Maidsfield Blog - Partnering and Business Development

See two past blog posts on “Why Good Strategic Partner Fit is Imperative - Part 1″ and “Why Good Strategic Partner Fit is Imperative - Part 2″.

Far too many companies accept the partners that come to them, because “we have nothing to lose, we’re not represented in that market, so if they sell we’re better off”. But with a small bit of planning and effort you can proactively approach the market, region or sector, to meet your business objectives and not simply respond to someone else’s possible once-off sales opportunities.

In gaining an understanding of whether a partner will deliver on your joint objectives, there is much you can tell in reviewing what they say about themselves, by reviewing their websites and various promotional materials. If you want to spend time working with the right partners you need to spend time finding the right partners.

In evaluating Prospective Partner companies you can review their websites and public materials to understand whether you want to speak to them to further qualify the prospect and thus decide who you can possibly work with. All 7 criteria don’t need to be perfect, they merely need to be considered in making your decision and how strategically and operationally challenges can be addressed. The 7 criteria are inter-related, like many things in a business. It is worth looking at the company from different points of view including who else they’re partnering with. Consider the adage, “if you want to know me, meet my friends”.
The 7 Criteria for Best-Fit Partner Analysis is linked to the alignment of the following (and Gut Instinct):

1) Business Model
I wrote a previous post on the challenges in partnering a SaaS business. If your company has a SaaS model and your prospective partner typically sells perpetual licences then this presents an immediate clash in charge models and sales incentives. If sales persons in the partner company get their commission when the customer pays, how long will they be waiting for the money in a SaaS model as opposed to a big initial licence fee sale. Businesses have found some solutions to this challenge and SaaS businesses are changing their approach to address.

2) Sales Models & Marketing Approach
How do you prospective partners sell their sales? What is their marketing and sales process and how can you fit into this? Do they focus heavy on marketing and lead generation and the sales follow ups OR do they know exactly who they want to speak to and focus more on the sales process? Neither is wrong, but if your company has a similar approach it makes it easier to work together and build relevant relations all along the customer journey. Other things to consider, are your prospective partners:

• Cost or Efficiency Driven Sale or Revenue Growth Driven Sale or Risk Protection Driven Sale
• Consulting Led Sales or Product Led Sales
• Thought Leadership or Direct Contact Sales
• High Profile or Under-the-Radar
• Pioneering Market (Missionary Selling) or Existing Established Market

3) Pricing Strategies
Do they adopt a premium market or higher volume lower cost approach? Where do you fit into this? I’ve seen companies increase the rates by partnering up market a little, thus increasing the ‘batting level’, credibility and thus move them up the value chain. You need to decide what your company wants.
4) Implementation & Solution Deployment
For example, System Integrators revenues are service days, licences and annual support & maintenance. If you have a minimum deployment cost, whether on-premise or Web deployed, it is less attractive to a System Integrator. In fact you may be competing directly with them. Understand what other software partners your prospective partners have and what type of deployments they have. Is the solution type Enterprise Solutions/SME deployed and is it Server Side Solution / Client Side Solution?

5) Growth Strategies
Review the prospective partners’ growth plans. This can be easier if they’re publicly quoted companies, as long as the division you want to partner with features separately in their shareholder communications. Are they in a Narrow Global Market that fits your business or are they very broad in Wide Regional Markets? How might this reflect your business approach? Do they have a large direct sales force or do they sell through partner channels? If they have a direct sales focus you are obviously closer to the customer than them operating through sales channels, thus faster potential revenues. Although if they have effective partner channels and your products fit well, their longer term upside could be significant.
6) Organisational Culture
Cultural differences are often cited as the reason 50% of failures in company mergers and the greatest difficulty in acquisitions and joint ventures. Some examples are, are they?

• Team Driven and Shared Leadership / Command and Control
• Aggressive Growth and High Performance / Cautious Growth
• Strongly Sales Driven / Strongly Delivery Driven / Strongly Product Driven

7) Business Objectives
Do their stated business objectives align with your objectives for the partnership? If you’re in a hurry, as most growing businesses are, do they show or state:

• Fast Revenue Growth / Cautious Cost-Effective Growth
• High-Profile Building Potential / Purely Revenue Driven
• Seeking 5 year Exit / Seeking Profitability

THEN Gut Instinct. If you know about technology businesses you can read between the lines to gain an understanding of their business reasonably quickly and make assumptions to be later verified. Keep in mind where their market is going and try to read into their reactions to possible market changes.

The 7 Best-Fit criteria don’t have to fit perfectly, but keep them in mind and use them as a framework. An effective partner relationship is all about people and how well the parties commit to overcoming the challenges as the gains greatly outweigh the pains.

Based on the interest in our morning event, we have decided to run the event again in the afternoon of Tuesday 29th. 

