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Q4 Strategic Alliance Quarterly Sourcing Outtakes: The Power of the First Draft, Ever-Changing Tech Standards, Customers and the Cloud, Value vs. Discounts

Posted By Jon Lavietes, Wednesday, December 11, 2019

In our upcoming issues of Strategic Alliance Monthly and Strategic Alliance Quarterly, we will examine the changing nature of supplier collaborations in today’s business world. In a lengthy feature for Strategic Alliance Quarterly, we dive deep into how advanced digital technologies are transforming sourcing and procurement managers’ jobs such that they now need alliance management skills and practices to effectively carry out their responsibilities. Meanwhile, a feature in our next edition of Strategic Alliance Monthly explores how a company can become a preferred supplier in the eyes of its partner.

As is the case with just about every piece we put together for ASAP’s publications, there were plenty of great insights left over from our interviews with experts from the ASAP community that don’t appear in either article. Here are just a few of those nuggets.

Alliance Agreements and the Power of the Pen

Andrew Eibling, CSAP, vice president of business development and alliance management at Enable Injections, Inc., made it known several times during our conversation that he felt that, in pharma, the procurement division was generally a parking lot for nonstrategic partnerships. In other words, wind up with a procurement manager as your point of contact and odds are that you have almost zero chance of having any real influence over the partner organization’s affairs. In that discussion, Eibling noted that initial contract negotiations offered a sign of how a partner will view your organization and relationship. The goal is to agree on a contract that hews closer to the principles set forth in The ASAP Handbook of Alliance Management rather than a boilerplate supplier agreement, and the best way to ensure this is to compose the first draft for the partner’s review.

“Somebody has the power of the pen. Who drafts the agreement first? Everyone wants to take the first pass because that becomes the substrate you’re going to work from,” said Eibling. He added that an alliance agreement “tends to be more bidirectional versus what we would get from a monodirectional supplier agreement [where] you will do what’s on the schedule according to the terms we agreed to, and that’s that.”

Are We a “Standards Fit”?

An important element to assembling a tech alliance that we didn’t end up exploring in great depth in the feature was the layer of complexity added by the number of disparate standards for emerging technologies, such as cloud and IoT, competing in the marketplace. Companies putting together a smart tractor, for example, have to find partners that are not only a feature/function fit and a cultural fit but also a “standards fit,” so to speak—that is, they base their systems on technical protocols that align with your IT architecture.

“Things are moving so fast. You might get a standard out there and get everybody to adopt it, but then some new technology comes along that disrupts it all. You’ve spent all this money on standardization and it didn’t endure. That’s one of the reasons why, as a supplier, you need to know what your customers’ sourcing strategies are, and if you’re going to be compatible with the direction they are going in,” said Russ Buchanan, CSAP, vice president of strategic alliances at Xerox and ASAP’s chairman emeritus.

As an example, Buchanan talked about how companies that base their technology on proprietary standards want to be sure to avoid getting entwined with organizations that are placing their chips on open source models.

“OK Google: I’m Seeing Other Cloud Companies”

Subhojit Roye, CSAP, vice president and head of alliances at Tech Mahindra Business Services, singled out the three cloud Goliaths—Google, AWS, and Microsoft—as another potential source of complexity in constructing an alliance. One or more of those vendors may pressure the manufacturer to make it the exclusive cloud platform for the new product or service, but in many cases decent portions of the OEM’s customer base may be split among each of the three cloud leaders. The manufacturer can’t risk alienating a portion of its clients. Thus, the sourcing manager may need to stand up to a powerful market mover, something alliance managers have been doing for years.

“Suddenly, if you’re the procurement manager you have to explain to Google, ‘I’m sorry, but customers are demanding that we have to talk with all three companies,’” Roye said.

Don’t Nickel-and-Dime a Valuable Relationship

More than one interviewee stressed that lower prices are no longer the end game for sourcing and procurement managers. Overall value is the buyer’s main goal. Roye explained the situation in greater detail.

“The procurement function is becoming more and more strategic. The chief marketing officer is becoming critical. Chief customer service officer, the head of sales, and the CEO are suddenly banking on the procurement officer to say, ‘Listen, those days are gone. Don’t nickel-and-dime the vendor. Don’t ask him to give us a $10 item for $6. We’d rather get more value for $10. We’d rather pay him $12 to make sure he’s happy with us, he gives us our products on time—we don’t wind up with a screw-up on Thanksgiving or during the winter holidays—or he doesn’t switch at the last minute and go to a competitor.”

