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Well-planned strategic partnerships create sales opportunities through the
identification of complementary service offerings and add-on services.
Chapter 6 covers the topic of service line and service offering creation in de-
tail, and should be considered a complement to this chapter.
Strategic partners can develop highly successful programs incorporating
each company™s services into a larger service offering for new or existing cus-
tomers. Partners can exploit particular area(s) of expertise in each organiza-
tion and leverage those skills for new business. In general, strategic partners
find new opportunities through the salesforces that they share. New revenue
opportunities are created in a symbiotic way where each partner benefits
from the other partner ™s expertise and customer base. These benefits in-
clude the following:

• Increased market share with combined services
• Decreased capital expenditures for R&D and employee training (re-
duced need to build internal service skills and support infrastructures
for some services)
• Increased value to clients through additional services
184 The Front Office: Driving Sales and Growth

• Better economies of scale
• Expanded geographic areas of client coverage
• Decreased costs of sales lead generation
• Increased use of low/no cost external salesforces



Geographic Types of Strategic Partnerships
Strategic partnerships can be formed with local, regional, national, or off-
shore companies based on the service offering needs of the partnering com-
pany. When selecting a geographic partner, key considerations include
security, communication, speed, quality, and price. For example, it may make
better sense to partner with a company in close proximity if the amount of
face-to-face communication for the particular service is significant. How-
ever, pricing concerns and the size of the job may prohibit use of a local part-
ner. Also, the intention of most geographic partnerships is to expand service
offerings into new territories with less investment. Make sure you understand
the objectives you are trying to accomplish, and then select partners who best
enable those objectives on a variety of levels, including geographic location
and servicing capabilities.


Supply Side Partnering
In today™s professional services marketplace, rarely is any one provider
equipped to furnish the complete range of specialized services that its
clients require. Ad agencies went through merger mania in the 1980s and
1990s because their clients required them to provide every service imagina-
ble. This was due in part to globalization of corporations and their desire to
reduce the number of vendors they managed because of administrative costs
and perceived ability to achieve volume discounts. Supply side partnering
makes sense for professional services firms that do not want to carry the fi-
nancial burden of funding employees for specialized or low demand services.
These professional services firms can tap a partner when needed for special-
ized services and still make a profit via a referral fee or other similar
arrangement.
Large companies demanding a broad array of services geographic cover-
age from the professional services firm pose challenges to the growing firm.
Strategic partnering enables the growing firm to focus on its core services
and conserve its capital while at the same time creating powerful alliances
and opportunities to expand and build the firm. If a solution provider cannot
meet the total needs of its client in this highly competitive global economy,
clients will look elsewhere to have their needs met. More than ever, supply
185
Strategic Partnering

side partnering makes sense and helps partners leverage their combined
skills when necessary.


Globalization and Service Partnering
The Internet and its digital convergence of information and communication
technologies, such as e-mail, instant messaging, video conferencing, and
voice-over Internet protocol (VOIP), have enabled companies to extend their
reach for strategic partners beyond their borders. At technology trade shows
in the United States, it is not uncommon for “offshore” companies to send
their top professionals to develop strategic partnerships with U.S. technology
companies. Over the past 10 years, the rapid expansion of technologies men-
tioned earlier has enabled companies to transmit work to distant locations
instantaneously and receive completed work without delay from transporta-
tion. With a growing demand for complex and specialized services, U.S.
companies need an ever-growing pool of talent and manpower. Certain areas
of the world such as India, Russia, and China offer a wide range of high-
quality talent where significant numbers of engineers are churned out every
year from top schools comparable to MIT and Stanford. This global work-
force is highly trained and well educated and has strong work ethics. Many
global technology companies such as Microsoft and Cisco have developed
corporate partners and technology campuses in India to augment their U.S.
operations. Microsoft and Cisco have established these technology campuses
to create a technology beachhead for future growth. IT workers in the
United States cannot fill the increasing demand over the next 10 years. Ex-
hibit 8.1 shows the approximate rates and workforce sizes in a variety of off-
shore markets.3
In the 1960s and 1970s, the communication infrastructure and technology
were not adequate to enable service-based partnerships to work. U.S. corpo-
rations moved manufacturing offshore to cut costs in the 1970s and 1980s.
Real-time, close, collaborative communications between U.S. offices and
their foreign manufacturing counterparts were not necessary for the manu-
facturing process to be successful. Service-based industries require constant
communication between partners. The convergence of Internet-related
communication tools has enabled companies to manage offshore professional
resources in a way that was not conceivable in the 1960s, 1970s, and 1980s.
The emerging era of digital globalization has transformed the way that large
global project teams collaborate. Global project teams collaborate over the
Internet with digital white boards and conferencing tools in real-time, mak-
ing it feasible to grow new workforces in dispersed locations. Large service-
based projects can now be handled by multiple teams in more than one
country or geographic area through global partnering and using Internet-
related communication tools that did not exist 10 years ago.
CZECH
PARAMETER INDIA CHINA BRAZIL MEXICO ARGENTINA UKRAINE RUSSIA REPUBLIC POLAND PAKISTAN MALAYSIA SINGAPORE

IT export 9,500 1,040 200 NA 100 (200) 71 165 65“90** 65“80a 90“100b NA NA
industry size
(US$ million)




186
Active 195,000 26,000 NA NA 3,000 8,000“ 5,500 NA NA 3,500c NA NA
export 10,000
focused IT
professionals

IT employee 5,000“ 9,600 9,500 NA 10,550 9,000 7,000 7,500 4,000“6,000 7,200 27,000
cost (US$/ 12,000
year
Number of 60 2 0 0 0 0 3 0 NA 0 NA NA
CMM Level
5 certified
companies
IT labor Low cost, Low cost, Moderate Moderate High cost, Low cost, Low cost, Low cost, Low cost, Low cost, Low cost, High cost,
force high quality low quality cost, low cost, moder- moderate high quality high quality high quality moderate moderate moderate high quality
quality ate quality quality quality quality quality
Infra- Average Average Poor Good Average Poor Poor Good Good Poor Good Good
structure

