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Systems Integrators Dish on How to Find a Working Revenue Model in Today’s Technology Solutions

Posted By Administration, Friday, June 20, 2014
Originally posted on 7/25/2013

Our Q3 2013 edition of Strategic Alliance Magazine has been sent to the printer and should be arriving in mailboxes around mid-August. As is customary in our Q3 issue, we have devoted a block of space to our annual IT Special Focus. This year, we took a topic that we have covered in some form in each of our previous IT sections—disruptive technologies such as cloud, mobile, social media, and big data—and decided to get what is a new perspective for us at Strategic Alliance Magazine on how these technologies are affecting alliance management.

We lined up executives from three major systems integrators to answer a variety of questions about how the alliance management function is evolving (past, present, and future) in the context of the new paradigm created by these disruptive forces for a virtual roundtable that appeared in the issue. As we do each issue, we try to provide ASAP members bonus material in the form of outtakes that didn’t make our print edition.

Below, David Erlenborn, CSAP, director of alliance portfolio management at KPMG, and Chuck McNamara, Microsoft alliance manager at Infosys, spoke about the challenges of finding a revenue model that satisfies the interests of traditional multinational IT vendors, emerging cloud players, and clients themselves.

ASAP Media: How do you find a common revenue model that satisfies all parties in a partner solution?

Erlenborn: Remember, we’re a business integrator more than a systems integrator. If we have a client looking for a single-owner solution, we would be willing to incorporate our partner’s technology into the overall solution. Generally, though, we don’t see ourselves as a reseller. We partner with technology providers because our clients are going to implement a solution that involves their technology, not because we want to make money as a reseller.

It’s very important to us that despite the alliances we have, we are an objective partner to our clients in helping them sort all of this out, and keeping the transaction separate helps reinforce that. When it comes to the revenue side, we’re not looking to make money selling other people’s stuff. We charge what we believe is fair value to our clients. We think we deliver more value than what they pay for, and that’s the way it should be. We partner with people that have the same concept and charge appropriately. It makes it much simpler than putting together a whole solution, then carving up a pie.

McNamara: Let’s say [we have] an end-to-end cloud solution where ultimately we would like to be charging the client a per-month fee. We work with the partner to procure licenses. Everything is hosted and structured by us. In that ideal model, we are involving the partners in the process of the build-out—the solution development and the like. That’s the easier [scenario]. The harder part—and the need for alliances—is, in many cases, in our large clients our partners have large revenue models built in as well, and they’ve already sold that product that is part of the Infosys cloud hosting model. Then the alliance person actually gets involved in that deal around that solution, and gets field engagement going on the ground with the two account teams to work out the understanding of what the partner already sold the client, and what we need to do to modify our deal to reflect that change. It’s harder, but the alliance influence in that deal becomes more important. If they didn’t involve the alliance team—one, they may lose the deal because they were unaware the client had purchased that [technology] in another part of the organization so the pricing was out of line, or two, they create a channel conflict.

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