Remember, this is just what hit the cutting room floor. Be sure to check out the next issues of Strategic Alliance Monthly and Strategic Alliance Quarterly for more great insights into alliance management vis-à-vis the sourcing and procurement functions in today’s corporate landscape. 

Tags:  alliances  Andrew Eibling  AWS  Cloud  digital technologies  Enable Injections  Google  IoT  Microsoft  procurement  relationship  Russ Buchanan  Sourcing  Strategic Alliance Quarterly  Subhojit Roye  Tech Mahindra Business Services  Tech Standards  transforming sourcing  Value vs. Discounts  Xerox 

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New Interactive Summit Session Allows Participants to “Spin the Globe” for Intensive Study of Regional Cultures Around the World

Posted By Cynthia B. Hanson, Friday, April 15, 2016

ASAP introduced a thought-provoking session at the March 2016 Global Alliance Summit that allowed attendees to “spin the globe” and finger regions of interest for cultural exploration. Designed to help alliance managers glimpse the importance of understanding cultural nuances, “Alliances Around the World: Cultural Roundtables” provided insights and tips on doing your homework before stepping into a partnering venture that’s sometimes halfway around the globe. 

Deftly moderated by Philip Sack, CSAP, president of ASAP’s Asia Collaborative Business Community, the two-hour session that took place at “Partnering Everywhere: Expert Leadership for the Ecosystem,” held at the Gaylord National Resort & Convention Center, National Harbor, Maryland, was co-presented by three knowledgeable alliance managers: China was covered by Andrew Yeomans, CSAP, director of alliance management, biopharma business, Merck KGaA, Darmstadt, Germany; India was covered by Subhojit Roye, CSAP of Tradeshift; Latin America was covered by Guarino Gentil Jr., CA-AM of Serono, a healthcare division of Merck.

The next issue of Strategic Alliance Magazine will feature the first of several articles written about the roundtables—a virtual collective deep dive led by Yeomans and his Chinese partner, Jin Wu, who works for Serono (a healthcare division of Merck KGaA, Darmstadt, Germany) in China. The article takes readers into the nuances, taboos, and norms of doing business in China, via a roundtable discussion, with the roundtables for India and Latin America following in a subsequent issue.

“What’s needed for success, in general, has to do with people and relationships,” summarized Sack when introducing the session. After describing the need for partnering with cultural sensitivity in our fast-merging world, he provided a very basic list applicable to anyone doing business in any country:

  • Be an active listener
  • Communicate well—be a good speaker
  • Be patient

Attendees then selected a region, and eventually rotated throughout the room engaging in regional exchanges led by the remaining two co-presenters. The animated discussions included multiple questions and answers from the co-presenters and participants on topics ranging from traditional values, social networks, and product approval processes to contracts, copyright, inflation, and state-by-state legal variances.

The co-presenters emphasized the value of developing appropriate soft skills, such as understanding what is important in a particular culture: holidays, seniority, punctuality—or in some cultures a laid-back approach to time.

In China, for example, knowing how to socially negotiate the system of guanxi (the concept of drawing on connections in personal or business relations) is critical for access to Chinese markets. The guanxi business network is a web that interlinks thousands of social and business connections.

In India, it’s key to understand the lines of delineation and codes of conduct: a partner can become a competitor; a prospective acquisition target can end up assuming your company. In Latin America, effective communication requires easing into relationships with chitchat on personal issues because direct communication can be viewed as impolite.

Becoming attuned to legal, political, and structural differences in a country, region, or district is also advantageous. For example, taxes in Latin America can be very complicated. Several layers of tax fees exist, and Brazil can be especially complicated with different VAT taxes, each with its own rules. The taxes may vary product-to-product and state-to-state, explained Gentil.

In India, where software development has matured considerably, doing business in village areas requires sensitivity and insight into the caste system. “The caste of an individual could play an important part in success. It’s best to have the local country representative guide you,” advised Roye. “This needs to be done with extreme sensitivity as India is a democracy, and equality of opportunity is important.”

In China, it’s especially important to pay careful attention to the contract. One needs to consider the spirit as well as the letter of the contract and differing approaches to interpretation, said Yeomans. A lot of partnering is done with the Chinese government, and your goals for doing business need to be seen as adding value, "a kind of Robin Hood philosophy where the company is distributing for the human good, for humankind,” he added. “They would see that approach as an added value concept.” Negotiating the nuances of China “requires a huge amount of depth and understanding, and the key is to harness [the skills necessary for entering] the Chinese market.” 

