Alliances with everything

At best, vendor alliances are long-standing commitments, revisited periodically. They benefit not just the vendor, by allowing it to cheaply acquire a new portfolio or customer base, but focus on the customer. Not surprisingly, the same names keep coming up, and the bigger they are, the higher the incidence of "co-opetition".

Ask any global IT vendor why it collaborates with others, and it`s likely to say: "We cannot be everything to everyone."

A perfectly logical response, and it happens to be the whole truth. Yet it sounds greedy. In view of perennial industry consolidation, is it not just as fair to say some vendors are coming pretty close to being just that?

In business performance transformation alone, IBM had made a dozen acquisitions by January 2005 under CEO Sam Palmisano. At one count, it had received 31 995 US patents in 13 years. And still it chooses to partner, in some cases even as a reseller.

One wonders: what could IBM possibly want from partnerships when it already has a universe of intellectual property (and customers) in hardware, software of almost every description and services?

It appears that the bigger a company gets, and the bigger its competitors, the greater its perceived need to be a cradle-to-grave provider. And since that is impossible on its own, it goes in search of partners.

Microsoft`s MD for SA (now promoted to head up Microsoft UK), Gordon Frazer, sums it up: "With the combined strengths of Microsoft, SAP, Accenture and HP, we can address almost any enterprise need. We`re better together."

Although it is virtually impossible to draw a definitive net of dotted lines between vendors on the global landscape, this article will attempt to trace some of the strategic global affiliations that have become classics of their time.

There is more to joint ventures (JVs) than the co-op marketing efforts or OEM (original equipment manufacturing) agreements one sees every day. Alliances with best-of-breed partners can themselves be best-of-breed exercises, extracting every ounce of value from collaboration and every bit of effort from dedicated staff. They enjoy the attention of company strategists from the top down.

Heather Third, Microsoft SA`s business and marketing officer, says together with its more than 60 000 global technology and services partners, Microsoft engages in solutions development, co-marketing, sales, services and support. The company`s global services and technology partners have developed, tested and brought to market hundreds of solutions for organisations in every major industry, spanning infrastructure solutions through to line-of-business applications.

HP is also, at heart, a partnering organisation, according to local alliance manager Martin Meltz. It has associations going back 20 or 25 years, clear evidence of the company`s commitment to a strategy of "cosying" up, rather than just paying lip service in the form of ad-hoc, initiative-based relationships.

HP has a myriad of partners, but only a few deserve the term "global strategic alliances". This list is not exhaustive: Microsoft, SAP, Oracle (independent software vendors), Accenture, Cap Gemini, BearingPoint, Deloitte (consulting systems integrators), T-Systems, CSC and EDS (outsourcers).

Another way to look at HP`s partnering model is to track its evolution up the value stack. Five years ago it focused solely on joint sales and marketing, but over time it became necessary to embrace an integrated solution model. Increasingly, HP will concentrate on specific markets.

The vendor engages partners on joint solutions in several ways. One is joint development, another joint support - and the two are closely aligned. Giving credence to the notion that Oracle, SAP and Microsoft give it the broadest reach, Meltz says HP supports joint competency centres in the major regions. These centres double as resourcing locales, in which customers use united platforms to test new products.

Microsoft, likewise, has encouraged partners to establish a wide range of development, testing and demo centres for its technology worldwide. The box (see end of article) contains a partial list of examples.

Partnering clearly doesn`t only benefit vendors. Apart from the knowledge, best practices and co-operative implementation that a good partnership offers, dealing with a composite engagement team also reduces the complexity of an engagement.

Our vendor relationships, though expanding our footprint, don`t bring in nearly as much as our channel relationships with Business Connexion and Dimension Data.

Japie Otto, pre-sales manager, EMC SA

Such alliances shouldn`t be hatched in a vacuum by top brass, nor be kept a local secret. There is a lot of human and portal-based interaction between HP and its partners, for example, both from the top down, and internally.

Perhaps the greatest testament to HP`s seriousness about partnering is its Internet bazaars and other portals for joint development. It cherry-picks "up-and-coming companies like Google and others. We want to be ready [to partner with] them when they become mainstream," says Meltz.

IBM has a mature equal-partner alliance of this sort with SAP. According to channel manager Stelio Frasco, the alliance includes joint R&D and sales, and while SAP calls on IBM for consulting and hardware services, IBM in turn provides SAP`s business systems on the platforms it builds for customers.

Like HP, Citrix (an access infrastructure company known for its thin-client technology) has thousands of partners, but again only a few stand out as strategic.

Naturally, they`re the usual suspects - HP, IBM, Microsoft, Oracle and SAP. This is a common feature of best-in-class alliances: If you had to compare the top ten vendors` lists of top 10 partners, chances are you`d have no more than 20 companies.

Again, this can benefit vendors and customers in terms of the intimate knowledge vendors develop of their partners` technology. Microsoft`s Third says as part of HP`s .Net initiative with Microsoft, it is adding to its worldwide force of 23 000 Microsoft-trained engineers and consultants by training 5 000 HP sales professionals and 3 000 HP consultants and solution architects on Microsoft .Net.

Except for its IBM relationship, Citrix`s alliances are all about providing device- and network-independent access to partner applications and information stores. All relationships target collaborative research and development as well as sales. But with IBM, it goes beyond access. Together, Citrix and IBM solutions deliver server consolidation, infrastructure simplification, application deployment and access solutions.

The golden thread that runs through all these joint efforts, says Chris Norton, country manager for Citrix Systems Southern Africa, is the proven integration with third-party products that collaboration brings, sometimes through joint development. As examples, he cites various Microsoft-branded terminal service products co-developed with Citrix, as well as on-site engineering, systems integration, professional services and co-op support deals with HP.

