Benchmarking Alliances

A Discussion Document from Alliance Best Practice

Understanding Begins with Insightful Questions – In other words good data = good decisions and bad data = bad decisions

What would ‘good’ data look like (as opposed to bad or misleading data)?

What should we measure and why?

What would a good benchmark overview report look like?

What are the proven common success factors (CSFs) in successful strategic alliances?

Why is benchmarking different from health checks?

What is the typical revenue increase after a benchmarking exercise?

Further Details

Issues addressed in this briefing pack

Why do some alliances succeed when others fail?

Has there ever been any structured research in this area?

Is there such a thing as alliance best practice?

Is there a common ‘language’ or approach which can be applied consistently across different types of relationships?

What are the limited things that we should focus our attention on to effect the greatest change?

“The most valuable information for corporate decision-making is concentrated in a relatively small number of sweet spots of information that flows through a corporation2”

What are the alliance sweet spots?

1 Anthony Robbins2 The Performance Manager Roland and Patrick Mosimann and Meg Dussault

Understanding begins with insightful questions1

1Every decision making cycle depends on finding the answers to three core questions;

How are we doing?

Why?

What should we be doing?

Today’s alliance manager needs integrated decision making ability in various user modes; Strategic, Managerial and Operational

1 The Performance Manager Roland and Patrick Mosimann and Meg Dussault 2007

Alliance decision making cycle

Holistic and integrated representing all aspects of the relationship

Simple to understand (intuitive)

Provide striking insights

Reflect multiple dimensions of the relationship

Reflect both / all sides views

Objective and numeric

Rigorously researched

Capable of action planning

Capable of benchmarking

Enable action to be taken linked to the insights

Simple to operate

Encourage involvement and commitment from all key stakeholders

Be capable of regular refresh

What would a good benchmark look like?

Benchmarks Based on objective scoring systems

Based on competitive comparator analysis usually not available to clients

Prescriptive because its based on known common success factors

Typical question = ‘What is the degree of trust in the alliance from 0 to 100’?

Results produce actionable outcomes

Health checks Based on subjective views and

opinions

Usually an internal exercise

Based on views from existing partners who want to please the host client

Typical question = ‘How ell do you think the alliance is performing?’

Unable to act on results

Why are benchmarks different from health checks?

0

10

20

30

40

50

60

70

80

90

100Co1

Co2 Co3Co4

Co5Co6

Co7Co8

Co9

Co10

T11

T12

T13

T14

T15

T16

T17

T18

T19

S20S21

S22S23

S24S25S26

S27S28S29

S30Cu31

Cu32

Cu33Cu34

Cu35

Cu36

Cu37

Cu38

O39

O40

O41

O42

O43

O44

O45

O46O47

O48O49

O50O51 O52 The Blue Line is one

partner The Pink Line is the

second partner The Yellow line is sector

best in class (BIC) Now lets test

understanding! How much consensus is

there in the relationship? What is going well and

what is going not so well? What particular

dimensions does the BIC base its success on?

A typical benchmark report

Commercial Dimension Co1 Business Value Proposition (BVP) Co2 Due Diligence Co3 Optimum Legal / Business

Structure Co4 Alliance Audit Co5 Key metrics Co6 Alliance reward system Co7 Commercial cost Co8 Commercial benefit Co9 Process for negotiation Co10 Expected Cost value ratio

Technical Dimension T11 Valuation of assets T12 Partner company market position T13 Host company market position T14 Market fit of proposed solution T15 Product fit with partners offerings T16 Identified mutual needs in the

relationship T17 Process for team problem solving T18 Shared Control T19 Partner accountability

Strategic Dimension S20 Shared objectives S21 Relationship Scope S22 Tactical and strategic risk S23 Risk sharing S24 Exit strategies S25 Senior executive support S26 B2B Strategic alignment S27 Fit with strategic business path S28 Other relationships with same

partner S29 Common strategic ground rules S30 Common visionCultural Dimension Cu31 Business to business trust Cu32 Collaborative corporate mindset Cu33 Collaboration skills Cu34 Dedicated alliance manager Cu35 Alliance centre of excellence Cu36 Decision making process Cu37 Other cultural issues Cu38 Business to Business cultural

alignment

Operational Dimension O39 Alliance process O40 Speed of progress so far O41 Distance from revenue O42 Formal business plan O43 Communication O44 Healthcheck / quality

review O45 Alliance charter O46 Change management O47 Operational metrics O48 Business to business

operational alignment O49 Exponential breakthroughs O50 Internal alignment O51 Project plan O52 Issue escalation

