Presentation to BCS BISSG 09/04/2003

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Partner Relationship Management

Therese CoryTeresa Cottam

Chorleywood Publications

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What is PRM?

• What is a partnership• definition of partners: people who get together to achieve a common

purpose• the deeper the alliance, the greater value-add the partners can generate

between them - greater potential for profitability, new growth opportunities.

• partner to deliver product; Together reach NEW markets neither could reach otherwise.

Large companies becoming a collection of collaborators - collaborative enterprise.. Customer focused - process centric, partner dependent. extending the boundaries of the enterprise.

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Types of partnership

• ranges from flirtation / short term relationship/ ....marriage • one project / loose reseller arrangement../ value-add / joint

venture ... permanent - acquisition/merger! • Failure gets more costly.. Lucent-Alcatel merger did not

materialise.• Different types of partnership necessitate different

strategies

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Comparison of depth of alliances

Loose Value-add

Strategy tactical, simple, nonexclusive,

operational

Infrastructure and support no integration collaboration

added value none or minimal partial

risk/responsibility/investment

reseller owns customer,returns faulty goods direct tovendor; some expectation offailure

some investment in partnerskills

examples reseller-preferred supplier OEM/crosslicensing/integrationpartner/technology partner

possible evolution no shared goals, but coulddevelop into closerrelationship if suitable jointgoal is identified

Development ofCollaborative or co-operativerelationships: Shared Goalsor complementary goalsrespectively

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When to partner - or do it yourself

• employee skills• available assets• superior processes• cost• differentiated offering• protected niche…..Partnering creates a larger virtual organisation, more

advantageous to capturing market share. Business goals and information must be shared. Primary provider may reduce working capital, some of this carried by partners.

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Reducing strategic and business uncertainties

• How do the business objectives of the participants mesh with one another?• Is there a size/power differential?• Is the relationship a business-to-business or supplier-to-buyer one?• Are the participants sharing a common business goal, or simply links in a

supply chain?• Are some partners likely to put their own immediate needs first?• What information do participants need to understand their partners better?• How will working with new partners assist / create new problems for

participants?• Could differences in work habits and culture endanger partner management?• Does the contract provide for an exit strategy?

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Once the decision to partner is made...

• Decide what type of partnership is appropriate• Select best approach - management and operations• Identify skills needed• Identify data needed

Some solutions are people intensive, others depend heavily on IT

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The Roots of PRM

• Methodologies with business focus supply chain management, value stream creation

• Information managementdocument management, CALS

• Softwaregroupware, concurrent engineering

ALL DEPEND ON:data management, networking, storage

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People and Data

• Information in people’s heads or on bits of paper• Estimated that 80% of a company’s knowledge is

not written down at all• 16% is available on computers but is unstructured

(e-mails, ppt presentations)• 4% is in structured form, analysable, shareable

(database, information systems)

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So what is PRM?

• A new market sector, promising huge revenue growth…

• A management concept, good practice, business processes, all supported by IT

• Wide range of product types and solutions

AT ITS MOST STRATEGIC, PRM IS A MISSION CRITICAL TOOL

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Management: reducing operational uncertainties

• What functions must be performed by each partner?

• What information do they need and when?• Are all processes understood, including human

roles?• Need mechanisms to:

measure criteria for success/ascertain performanceremunerate partners

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Examples of product concepts

• Intranet/extranet with shared tools• Extension of supply chain• Extension of CRM• Closed e-marketplace/private exchange• Electronic bondingBUT..You cannot automate a partnership,

only support it!

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Examples of commercial software products - ALLEGIS

• Shared extranet built around a database• Range of shared applications and tools • Role-based access permission/security• Workflow and activity management• OLAP reporting

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Tools to support function

• Finding and recruiting partners - risk management, profiling, on- line registration

• Motivating and managing - training and certification, joint business planning, market development funds, lead management

• Supporting joint sales and marketing - on-line product catalogues, targeted communications, searchable knowledge base, pricing

• Assessing performance and success - ROI, analytics, customer feedback, SLAs

• Accounting and remuneration tools

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Other product examples

• Supply chain extension - PeopleSoft• CRM extension - Siebel• Private exchange - Webridge• People productivity and data management -

Intraspect• Electronic bonding - PartnerCommunity

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Critical success factors

• Usability!• Language and currency support• Links to legacy systems• Supporting best practice, not enforcing new

practicesLessons learned from failed data warehousing,

CRM and other large projects

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CISCO Ecosystem

• Example of partner matrix• Two tier reseller structure• Developed in-house with aid of consultants• In EMEA, 90% of products are sold through

channel, 10% through direct salesforce• Emphasis on increasing partner skills• Partners have same tools as salesforce

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Telecoms industry - New imperatives

• New types of partnerships and partners• Participants contrasted in business, culture,

size• New revenue sharing models, e.g.

MVNOordering bandwidth if you are an ISPordering a local loop from the incumbent

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Example: Bureau Service/Outsourcing

• Applies to billing, mediation, interconnect• Alternative to software licensing• Revenues more predictable for suppliers• Enforces ongoing supplier/customer

interaction• Strict SLA criteria/risk sharing

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Example: Peering between ISPs (example from William Norton, Equinix)

• Decide on case for peering• Identify counterpart• Contact and qualification• Discussion and negotiation• Business case and DecisionBUT..It could all fail because of personality clash!