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January 2005
Are Your System Integrator Alliances Strategic Weapons or Relationships of Convenience?
By Adrian Ott, President, Exponential Edge, Inc.
Software and hardware companies invest billions of dollars implementing alliance programs with systems integrators
and consultants (SIs), and these relationships shape the business of a significant number of high-tech companies.
Exponential Edge estimates that mid-tier SIs (firms with 100+ employees) will influence more than $25B in hardware
purchases worldwide in 2005—and an even higher amount of enterprise and small-business software purchases
during the same period. Often, these alliances don’t align with a company’s vendor strategies. Many of them are
opportunistic pairings, convenient vestiges of past deals, or relationships that are familiar for the sales force.
However, the key to success is developing well-constructed partnerships that fit your company’s situation and drive
profitable, strategic business.
Hundreds of medium-to-large SIs and consultants exist, each with its own specialty, regional, and vertical strengths.
To sort through this plethora of options, you need an alliance-filtering process that logically identifies a small set of
allies with the right strategic fit. Without such a tool, it’s difficult to transform "relationships of convenience"
and "top executive favorites" into strategic alliances that are aligned with current business requirements.
In our work with leading high-tech companies, Exponential Edge has refined an approach that garners results by
answering three essential questions:
What Is My Objective, and What Are My Selection Criteria?
Understanding the SI business model greatly enhances your probability for success. Too often, high-tech companies
treat these relationships the same way they do channel resellers, which is a recipe for failure. To succeed, you need
to clarify your objective for engaging an SI and determine your selection criteria. This list should contain no more
than five, well-defined selection criteria that clearly communicate your needs and what you have to offer and also
take into account the following critical issues:
- Are we looking for a complementary vendor that can fill product or service gaps, resulting in a full, customer
solution?
- Do we need a channel to extend our reach into a market?
- What markets and/or verticals do we need to penetrate?
- Do we compete with SIs; if so, how?
Which SIs Fit My Criteria?
If you ask an SI about its capabilities, the typical response is, "We do it all." However, that’s not the case.
No SI is right for every market, vertical, region, or capability. Nor will every SI have a business model that supports
your objectives. When determining which SIs fit your criteria, your measurement process should:
- Utilize a filtering method that results in a set of leading contenders, with 20 percent of the firms producing 80
percent of the needed results
- Incorporate quantitative, weighted scoring that enables you to audit the relationships, ensuring that they meet
your company’s current business needs
- Produce a ranking that your organization can understand and trust
Which SIs Influence My Top Customer Accounts?
This last step is often the most crucial and the most overlooked. Profiling your top accounts and learning which
SIs work in those accounts and in what capacity ensures that you’ll find the best fit. Most high-tech companies have
approximately 50 to 100 top global accounts. When you consider the Fortune 1000, this is a small set of customers
generating the bulk of revenue. If you select an SI that’s strong in a market but doesn’t have influence with your
principal customers in a solution area in line with your products, the alliance is a waste of time and money.
If you take the time to follow this process, you will develop strong relationships with valuable allies in
the customer accounts that matter most to your business, thus transforming your SI alliances into strategic weapons
instead of relationships of convenience.
Adrian Ott is President of Exponential Edge, Inc., a strategy consultancy that assists medium to large high-tech
and communications clients with market assessment, partner programs, and market research. She has authored several
articles on strategy and alliances in national publications, and CNBC and PBS have interviewed Adrian, discussing
her work in the high-tech community. To receive a detailed white paper on this topic, please visit
www.exponentialedge.com. To reach Adrian, email her at
adrian.ott@exponentialedge.com or call 925-243-1500.
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