Small Players, Big Deals: How Tech Startups Can Become Better Partners to the Global 500
How can small vendors become trusted (and profitable) partners to the tech giants of the world—the hyperscalers, Global 500 ISVs, the “Big Four” consulting firms, and the like? Last month, two analysts from Technology Research Business, Inc. (TBR), a research firm that obsessively tracks the largest technology companies in the world, shared their findings on this topic gleaned from earnings reports, conversations with senior executives and frontline managers, and other data in an insightful if slightly mistitled webinar, “Benchmarking Alliance Performance Through Objective Data Metrics.”
No Soup for You! Just Red Tape
Vendors and consultancies of all sizes are still establishing best practices in the context of the ecosystem model, and there’s plenty of opportunity for smaller niche software vendors to find their fit. Unfortunately, they often have to navigate counterproductive and unnecessary red tape in doing so. Although the customer wants bespoke solutions that address specific business challenges, too often these larger legacy technology companies’ rigid partner program structures prevent smaller solution providers from delivering value in the way the customer desires.
“Anchor vendors are dictating those commercial terms, which were to the benefit of their own internal middle office functions—not to the benefit of the customer, not to the benefit of the partner,” said Geoff Woollacott, senior strategy consultant and principal analyst at TBR, who gave the example of a smaller tech player that “may be approved for one track within this anchor vendor system, but the customer wants you to behave in a way that’s [fit for] a different track. You’re caught in the bureaucracy of this large firm. You’re not really doing anything that’s adding or delivering customer value.”
Niche vendors are understandably frustrated. On one hand, the growth potential these larger companies represent is tantalizing, but the hoops the smaller vendors have to jump through are exasperating, to say the least. Woollacott compared their plight to the infamous “Soup Nazi” from the renowned Seinfeld episode in the ’90s.
“You love the product but it was somewhat hostile to get at,” he said.
Two Left Feet: Partner Program Flaws Make It Tricky to Dance
Woollacott and his copresenter Patrick Heffernan, principal analyst and practice manager at TBR, outlined a few specific challenges with large-company partner programs and their corresponding fixes. First, the roles of ecosystem participants aren’t always clear. One day they might be asked to do integration work, the next they’re functioning as a mere contributor of intellectual property. Everybody’s role could be better clarified up front in the initial agreement.
“The solution is simple, smart contracts, instead of margin stacking,” explained Woollacott.
Also, since implementations come in multiple forms within the same enterprise client engagement—OEM deals, subscriptions, on-premise licenses, etc.—IP version control can potentially stymie smaller vendors. Those looking to find their niche in an ecosystem must understand each technology contributor’s DevOps processes and design their own to fit every solution type.
“The technological development that you may be doing as a little partner is the dance music to make sure you are in the same cadence as those others,” said Woollacott.
Other challenges include:
- Sales ownership – “Is it a registered deal? Who was supposed to take it? Are you allowed to be in there? Fluid selling motions are there because of customer preference rather than anchor vendor preference,” said Woollacott.
- IP disaggregation – Anchor vendors are selecting the best solution providers in each technology area rather than trying to partner with every player. “We’re picking the very best niche solutions, startups, and companies to be working with to solve very specific problems,” Heffernan explained. “If you work with anybody, then who are you really working with?”
- SLA finger-pointing – Every ecosystem player has to be ready to deal with a client trouble ticket. “You can’t say, ‘It’s not my problem, check with the other vendor,’” warned Woollacott.
Learning the Sheet Music and Arrangements to Make Sweet Sounds
So how does a small player decode a big tech company’s partner program and find a lucrative fit in the latter’s ecosystem? Start with a little research.
“Where are they making investments? Who are they acquiring? What kind of talents are they training? What are the pieces that they’re building, and where do we slot in?” said Heffernan.
If it appears your technology could be a fit, then you must next determine whether your sales organizations are compatible.
“What’s the sales structure they have by customer size and by industry segment? How will you align and slot into their go-to-market?” asked Woollacott.
Middle- and back-office alignment are critical, too, as is a vendor’s development and tech support practices.
“Will they allow for joint selling? Will they have the flexible commercial arrangements?” said Woollacott. “Do you have access to the experts? Will that large vendor do some of the testing and give you some guidance? Will you have an assigned mentor who can help you learn the sheet music—how to work with them on their electronic toolsets?”
Close, But No Exploding Cigar
Finally, once a startup has determined the ecosystems it wants to play in, it has to be thoughtful about how it engages those anchor vendors if it wants to find what Woollacott termed “the exploding cigar.” First, if you have executive alignment, you must approach these companies with “three or four opportunities that you can bring right away, or a track record that says, ‘We have X number of joint customers already. This is why these joint customers use us,’” said Woollacott.
And don’t email blast every sales rep in the organization. “Pick your spots,” advised Woollacott, and find easy customer wins that you can “serve on a platter.” That will get anchor vendor sales reps promoting you internally.
ASAP members can obtain more tips from Woollacott and Heffernan by accessing “Benchmarking Alliance Performance Through Objective Data Metrics” through ASAP’s Content Hub.