Tags:  Alliance managers  Andrew Yeomans  China  cultural nuances  cultural sensitivity  guanxi business network  Guarino Gentil Jr.  India  Latin America  Merck KGaA  Merck Serono SA  negogiating  Philip Sack  Subhojit Roye  Tradeshift 

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Engaging Peer-to-Peer Roundtable Sessions Become Popular New Central Feature at ASAP Global Alliance Summit

Posted By Cynthia B. Hanson & Ana Brown, Monday, March 14, 2016

Fostering opportunities and tools for peer-to-peer learning is one of ASAP’s goals, and that concept was well-integrated into this year’s ASAP Global Alliance Summit with several popular roundtable sessions. The feedback has been positive so far on the two roundtables, which quickly became an active format for sharing at the Gaylord National Resort & Convention Center, National Harbor, Md. 

Following the “ASAP Quick Takes” talks, the first roundtable session provided participants with the choice of 17 valuable, timely topics connected to the broader “ASAP Quick Takes” theme of “Partnering Everywhere: Expert Leadership for the Ecosystem.” Participants chose between 26 different discussion groups facilitated by thought leaders from ASAP’s membership. Topics ranged from “Strategic Alliance Management across the Enterprise” to “Knowing with Whom to Partner Now” to “Quick Take ‘Hot Takes:’ Seeing Around Corners.” Look for an upcoming blog item on the second engaging roundtable session that took place the following day: “Alliances around the World: Cultural Roundtables,” facilitated by Philip Sack, CSAP, ASAP Asia Collaborative Business Community, and co-presented by Guarino Gentil Jr., CA-AM, Merck-Serono; Subhojit Roye, CSAP, Tradeshift; Andrew Yeomans, CSAP, Merck-Serono. 

I randomly selected a group at the ASAP Quick Take Roundtables led by Donna Peek, CSAP, director, partner enablement & operations, global alliances & channels, SAS on “The First 100 Days of an Alliance” and watched a lively, relevant conversation unfold. Peek, who also is ASAP’s vice-chairman of the executive management board, dynamically led the group, drawing out ideas and fostering engaging conversation as the participants ramped up their communications into active sharing. “The train is already barreling down the track and you are trying to adjust and redefine,” she said, while jotting down a checklist of what an alliance manager should be focused on in the first 100 days that looked something like this: 

  • Identify critical stakeholders
  • Identify executive governance
  • Define frameworks
  • Find good fits for the collaborative team
  • Make sure everything is included that needs to be in the contract
  • Clarify strategy and scope
  • Make alignment part of the term sheet process 

This last point, offered by Ana Brown, project manager, strategic alliances, Citrix, so captured participant attention that we thought her idea worth sharing as an example of how helpful and practical these exchanges can be. Brown offered to write up the idea for a larger audience. 

#Termsheetlove: Bringing Back the Term Sheet
By Ana Brown

The use of a term sheet has been a longstanding precursor to any agreement. With busy times, and changing alliance leaders and teams, sometimes such processes are left behind.

If you find yourself having multiple conversations with your internal stakeholders, all at different times, redlining your partner agreement—sometimes for months. Finding yourself thinking, “Oh my gosh, that call was so long ago I can’t remember what the issues with the agreement were in the first place,” then this recommendation is for you.

Bringing back the term sheet with some easy steps will help you: 

  1. Gain alignment with all your internal stakeholders before going into the agreement process.
  2. Cut the lead-time to fully executed agreement more than half (months for some of us)! 

First, work with your legal team to come up with the best term sheet template (and get buy in from your internal stakeholders that the term sheet will answer most, if not all, of the questions they may have on any potential partner agreement).

Next, complete the term sheet after completing your business plan and receiving buy in from your business unit and partner. Alliance leaders fill out the term sheet (deal exec summary and details) and simultaneously circulate it to the internal stakeholders so that they all know.... (Example of stakeholders include: channel operations, revenue recognition, legal, GEO VPs, etc.—anyone who needs to know the deal is coming.)


Alliance leaders then schedule a kickoff call with stakeholders to review the term sheet, receive stakeholders’ approval to the term sheet (email approval is okay), and are then ready to move the deal to agreement and work with legal to execute.

Ta-da! You just made a bunch of friends by creating internal alignment and cutting the lead time to fully executed agreement in half.

#Termsheetlove - spread it forward :)

Tags:  agreement  alignment  Ana Brown  Andrew Yeomans  ASAP Global Alliance Summit  ASAP Quick Takes  collaborative  Donna Peek  frameworks  governance  Guarino Gentil  leadership  Merck-Serono  partnering  peer-to-peer learning  Philip Sack  scope  stakeholders  strategy  Subhojit Roye  term sheet  Tradeshift 

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