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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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The Tsunami Effect of AI on Partnering—Part 1 of the 2019 ASAP Summit Keynote Address

Posted By Cynthia B. Hanson, Friday, March 22, 2019

How do you align for the era of smart?  “Let’s put smart to work” was the mantra Bruce Anderson chose for his keynote address “Partnering in the AI Era: An Essential Shift from Value Chains to Business Ecosystems” at the recent 2019 ASAP Global Alliance Summit in Fort Lauderdale, Florida. Anderson is IBM’s global managing director, global electronics industry, and he painted a vision that appeared highly relevant to alliance managers and their associates in the packed room.

“In my world, with the scope of clients, there is almost [always] an alliance idea that happens several times a day,” Anderson said, setting the stage for his address. “We put a lot of structure around that. I have seen that structure help us define these alliances and what they could do.”

The market is moving so fast from a linear to dynamic approach that you need to ask how your company should be thinking about alliances in this accelerating business approach, he stated. “IBM figured out a long time ago you have to partner, and the real value of companies like IBM is to bring the pieces together to create business value. That’s where the ecosystem comes into play.”

Anderson then provided some context: Design cycles for hardware took years, but now technology development is going faster and faster. As companies come into this space, they need to leverage what they’ve created by “reaching out to a broader ecosystem to create value. The approach is getting more open,” he pointed out. “This is only going to accelerate. The change is not only how products are brought together, but also how they partner in the marketplace.”

In this climate, alliance managers need make sure ideas are aligned “because a lot of thought went into the idea of strategy to get momentum for the alliance in the company. We use the word cognitive. You can use the world AI. We think about augmented intelligence and using data to make life—at work and at home—better. This is done most effectively in the Cloud. So there has been a lot of change for us since the ‘80s. But the context for what this is useful for is industries.”

In the advancing era of artificial intelligence (AI), companies need to create all the pieces—and alliances—necessary to make it easy to adapt for the advancement of products, he said. “Alliances have become fundamental to the idea of strategy. How has IBM shifted over the years?” he then asked, flashing a slide of a revenue chart IBM put together years ago with the overarching header “Over 50% of IBM revenue will come from Cloud and Cognitive Solutions in the near future.” Anderson then followed with a slide on AI “emerging across ecosystems … everywhere,” that was broken into three categories:

  • AI-enabled engagement
  • AI-enabled analytics
  • AI-enabled operations

AI seems to have an unlimited number of applications, and Anderson talked about a small handful of which IBM has been partnering on: digital farming, block chain (which prevents waste), mapping the microbiome, sensor detection of pathogens, and radical recycling. A discussion then took place about the multiple benefits of AI in IBM’s Food Trust.

Stay tuned for more of ASAP Media’s live, onsite coverage of this session and others from 2019 ASAP Global Alliance Summit. Cynthia B. Hanson is managing editor of ASAP Media and Strategic Alliance publications. 

Tags:  AI-enabled engagement  alliance managers  Artificial Intellegence  block chain  Bruce Anderson  Cloud  cognitive Solutions  design cycles  digital farming  ecosystem  global electronics  IBM  partner 

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The Value of Honing in on Partner Specialization and Expertise—the Google Way

Posted By Cynthia B. Hanson, Wednesday, October 17, 2018
Updated: Wednesday, October 17, 2018

Google has been called a trendsetter; a more apt description might be “epoch-maker.” The company repeatedly has surged ahead of the pack to set long-term standards. When adapting to the evolving multi-industry, multi-partner ecosystem, Google places great value on making specialization and expertise central to strategy, says Nina Harding, channel chief at Google Cloud. Harding discussed that message today in her session “Transforming Partnerships in the Cloud” at the 2018 ASAP Tech Partner Forum, “Reimaging Part­nering in a Disruptive World,” on October 17, at the Four Points by Sheraton, San Jose Airport, San Jose, California. In a fascinating pre-Forum interview, here’s what Harding honed in on:

Your session description describes Google’s link to transformation as pervasive in a world of continuous change. How does this philosophy fit into Google’s present partnering mindset?

We partner differently. We approach partnering much more from the ways companies and partners are transforming. I plan to talk a lot about traditional services and resellersthe way partners build their businesses. That traditional way is in the rear view mirror. We are finding increasingly the need to build businesses around where they have expertise, so it makes it easier to partner to fill in gaps. We ask the question: What do you want the ecosystem to do for you, and how do you want it to extend value for you? We look at channels differently as we meet with partners and look at the marketplace. Those traditional partners don’t exist anymore. They don’t show up as one type or two types anymore.

The shift from vendor to ecosystem partner requires figuring out for a particular company how they can best ride their business. You need to look at it more from a behavioral perspective: How can we make you successful or profitable? Or if you want to just sell, how can we unbridle you from the resell? Become strategic advisors if you don’t want to be bridled into reselling. We talk about transforming and looking at the landscape of the ecosystem and how they want to engage with us. It’s a very different approach. Companies like Google, SAP, and Microsoft used to have a lot of power in who their partners were. Now, with social media, purchasing is through networks. Our job is not to assess the value of a partner. Instead, it’s to differentiate the business. There is a fundamental shift in the way you want to engage and work with our ecosystem. We talk a lot more now about how we help partners differentiate in the marketplace and how we make them successful. Because we created a culture, we ask questions like: How do we find the right partner? How are they specialized? What is their expertise?