Co = CommercialT = TechnicalS = StrategicCu = CulturalOp = Operational

Common Success Factors

Co1 Business Value Proposition (BVP)

Co2 Due Diligence Co3 Optimum Legal /

Business Structure Co4 Alliance Audit Co5 Key metrics Co6 Alliance reward

system Co7 Commercial cost Co8 Commercial benefit Co9 Process for

negotiation Co10 Expected Cost value

ratio

0

10

20

30

40

50

60

70

80

90

100Co1

Co2 Co3Co4

Co5Co6

Co7Co8

Co9

Co10

T11

T12

T13

T14

T15

T16

T17

T18

T19

S20S21

S22S23

S24S25S26

S27S28S29

S30Cu31

Cu32

Cu33Cu34

Cu35

Cu36

Cu37

Cu38

O39

O40

O41

O42

O43

O44

O45

O46O47

O48O49

O50O51 O52

The Commercial dimension

T11 Valuation of assets T12 Partner company

market position T13 Host company market

position T14 Market fit of proposed

solution T15 Product fit with

partners offerings T16 Identified mutual

needs in the relationship T17 Process for team

problem solving T18 Shared Control T19 Partner accountability

0

10

20

30

40

50

60

70

80

90

100Co1

Co2 Co3Co4

Co5Co6

Co7Co8

Co9

Co10

T11

T12

T13

T14

T15

T16

T17

T18

T19

S20S21

S22S23

S24S25S26

S27S28S29

S30Cu31

Cu32

Cu33Cu34

Cu35

Cu36

Cu37

Cu38

O39

O40

O41

O42

O43

O44

O45

O46O47

O48O49

O50O51 O52

The Technical dimension

S20 Shared objectives S21 Relationship Scope S22 Tactical and strategic

risk S23 Risk sharing S24 Exit strategies S25 Senior executive

support S26 B2B Strategic

alignment S27 Fit with strategic

business path S28 Other relationships

with same partner S29 Common strategic

ground rules S30 Common vision

0

10

20

30

40

50

60

70

80

90

100Co1

Co2 Co3Co4

Co5Co6

Co7Co8

Co9

Co10

T11

T12

T13

T14

T15

T16

T17

T18

T19

S20S21

S22S23

S24S25S26

S27S28S29

S30Cu31

Cu32

Cu33Cu34

Cu35

Cu36

Cu37

Cu38

O39

O40

O41

O42

O43

O44

O45

O46O47

O48O49

O50O51 O52

The Strategic Dimension

Cu31 Business to business trust

Cu32 Collaborative corporate mind-set

Cu33 Collaboration skills Cu34 Dedicated alliance

manager Cu35 Alliance centre of

excellence Cu36 Decision making

process Cu37 Other cultural issues Cu38 Business to

Business cultural alignment

0

10

20

30

40

50

60

70

80

90

100Co1

Co2 Co3Co4

Co5Co6

Co7Co8

Co9

Co10

T11

T12

T13

T14

T15

T16

T17

T18

T19

S20S21

S22S23

S24S25S26

S27S28S29

S30Cu31

Cu32

Cu33Cu34

Cu35

Cu36

Cu37

Cu38

O39

O40

O41

O42

O43

O44

O45

O46O47

O48O49

O50O51 O52

The Cultural Dimension

O39 Alliance process O40 Speed of progress so far O41 Distance from revenue O42 Formal business plan O43 Communication O44 Health check / quality

review O45 Alliance charter O46 Change management O47 Operational metrics O48 Business to business

operational alignment O49 Exponential

breakthroughs O50 Internal alignment O51 Project plan O52 Issue escalation

0

10

20

30

40

50

60

70

80

90

100Co1

Co2 Co3Co4

Co5Co6

Co7Co8

Co9

Co10

T11

T12

T13

T14

T15

T16

T17

T18

T19

S20S21

S22S23

S24S25S26

S27S28S29

S30Cu31

Cu32

Cu33Cu34

Cu35

Cu36

Cu37

Cu38

O39

O40

O41

O42

O43

O44

O45

O46O47

O48O49

O50O51 O52

The Operational Dimension

Which can you live without?- Your heart or your brain?- Your lungs or your

blood? What happens if you

have;- Commercial and not

Cultural?- Operational and not

Strategic? How do each of the

dimensions help each other?