Cognos, a business intelligence (BI) vendor, names only one big partner: IBM. This sets the company apart from others in the alliance game. The correlation between IBM`s offering and its own points to a singular commitment to its (fairly narrow) strategic direction - standards-based integration of business processes, for greater insight into business performance.

Our partners are an extension of our sales force.

Trish Barwick, marketing and channel manager, Novell SA

Gerrardt le Roux, systems integration alliances manager at Cognos SA, says the companies` joint efforts include collaborative research and development, and joint sales and marketing of solutions based on service-oriented architecture (SOA).

Unlike many OEM agreements, both vendors maintain their own brands, but as with many such relationships, some bundling goes into it. For at least the next three years, Cognos will deliver IBM`s WebSphere and information management technologies as part of the "preferred reference architecture" for Cognos 8 Special Edition (a BI solution).

Through the collaboration, the companies also use each other`s ETL (extraction, transformation and loading) capabilities, existing at different layers. IBM provides the DB2 back-end, transactional layer and warehouse, whereas Cognos brings ETL to the package.

McAfee has also chosen one strategic vendor (Dell), although not for the same apparent reasons. Given the pressures of commoditisation at the bottom of the information security industry (for example, anti-virus software) it makes sense indeed to focus its efforts on one vendor that can give it the global reach and breadth of offerings that Dell has. For Dell, the arrangement provides entry into the security market.

Local McAfee head Chris van Niekerk says the Dell alliance is a comprehensive partnership in numerous areas and all key geographies. "The largest component is our OEM consumer/SME relationship, whereby Dell preloads our SecurityCentre software suite on its desktops, notebooks, and high-end workstations."

He says McAfee works closely with Dell`s engineering teams at its headquarters to develop new releases. "Dell also manufactures all our Secure Content Management gateway appliances, branded as McAfee appliances." Dell`s software and peripherals arm is, in addition, a reseller of everything McAfee produces.

Both Cognos and McAfee argue that the greatest vendor advantage of partnering is the "incremental revenue increase". And they`re not alone. Dell country manager Stewart van Graan says Dell contributes more than 10% of EMC`s revenue.

A joint strategy takes away complexity.

Martin Meltz, alliance manager, HP SA

Nowhere does the extra money (as well as awareness and brand kudos of big-name partners) make more sense than in the case of enterprise Linux vendor Novell. Trish Barwick, Novell SA`s marketing and channel manager, says the company has strong alliances with international hardware suppliers Dell, HP and IBM.

Each of these vendors has signed an OEM agreement, whereby it preloads Novell Open Enterprise Server or Suse Linux Enterprise Desktop software on some of its machines.

Facing huge institutionalised prejudice against Linux, Novell stands to benefit greatly from its partners` credibility, as well as their channels, marketing, system building and sales programmes. "They are an extension of our sales force," Barwick says.

However, not even when you consider somebody your best friend can you be assured of a reciprocal commitment. McAfee`s focus on Dell may yield fantastic dividends for both, but Dell names two other companies as its most strategic allies.

Intel makes the most logical sense out of the two, although even here Dell has strayed outside the relationship, flirting with AMD`s microprocessors in what must be one of the Intel competitor`s most famous exploits. Intel itself has broadened its horizons, too, with an extramarital dalliance with Apple Computer.

Nevertheless, it is the deep relationship Dell has with storage vendor EMC that is most interesting. Van Graan says Dell uses EMC`s Clariion storage arrays in an OEM relationship, and has access to EMC`s entire hardware and software range. The arrangement strengthens Dell`s offering and increases its value.

While EMC provides product leadership, Dell provides the direct model that gives insight into customers` needs and provides a strong record of customer satisfaction.

EMC in turn cites names other than Dell, including Fujitsu Siemens, Unisys, Cisco, McData and Brocade. Yet it considers the Dell arrangement among its more important alliances, giving EMC an entry into the commercial (Wintel) arena, according to Rassie Jacobs, EMC SA`s commercial sales manager.

In similar vein, EMC`s relationship with Unisys has given it the thin end of the wedge in the server and storage consolidation area, says Japie Otto, pre-sales manager at the storage vendor. Between EMC`s three allies they sell almost the entire range of its storage area networks.

But it`s not all about vendor alliances. Otto provides some perspective on the relative merits of channel sales relationships: "Our vendor relationships, though expanding our footprint, bring in considerably less [revenue] than our channel relationships with Business Connexion and Dimension Data."

IBM`s sprawling set of offerings and competencies makes it a special animal in the IT ecosystem. Its service competency, among others, has earned it Gold Partner status in networking vendor Cisco`s army of partners.

Although channel relationships logically belong under a different discussion, as a mutation in the vendor partnering model, it keeps cropping up, just as it did with Dell and McAfee earlier.

Another not-so-common "partnering" form is IBM`s relationship with Lenovo. After the Chinese giant bought IBM`s PC division, IBM retained a 19% stake in Lenovo. This sort of partnering strategy likewise deviates from the norm, involving as it does ownership. Other examples of this ilk include 3Com`s relationship with security vendor TippingPoint.

IBM`s country GM Rashid Wally says other than IBM, Lenovo partners with Microsoft and Intel, but also LANDesk. "Lenovo has a close OEM sales relationship with Microsoft, and collaborative ones with Intel and LANDesk that include research and development."

So it appears that while there are many ways to skin a cat, there are but a few in which to prove you`ve really done it. It`s all about putting your money where your mouth is.