As one of the big leaders in this new ecosystem, how is Google adapting and adjusting to the change?

It’s critical. One of the biggest areas of investment in the last six months requires really focusing on industry perspective. For example, some of our great new partners and customers are makers of wearable devices, where they have the Google Cloud platform. This is not the traditional cloudwe take geospatial data, maps, linguistics, etc., and intertwine them. The power of having such tools and resources through Google partnering is to be able to deliver transformative options in, for example, the healthcare space. We also have Chrome. The utilitarian nature of a Chrome book allows hospitals and organizations to have a utility laptop that anyone can access. They can sign into their account regardless of it being their machinebecause everything is in the cloud. It’s not just signing into an epic system; it’s anything and everything they have access to as a user, from the G-suite to GCP, Chrome, maps. There’s a tower of solutions as a partner.

You state that companies need to become business advisors solving customer challenges in an agile, customer-centric, digital environment. Why is that the new normal?

Customers are almost ahead of partners sometimes in digital transformation, as partners are no longer going in to solve a lift-and-shift problem. Whole conversations need to be about imagining what your business could be and tackling what your next version of your business will be. It’s about transforming your businesshow to reach and serve your customer versus going in and saying “This is our tech, and this is how this will fit.” That’s the conversation we’re having about being that trusted advisor.

What are key considerations when building these new partnering programs?

I don’t think the partner program are vendor-driven, they are ecosystem-driven. So when building programs, build to make the partner successful. Build their business. In this world, it’s about innovation, digital transformation, and the need to infuse with tech enablement, but also it about how to think differently and imagine a different world than we have today. It’s a different way to enable partners. It doesn’t mean anything to a customer if you are a silver, bronze, or gold partner. But it means something if I have specialization or expertise to give you an idea of where you need to take your business. It’s about serving your ecosystem rather than measuring your ecosystem. My message is more about how should companies should be thinking differently working with their partners. Look at this from a different perspective and be customer-centric, which is a different philosophy.

Stay tuned for more of the ASAP Media team’s coverage of the 2018 ASAP Tech Partner Forum on the ASAP Blog at www.strategic-alliances.org. Learn more about the 2018 ASAP Tech Partner Forum at http://asaptechforum.org

Tags:  ASAP Tech Partner Forum  Chrome  cloud  customer-centric  digital Transformation  geospatial data  Google Cloud  innovation  Microsoft  multi-partner ecosystem  Nina Harding  partner programs  partners  SAP  strategic advisors 

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Transform or Risk Extinction (Part Two): Recognizing Value in Multiple Engagement Models

Posted By Cynthia B. Hanson, Tuesday, May 22, 2018
Updated: Sunday, May 20, 2018

This is the second of two blogs continuing my April 2018 eSAM Plus article on “Architecting for Transformation: The Next Generation Partner Ecosystem,” the title of a lively conference session led by Russ Cobb, senior vice president, growth and business operations at SAS Institute, and Norma Watenpaugh, CSAP, founding principal, Phoenix Consulting Group. The two took the stage at the A2018 ASAP Global Alliance Summit, “Propelling Partnering for the On-Demand World: New Perspectives + Proven Practices for Collaborative Business,”March 26-28, 2018, in Fort Lauderdale, Florida, USA. The drivers of seismic changes in channel partnering, Cobb and Watenpaugh explain explained, are the convergence of SMAC (social media, mobile computing, analytics, and cloud technology), the change in technology consumption, the rise of digital transformation (DX), and the Internet of Things (IoT).

Part One of this blog post concluded on Watenpaugh’s comment, “There are no simple partner models anymore. They are adopting complex, multi-faceted business models where they do all of the above.” So how to recognize value across multiple engagement models?

Watenpaugh: Companies need to recognize value across multiple engagement models in the following ways:

  • Partner programs are evolving to recognize the breadth of contribution from partners across a blended business model.
  • Incentives shift to reward behavior and customer value.
  • Vendors can no longer subsidize profitability through rebates or discounts.
  • Recognizing value, investment, commitment, volume.

Cobb: SAS has a partner program that has a precious metals taxonomy as well. What we are trying to do is have more partners because of economics—if we can get a partner to look at different ways at engaging with SAS, such as the ability to resell SAS or engage in analytic services with a revenue-sharing agreement with SAS. We are really focused on economics because of customer behavior.  The more ways we can get engaged with you partner-wise, the more commitment you will get. The ROI will go up over time. One reason we get partners to do things with us is we create commitment over time.