The answer of course is that you need all the dimensions in –

An Alliance Balanced Scorecard

0

10

20

30

40

50

60

70

80

90

100Co1

Co2 Co3Co4

Co5Co6

Co7Co8

Co9

Co10

T11

T12

T13

T14

T15

T16

T17

T18

T19

S20S21

S22S23

S24S25S26

S27S28S29

S30Cu31

Cu32

Cu33Cu34

Cu35

Cu36

Cu37

Cu38

O39

O40

O41

O42

O43

O44

O45

O46O47

O48O49

O50O51 O52

Strategic Alliances are ‘Holistic’

0

10

20

30

40

50

60

70

80

90

100Co1

Co2 Co3Co4

Co5Co6

Co7Co8

Co9

Co10

T11

T12

T13

T14

T15

T16

T17

T18

T19

S20S21

S22S23

S24S25S26

S27S28S29

S30Cu31

Cu32

Cu33Cu34

Cu35

Cu36

Cu37

Cu38

O39

O40

O41

O42

O43

O44

O45

O46O47

O48O49

O50O51 O52

Why are there differences in perception? Will this hamper performance?

How can we improve our scores nearer to best

practice?

What would the commercial impact of this

improvement be?

Why and how should we improve?

0

10

20

30

40

50

60

70

80

90

100Co1

Co2 Co3Co4

Co5Co6

Co7Co8

Co9

Co10

T11

T12

T13

T14

T15

T16

T17

T18

T19

S20S21

S22S23

S24S25S26

S27S28S29

S30Cu31

Cu32

Cu33Cu34

Cu35

Cu36

Cu37

Cu38

O39

O40

O41

O42

O43

O44

O45

O46O47

O48O49

O50O51 O52 Holistic and integrated

Simple to understand Provide striking insights Reflects multiple

dimensions Reflects both / all sides

views Objective and numeric Rigorously researched Capable of action

planning Capable of benchmarking Simple to operate Be capable of regular

refresh

Red-Amber-Green (RAG) Dashboard

0

10

20

30

40

50

60

70

80Co1

Co2

Co3

Co4

Co5

Co6

Co7

Co8

Co9

Co10

0

10

20

30

40

50

60

70

80T11

T12

T13

T14

T15T16

T17

T18

T19

0

5

10

15

20

25

30

35

40

45

50S20

S21

S22

S23

S24

S25S26

S27

S28

S29

S30

0

5

10

15

20

25

30

35

40

45

50Cu31

Cu32

Cu33

Cu34

Cu35

Cu36

Cu37

Cu38

0

10

20

30

40

50

60

70

80O39

O40

O41

O42

O43

O44

O45

O46

O47

O48

O49

O50

O51

O52

$6m

Co T S Cu O

0

10

20

30

40

50

60

70

80Co1

Co2

Co3

Co4

Co5

Co6

Co7

Co8

Co9

Co10

0

10

20

30

40

50

60

70

80T11

T12

T13

T14

T15T16

T17

T18

T19

0

5

10

15

20

25

30

35

40

45

50S20

S21

S22

S23

S24

S25S26

S27

S28

S29

S30

0

5

10

15

20

25

30

35

40

45

50Cu31

Cu32

Cu33

Cu34

Cu35

Cu36

Cu37

Cu38

0

10

20

30

40

50

60

70

80O39

O40

O41

O42

O43

O44

O45

O46

O47

O48

O49

O50

O51

O52

$23m

Co T S Cu O

68 97 66 81 68

20 42 27 28 43

Valuation of AssetsMarket Fit of SolutionProduct Service Fit

Mutual NeedsTeam Problem solving

Shared ControlPartner accountability

Breakthrough Value Proposition (BVP)

