Competitors Don’t Mean War: The Value of Strategic Partnerships

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In the IT channel, Strategic Partnerships are commonplace, most notably with the recent collaboration between the two technology giants, Cisco and Apple. The Apple & Cisco partnership is a perfect marriage, Apple gain access to the Enterprise market, whilst Cisco benefit from iOS and facilitate Apple’s entry into the Enterprise arena. But, what exactly is a Strategic Partnership?

Price Waterhouse Cooper define a Strategic Partnership as:

“A strategic partnership involves some shape of formal agreement between two or more parties that have agreed to share finance, skills, information and/or other resources in the pursuit of common goals.”

Sharing

Before a Strategic Partnership has been formalised, firstly ensure that all parties share the same expectations of the outcome of such partnerships. Start by clearly defining shared business objectives, you both might want to achieve A or B, but can you achieve them together? Strategic Partnerships are generally triggered by the existence of shared objectives. For example a Managed Services Provider or Cisco Channel Partner may need Cisco Technical Resources worldwide due to a lack of in-house specialist Cisco Network Engineers. Therefore there exists an implied shared objective, prior to a formalised agreement being signed.

As highlighted in the PwC definition, a successful Strategic Partnership can only be achieved by sharing resources, finance, information and skills. Each company will have a unique strength which the other lacks, therefore combining capabilities allows both partners to access new markets, increase product/service offerings, increase revenues and embark on a mutually beneficial knowledge sharing relationship. Strategic Partnerships are a viable alternative to traditional growth strategies including organic growth, angel investors and borrowing.

Culture & Values

A 2013 CIPD survey showed that 60-70% of Strategic Partnerships fail, often triggered by a mismatch in culture and company values. The lesson learned from this statistic is to choose your partners based on common shared values and company culture. If your company has an aggressive sales culture who earn their competitive advantage via low prices, then your ideal partner isn’t a company who values quality of service over price.

Achieving a cultural fit where both parties share values, should not be underestimated. A written agreement will specify relevant KPI’s including volume of sales, quality of service and conflict management. However, in the blink of an eye, the days and months of negotiations can be destroyed with a cultural faux pas. Obvious cultural differences occur when partnering with an international partner in body language, linguistics and beliefs. However, more subtle factors like equality, gender balance and employee & stakeholder engagement can contribute to a failed or successful Strategic Partnership.

Ease of Integration

After agreeing on shared objectives, resources and culture, integration is the next step before the partnership is good to go. The theory of how companies form a partnership is the easy part, now it’s time to fit the final pieces together.

Integration is the point where 2 (or more) companies in a Strategic Partnership become one entity. What type of information is shared between parties? What processes should be implemented to directly deal with joint customers? What systems are implemented to process enquiries, sales and communications?

When a Cisco Channel Partner or ICT Provider, needs to book a Cisco Network Engineer from a Cisco Professional Services partner onto a client site, there needs to be a unified and coherent system used by both parties. A scope of work will be agreed along with timescales, prices and quality standards. Mapping systems would be in place so all partners can identify where Network Engineers are working and how and when to book the next available one: all contributing to a seamless synergy between Strategic Partners.

Have you experienced a Strategic Partnership where only 1 party truly benefits? Have you been involved in a Partnership where you value quality of service but your partner values low price more? Tell us your horror and success stories 🙂