the one hand ISV solutions, often configured and enriched by more specialized, solution-focuses systems integrators, add to competition for general-purpose integrators. On the other hand, ISV and systems integrators find great value in teaming with each other. In pursuing this, ISVs can provide a further stimulus for systems integrators to focus their offering in solutions, built more and more around selected ISV solutions.

Early discussions suggest this requires significant investment by platform vendors, ISV and traditional partners. Specifically, the change is about offerings and how to define, manage and even communicate partner relations to partners themselves and the market. In our fragmented Italian market, I am seeing evidence that some platform vendors, ISVs, and systems integrators are strongly interested in this.

Introducing Full Alliances Management in a New Team – Lessons I am Learning   Leave a comment

Over the last 6 months I have had the privilege of planning, then executing the introduction of new alliances management practices in a very special team in our organization.

This team has always been highly sensitive to alliances, both with large platform vendors and with smaller, sometimes niche, value-added solution providers. In fact, this team enjoys from its beginning a very special, defining relationship with one of the top global platform vendors – arguably our whole organization’s most important platform partner.
In addition to this, ever since this team was very small, quite a few years ago, many business developers in it have effectively achieved greater than life impact on the market by leveraging ISVs, both including their solutions in our offerings and leveraging their relations with our common clients.

Here are the special features of the new practices we have been introducing:

  1. Resale: we practice systematically value-added resale to our clients of solutions from Independent Software Vendors (ISVs) and Original Equipment Manufacturers (OEMs).  
    This helps strengthen and differentiate our own client propositions and those of our partners.
  2. Relationship: we manage systematically and communicate explicitly the value of our relationship with partners – to both our clients and our partners.
    This is about both joint pipeline, and combining the trust each of us establishes with our joint clients.

Introducing these new features has required evolving the established alliance practices and approaches in the existing team. As we have begun doing this, three lessons have emerged.

First, our solution sales teams have the key role in this initiative.

On one hand, it is their responsibility to assess the value of partner solutions across multiple clients and multiple opportunities and projects. By helping account teams to sell and deliver our offerings that include partner solutions, they determine what solutions from what partners give the best value for multiple clients, how do these solutions fit into our own offerings, and what investment to make in building capability on each partner solution. This in capability building, that solution sales teams manage, is by far the most significant investment a systems integrator can and need to do on a third-party solution. Wise partners rightly aim to get that investment as a key competitive positioning tool.
On the other hand, solution sales teams become more effective at carrying out this alliance responsibility, and reap better rewards in their sales success, as they evolve from opportunistic choices to more systematic ones, and come to focus more and more on solution definition and capability building, leaving economic negotiation and transaction to the account teams and alliance specialists. My key responsibility towards this team is helping solution sales leads complete this evolution, and taking up the resulting economic negotiation responsibility.

Second, global and local executives need to make a conscious decision that this new, active and systematic approach is indeed valuable – both for our clients and for our partners and us.

Historically, many sales teams and executives in our overall organization and in this particular team had regarded alliances management as a complexity driver to use only in selected cases, often opportunistically. Even more importantly, some sales teams used to regard resale of partner solutions, now one of the value and scale drivers of our approach, as conflicting with a systems integrator’s role in our clients’ eyes.
In retrospect, the executive decision to articulate and propose to our own clients the distinguishing, incremental value of offerings that leverage and combine uniquely value from ISVs and OEMs may well have been the single most important factor in our first successes and current evolution.

The third and last lesson, that we are still articulating and evolving, is about accepting existing practices to evolve them.

As this team has long maintained active alliance management practices, I have chosen to take them into account and leverage them as much as possible while introducing new standards. We have embraced these earlier practices fully in our first few applications as a way to understand them and help all stakeholders compare them with new practices and their benefits.

I strongly believe this has been essential for early successes and will be invaluable to evolve and consolidate our new, more structured and systematic alliance approach. Now we have a clearer and more practical picture of opportunities and ways to improve current alliance management practices and adopting new ones.

Last, this experience strengthens last month’s lesson learned: channel management and relationship management boost and support each other when we engage together, on the same opportunity or campaign, a large platform vendor and their ecosystem value added solution providers (ISVs and OEMs).

A large platform vendor tightly manages their resale channel, keeping resellers and systems integrators focused on separate value drivers to their end customer. For a global systems integrator like us, the focus of an alliance with a platform vendor is value-added joint go to market, essentially free from resale opportunity.

ISVs and OEMs, however, keenly leverage both joint go to market with the platform vendor and resale through systems integrators.

Our experience introducing full alliance management in this team has confirmed: as a systems integrator capable of sophisticated, multi-vendor, multi-way alliance management, when we engage platform partners and their ISVs and OEMs together, we can combine three components: resale margins from ISVs and OEMs, plus a joint go to market with them, plus a joint go to market with the platform partner. This in turns allows us to offer our clients – and our own solution sales teams – an even better value proposition than each kind of alliance would provide alone.

An Alliance and a Joint Venture – Pipeline Sharing   Leave a comment

A pipeline of business opportunities is the cornerstone of most sales initiatives, so pipeline sharing is the cornerstone of alliances, and of channel management.

The very fact of sharing a pipeline defines an alliance or channel relationship; what pipeline is shared and how tells a lot about the specifics of the relationship.
For instance, when one partner shares leads and the other shares pipeline opportunities, the second acts as channel; when two partners share opportunities that each generates, and cooperate on them, they are very much managing an alliance. Even more, the content of the pipeline they share literally defines what their alliance is about in practice.

The alliance I have focused on has a joint venture. Over the last few months, as we evolve and strengthen the role of this joint venture, one key area has been pipeline sharing.

There is more than one pipeline here – the shared alliance pipeline among all partners, the joint venture’s own internal one, and the two that the joint venture can share with each alliance partner separately. Sharing them is proving more powerful and enlightening than in standard alliances, as it helps us understand what the joint venture and the alliance really are and how they can make the most of each other.

What is so special?

First of all, pipeline sharing between the joint venture and each alliance partner instantly clarifies the role of the joint venture itself, proving that the alliance is broader than the joint venture, and how this is good for all partners.
Two practical findings put the matter to rest:  

  • the alliance pipeline includes opportunities that are out of the joint venture’s pipeline; they may be few, still they are significant for the alliance and each of the partners – some are among the most significant
  • even more importantly, the joint venture’s pipelines are overall more significant than what the two partners could possibly share between them and team on – and they all are by definition relevant for the alliance partners

Clearly the joint venture makes the alliance deeper and broader than it would otherwise be, and the alliance is still more than the joint venture itself.

In addition to this, differences between all these pipelines point to ways the alliance can evolve.

Each difference is an actual, live opportunity one or more organizations are working on. Each is a pointer to how the three organizations can work better with each other, either by teaming or by leaving the joint venture alone pursuing it for the benefit of all partners.

Posted January 25, 2011 by Gianluca Marcellino in Alliances

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