Internationalisation is the biggest single challenge facing the Irish Tech Sector today. Having ambition in Ireland, means you’re looking international quickly. Irish Tech companies almost immediately face great challenges to make their business successful.

On Tuesday the 29th of September 2009, between 2:30pm to 6:30pm at the Hampton hotel in Donnybrook, Dublin 4, we invite CEO s of Irish Technology Companies to join us - Register Today, limited to 30 attendees.

The event will present talks from leading International and Irish experts, case studies from successful indigenous Irish Technology companies, and an opportunity to discuss the challenges and pitfalls of the International business landscape with your peers.

On the back of their recent partnership announcement Donagh Kiernan of Maidsfield Associates, Niall Devitt of Beyond the Boardroom and David Brock from Los Angeles based Partners In EXCELLENCE, will present and discuss how Irish technology companies can to succeed in international markets.

The Partners In EXCELLENCE, Beyond the Boardroom and Maidsfield Associates Strategic Partnership’s focus is to help Irish Technology companies accelerate the results they achieve through their Internationalisation efforts. The partnership brings together experience and track record in helping companies successfully expand globally. Leveraging the capabilities to access new regions, markets, develop new channels and alliances; this partnership will help Irish Technologies improve the results they achieve in competing in a global market.

Whether your organisation is seeking to go international or already trading abroad the internationalisation partnership can assist you to ensure you achieve the highest levels of performance and the best results possible.

Together, Maidsfield Associates, Beyond the Boardroom and Partners In EXCELLENCE have helped Irish and other organisations achieve tremendous results in Internationalising. Organisations like Qumas, InnerWorkings, Decare Systems Ireland, Helix Health, Dolphin Software, Enterprise Ireland, IBM, HP, Canon, Motorola, Ericsson, Dassault Systemes, NCR, and others.

Timetable

14:30 Arrive, Coffee and Registration
15:00 Welcome and Introduction - Donagh Kiernan & Niall Devitt
15:10 Corporate Partnering into Markets - Donagh Kiernan
15:50 Hi Tech Globalisation Options - David Brock
16:30 Internationalisation Workshop - facilitated by Niall Devitt
Breaking into roundtables / groups and discussing internationalisation challenges and potential solutions
17:50 Coffee and Networking
18:30 Close

Attendees are limited to 30 - register today

Driving your business through corporate partners helps build a much more scaleable business. It takes time to get the channel started and the channel needs feeding. How you reward your channel depends on what you expect from them and what your corporate partners are doing for you.

Partners should be rewarded according to the extent of the results and to what extent they contribute to the sale and delivery. There are various levels of responsibilities along the sales process / customer journey between your partners and your company, depending on the type of partnership and respective company capabilities.

Some points of note:

Typically you own the customer relationship if you’re delivering the full service. If your offering is part of a full service and you are not the prime-contractor, then you may not have a direct commercial relationship with the client.

Finders Fees and Commissions are payable on successful sale and cash in the bank, but the timing may vary for Finders Fees just to keep it simple.

Sharing Commissions may be required between your sales people and different types of partners. This should be clearly defined from the outset to avoid any confusion or conflict. You need your sales people to see the value in working with partners. Your commissions must be defined accordingly.

It would be interesting to hear how companies balance sales people’s commissions and shared responsibilities and commissions with referral/reseller partners?

I had a meeting this week with one of my client companies who are at the leading edge of the industry with their expertise and technology. They really have a tremendous market opportunity. Talking to the board members and key individuals of this small innovative company led to addressing the question:

“How we best capitalise on this international market opportunity in the marketplace?”

“We can target the market directly and talk to 30 of the relevant companies. This will definitely produce more than enough consultancy and follow on technology sales to establish us in this space.”

“The downside to this is that once we get into delivery mode it will tie up the key people very quickly and it’s hard to keep selling to continue to grow and we really only have a limited window of opportunity here”

My thoughts: “sell direct, but include securing strategic partners in your sales process.”

Then “If we can sell direct, why should we consider selling through strategic partnerships?”

How about the following reasons for selling through corporate partners:

1. The offering is defined and easy to explain. The benefits can be communicated easily. Partners will understand quickly and see the opportunity quickly.
2. Reduce Cost of Sales - You could partner with organisations who have strong commercial relationships with your target clients. They can get you straight in the door on a commercial basis, thus greatly speeding up the sales process.
3. Focus on Your Strengths - You have a limited window of opportunity before other organisations establish themselves and take over your opportunities, so there is an element of land-grab working with your selected leading organisations. They may deliver the bulk of the services, but at least you can sell the premium services and grow your team accordingly and sell software licences also.
4. Access to larger sales force - Partners will present and sell your offering in their market far faster than you can. They are more established and in the market sector and/or region you want to be in.
5. Access to broader market - You can’t be everywhere at once, but you can build up a partner network to get you into key sectors and regions.
6. Increase revenue sources – you cannot have the full pie from each customer, but should target to have a more premium piece of the pie from many customers
7. Increase licence revenue growth – increased number of consulting customers brings more software licence revenue opportunities
8. Increase shareholder value – a wider spread customer base means a more stable business and growth path, thus increased business potential and increased shareholder value.