Watenpaugh: The cloud strategy right now is evolving and emerging. We need a flexible view of what cloud means. We need to transition to a service model. How can we help our customers fit into third-party cloud environments? We’ve got to figure out how to meet our customers where their need might be. There is a complexity of applications. No one can do it alone, so we are seeing more partner-to-partner. There are so many specializations. No company has it all. It’s becoming more and more important to get from a pick list to what skills are needed to deliver.

Some people think it needs to be more like a blockchain model. That involves the challenge of finding new partners and finding how to engage to meet the needs of customers. Infrastructure companies are challenged, and finding the right value and provision in the cloud is really a challenge.

Russ: This all comes down to if you are a channel or IT partner, what is your unique value proposition? You need a very crisp value proposition. So what is the road ahead in ecosystem evolution?

  • Industry trends in cloud, digital transformation, and IoT are driving disruption and opportunity in the market
  • Non-traditional partners offering access to the line of business
  • Vendors will be required to think more holistically about the capabilities of the partner ecosystem
  • Vendors must create relevance to business outcomes or become commodities
  • Creating a compelling partner experience

Check out Part One of this blog post as well as the May 2018 issue of eSAM Plus for other topics addressed in Watenpaugh and Cobb’s session as well as ASAP Media’s coverage of other sessions at the 2018 ASAP Global Alliance Summit. 

Tags:  blockchain  business models  channel partnering  channel partners  Cloud  complex partnering  digital transformation  IoT  Norma Watenpaugh  partner ecosystem  partner models  Phoenix Consulting Group  Russ Cobb  SAS Institute  SMAC  value propositions  vendors 

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Huawei’s Strategy for Partnering Success (Part Two): Focusing on Customer Challenges that ‘Only Innovative Partnering Solutions Can Solve’

Posted By Genevieve Fraser, Tuesday, March 6, 2018
Updated: Saturday, March 3, 2018

This is the second of a two-part blog post based on my recent interview with Greg Fox, CSAP, a longtime ASAP member who is currently vice president of strategic alliances at Huawei Technologies, headquartered in Shenzhen, Guangdong, China. For the past two years, Fox has lead Huawei’s efforts to build information and communications technologies (ICT) industry-leading alliance management competencies and global partnering capabilities.

 

Organizations that Huawei is most apt to forge alliances with are heavily driven and influenced by the needs of their business groups and associated business units, where Huawei products and solutions are incubated, produced, and delivered to the market.

 

According to Fox, during the early phases, he and his team were focused on traditional alliances in the IT space, including independent software vendors (ISVs), systems integrators (SIs), and key technology partners. As the business evolved and expanded beyond this core, it brought in a new era of partnering with non-traditional partners focused on specific industries.

 

“For example, we partner with GE Digital to push the industrial industry towards digitization and automation, with KUKA for smart factories to enable acceptance of the smart production applications in the manufacturing sector, and with the likes of Honeywell to bring to market smart building offerings that take advantage of the latest IoT [Internet of Things] technologies to help make buildings more sustainable, secure and energy efficient,” he said. “In our digital transformation platform effort, we are open to any mutually advantageous partnering arrangement, where we together can combine our capabilities and value to deliver customer success.”

 

Fox explained that some partners are global and cross-industry in nature, while others focus on specific industry business needs, where a relationship may just be tied to that industry. “We are finding that in this age of digital transformation and the desire for increased innovation, productivity, and growth, there are not absolute boundaries that exist. What we do today with a partner in one industry, as the business grows, and we prove things and show success, this may also lead to expanding that partnership to include another industry, and it can scale in breadth and scope, but also in depth.”

 

The most attractive areas of cooperation for Huawei today, and for the foreseeable future, are areas in which customers are experiencing their biggest business challenges that only innovative partnering solutions can solve. One of the central business challenges they face is how to foster innovation and achieve growth, and many are placing digital transformation at the center of their strategies through 2020. Yet, according to Forrester research, only 27% of businesses have a coherent digital transformation strategy in place for creating customer value. This is a major concern, and there is fear of becoming obsolete if this gap is not addressed.

 

Huawei’s goal is to be the digital transformation platform that connects intelligence, data, and devices, and that enables its customers to increase engagement with partners and develop applications that foster innovation. “The beauty of digital transformation is that its customer-centric marketing and business processes require the ability to work across business verticals and silos, which requires partners and ecosystems to achieve,” Fox said.

 

To learn more about Huawei’s partnering efforts, read part one of this blog as well as Genevieve Fraser’s Member Spotlight in the Q4 2017 issue of Strategic Alliance Magazine. Greg Fox also co-presented, with Andrew Yeomans, CSAP, of Merck Serono, the January 18, 2018 ASAP Netcast webinar “Building the Engines of Collaboration Inside and Beyond the Borders of Mainland China.”

Tags:  alliance management  cloud  digital transformation  GE Digital  global partnering capabilities  governance structures  Greg Fox  Honeywell  Huawei Technologies  ICT  independent software vendors (ISVs)  manage alliance relationship  partnerships  strategic alliances  systems integrators (SIs)  technology partners 

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