Alliance AuditKey metrics

Alliance Reward SystemCommercial Cost

Commercial BenefitProcess for Negotiation

Expected Cost Value Ratio

Shared objectivesRelationship Scope Risk Identification

Risk sharingExit Strategies

Senior Exec SupportB2B Strategic Alignment

Other RelationshipsCommon Ground Rules

Common Vision

TrustCollaborative Corporate

MindsetCollaboration skillsDedicated Alliance

ResourcesAlliance Centre of

ExcellenceJoint Decision Making

ProcessOther Cultural Issues

B2B Cultural alignment

Alliance ProcessSpeed of Progress

Distance from RevenueFormal Business Plan

CommunicationQuarterly Healthcheck

MOUPChange ManagementOperational Metrics

B2B Operational AlignmentExponential Breakthroughs

Internal AlignmentRelationship Plan

A more complex (RAG) Dashboard

Alliance Success

The effectiveness with which an alliance achieves its primary value-creating activities. David C Simon and Peter J Lane – Journal of International Business Studies 2004

Commercial

Technical

Strategic

Cultural

Operational

Goal / ObjectiveCommon SuccessFactors (CSFs)

InfluencersContributors

Task

Relevance

Stage

Control

Skills

??

Importance

Activities

Organisation

Training

Resource Allocation

Leadership

Prioritisation

123 0

??

This is a multiple interactionI.e. many to many relationship

An actionable framework

Goal / ObjectiveDiagnosticActionPlanning

ResourceMobilisation

123 0

0

10

20

30

40

50

60

70

80

90

100Co1

Co2 Co3Co4

Co5Co6

Co7Co8

Co9

Co10

T11

T12

T13

T14

T15

T16

T17

T18

T19

S20S21

S22S23

S24S25S26

S27S28S29

S30Cu31

Cu32

Cu33Cu34

Cu35

Cu36

Cu37

Cu38

O39

O40

O41

O42

O43

O44

O45

O46O47

O48O49

O50O51 O52

£/$/€S

L

R

H

Impact x Number of Partners Contributing

R A C I

Outputs / Tools per stage

Identify Best Practice Assess Reality of Results Review Pilot

Understand Framework

Get Coaching

Select Relationship/s

Secure Internal Support

Identify Gaps to Best Practice

Construct (ST) Pilot

Secure Partner Support

Secure Partner Support

Conduct Diagnostic

SHORT0 - 30

MEDIUM30 - 90

LONG90 - 360

Secure Internal Support

Secure Resources

Launch (ST) Pilot

Decide whether to scale

Construct (LT) Programme

Decide new team

Decide new scope

Secure Resources

Launch (LT) Programme

1 2 3

Action plan overview (Example)

ABP Case Studies in High Tech (Sample)

Average increase in the database is 250% - 650%

Client Partner Target Increase

Capgemini IBM $19m $51.3m

Unisys Lenovo $4m $6m

Capgemini Microsoft $230m $782m

Cognos IBM $23m $69m

Cognos IBM €12m €42m

Oracle IBM €6m €22.8m

BT 8 Partners £150m £480m

Micro Focus

Accenture £3.5m £17.01m

Siemens AG

PwC€4m €16.2m

APC IBM $3m $7.98m

Total 454.5m 1494.29m

Client Partner Target Increase

Chordiant IBM $16m $80m

Capgemini HP €34m €61.2m

Capgemini Oracle $18m $82.8m

Siebel IBM $900m $1044m

Unisys EMC €13m €18.59m

BT Fujitsu £12m £15.24m

SAP32 Partners

€65m €152m

HP StorageTek £26m £41.6m

BT Cisco £5m £30m

Alcatel BT £4m £7.6m

Total 1438m 1975.53m

Further Details

For further details please contact;

Mike Nevin

Managing Partner

Alliance Best Practice Ltd

Web: www.alliancebestpractice.com

Office: +44 (0)1675 442490

Mobile: +44 (0)7766 752350

E Mail: mike.nevin@alliancebestpractice.com