Main posi- Large num- IT centers of Near shore, Large edu- High quality High quality Solid infra- Good intel- Focus on High gov- Business-
tives ber of IT pro- large MNCs, familiarity cated popu- engineers engineers structure lectual software ernment friendly
fessionals government with U.S. lation capital quality and support, in- governance
support culture processes vestments offers high
of $10 bil- tax incen-
lion in high- tives for IT
tech parks exports

Main Lack of proj- Language Scalability High Poor infra- Unstable Talent Talent Geopolitical Political Limited
negatives ect man- may be an salaries, structure economy retention retention risk instability availability
agement issue, lim- political issues issues of skilled
ited skilled instability labor pool
workforce
a
Offshore outsource software exports.
b
Software development.
c




187
Evalueserve estimates. (Average revenue per IT employee in Pakistan in $14 per hour. Average working hours per year assumed to be 1,850 hours. This gives a per-employee annual rev-
enue of $25,900. Dividing total IT export revenues by the per-employee annual revenue gives the number of export focused IT professionals to be 3,474, which has been rounded off to
3,500.)


Exibit 8.1 Upcoming and Potential Destinations for Offshoring IT Services (Until March 2003)
188 The Front Office: Driving Sales and Growth

Servicing the Client: Call Centers
Move Global
Because of changes in communication technologies and voice-over IP, many
large and mid-size U.S. corporations have partnered with companies in India
and the Philippines to augment or replace their U.S. call centers. Communi-
cation technology changes have enabled call centers to be built all over the
world. Countries such as India and the Philippines have highly educated
workforces. Labor in these countries is less expensive than the United States,
thus offering significant cost savings to companies while maintaining quality
support services. Call center operations are significant and expensive but
not a core competency for most companies, so it makes tremendous sense as
a partnering opportunity. Partnering is limited only by the creativeness of
those involved. Tips for creating strategic partnerships follow:

Creating Strategic Partnerships
• Keep an open mind; do not fear partnerships.
• Compete with larger organizations by filling service voids with partners.
• Discover that highly skilled teams are at your disposal.
• Partner selection is paramount to success.

Keep an Open Mind
Partnering may seem threatening at times, especially if your partner offers
some of the same services that you do. Be open-minded and do not let fear
stand in your way of developing partnerships that will help you grow your or-
ganization and its service offerings. No one company can be all things to all
people and offer all the services that clients may need or want. Selecting a
trusted partner, and clearly outlining the “rules of engagement” for opera-
tions, communication, lead sharing, and revenue sharing can help mitigate
these concerns.

Compete with Larger Organizations
Any company, no matter how small, can compete with large companies by
creating quality strategic partnerships. Small to mid-size service providers
can compete against Goliath-size competitors through smart strategic part-
nerships and best-of-breed talent pools.
A small to mid-size company has two options for competing with larger or-
ganizations. First, focus on smaller clients that are not attractive to larger
competitors, thereby eliminating the competition. Second, partner with
firms that can help the firm service larger clients effectively. As long as the
client receives good service at a competitive price and does not experience
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Strategic Partnering

any “transaction costs” or disruption due to a partnership, the partner should
enable most smaller firms to compete with their larger brethren.


Highly Skilled Teams at Your Disposal
Strategic partnerships enable the partners to create a combined group of
highly skilled resources with diverse areas of expertise. Imagine creating the
perfect team without having to increase infrastructure costs, training time,
and time to market for any given project. Smart partnerships allow any com-
pany, regardless of size, to compete and grow its talent base quickly with the
finest experts that it shares with its strategic partner.


Partner Selection Is Paramount
The selection of a good partner is paramount to the partnership™s success.
Service providers need to select their strategic partners carefully keeping
many factors in mind. Critical elements in the selection include services pro-
vided, overlap of services, service demand, and the time horizon. For exam-
ple, partnerships can have a finite life and should be dissolved if they no
longer benefit both organizations.
Choosing partners wisely in areas where there is little overlap or competi-
tion will create a complementary team of professionals that can service large
projects for any size client. Sometimes partners may offer some of the same
services. This does not mean that those organizations should avoid partner-
ing. The intended partnership may be narrow enough so that each company
benefits from the other ™s highly trained workers in one specific area of ex-
pertise, while the other competitive services of the firms are excluded from
the partnership. The goal is to create the best and brightest team possible to
provide outstanding service to the client. Selecting the right partner will en-
able the professional services firm to field the best team to successfully
complete the client™s projects.


Guidelines to Developing Successful
Strategic Partnerships
Here are six helpful steps in developing, implementing, and executing strate-
gic partnerships:

1. Develop a system and implement a plan.
2. Quantify potential cost savings for new services.
3. Prioritize opportunities.
190 The Front Office: Driving Sales and Growth

4. Mitigate risk factors.
5. Measure and monitor performance.
6. Reevaluate and deploy short- and long-term goals and continuously im-
prove processes.


1. Develop a System and Implement a Plan
Develop a business planning process for strategic partnering that is a collab-
orative approach with decision makers in your group. Identify your strengths
and weaknesses and where partnering makes the most sense. Find a partner
who provides those services gaps that you cannot presently offer to your
clients. Develop a management system to define how you will work with your
new strategic partners and manage clients and their expectations. Get a con-
tract in writing to help limit misunderstandings and establish upfront com-
mitments between you and your partner early on.
Implement a plan that meets your company™s strategic goals and is exe-

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