Besides, if the company’s strength is not in sales, why not let other people sell what we do. We can always sell direct as well.

Donagh Kiernan, Maidsfield Associates

Internationalisation is the biggest single challenge facing the Irish Tech Sector today. Having ambition in Ireland, means you’re looking international quickly. Irish Tech companies almost immediately face great challenges to make their business successful.

On Tuesday the 29th of September 2009, between 10am to 2pm at the Hampton hotel in Donnybrook, Dublin 4, we invite CEO s of Irish Technology Companies to join us - Register Today, limited to 30 attendees.

The event will present talks from leading International and Irish experts, case studies from successful indigenous Irish Technology companies, and an opportunity to discuss the challenges and pitfalls of the International business landscape with your peers.

On the back of their recent partnership announcement Donagh Kiernan of Maidsfield Associates, Niall Devitt of Beyond the Boardroom and David Brock from Los Angeles based Partners In EXCELLENCE along with guest Kevin O’Leary CEO of Qumas, the internationally successful Irish software company, will present and discuss how Irish technology companies can to succeed in international markets.

The Partners In EXCELLENCE, Beyond the Boardroom and Maidsfield Associates Strategic Partnership’s focus is to help Irish Technology companies accelerate the results they achieve through their Internationalisation efforts. The partnership brings together experience and track record in helping companies successfully expand globally. Leveraging the capabilities to access new regions, markets, develop new channels and alliances; this partnership will help Irish Technologies improve the results they achieve in competing in a global market.

Whether your organisation is seeking to go international or already trading abroad the internationalisation partnership can assist you to ensure you achieve the highest levels of performance and the best results possible.

Together, Maidsfield Associates, Beyond the Boardroom and Partners In EXCELLENCE have helped Irish and other organisations achieve tremendous results in Internationalising. Organisations like Qumas, InnerWorkings, Decare Systems Ireland, Helix Health, Dolphin Software, Enterprise Ireland, IBM, HP, Canon, Motorola, Ericsson, Dassault Systemes, NCR, and others.

Timetable

10:00 Arrive, Coffee and Registration
10:30 Welcome and Introduction - Donagh Kiernan & Niall Devitt
10:40 Corporate Partnering into Markets - Donagh Kiernan
Guest: Kevin O’Leary, CEO Qumas
11:20 Hi Tech Globalisation Options - David Brock
11:50 Internationalisation Workshop - facilitated by Niall Devitt
Breaking into roundtables / groups and discussing internationalisation challenges and potential solutions
13:10 Lunch and Networking
14:00 Close

Attendees are limited to 30 - register today

To continue from the post “Why Good Strategic Partner Fit is Imperative – part 1“.
The real cost in getting it wrong is opportunity cost. Basically the lost time and opportunities in the time spent working on something that doesn’t produce. There are a number of simple things which help in building a corporate partner relationship and making it successful if you look for them and plan for them at the outset.

Parrt 1 of this post was learning why partnerships fail. Looking at the flipside of this, why do some Corporate Partner relationships work?

1. Know your prospective partners. You can tell much about a company in how they communicate. This is why Blogging and Twitter has become so prominent in building relationships. In reviewing a company’s website, blog, annual reports, press releases and general press you can find out pretty quickly if they fit the type of a company that you would like to do business with.

2. The product was good and the company really knew their customer, why they would buy and had the sales materials to back it up. They clearly had good track record in selling their solution and knew their market space

3. The market quickly saw the value in the product and clearly understood why such a corporate partnership made sense

4. The initial training, both product and sales, was very professional and enabled the partner company to be more effective faster

5. The on-site pre-sales support for the first number of opportunities was a great start and it really showed commitment to the partnership. A little hand-holding goes a long way

6. The multilevel relationships between the two partnering companies is great. With regular communication and occasional face-to-face meetings, at CEO and Divisional Head level, VPs of Sales, Marketing, Implementation and Support. Each level understands how each-others business works and it works together. Feedback works at many levels to make up for the missing direct connection to the customer

7. From the outset we all knew the expectations and we knew our responsibilities and with regular calls and meetings with straight-talking and supportive management between the companies, everything was clear and issues were dealt with swiftly. The joint market and customer focus brings clarity every time. Everyone understood that the opportunity was worth the investment.

Much greater success in corporate partnering can be achieved with better understanding and analysis, and I don’t mean over-analysis of what your business really requires and what you expect from a prospective partner.

All to get a better view of whom you should partner with and apply your time and energies with the right companies. Not every company that approaches you is the right one. Its good to be sought after but it better to spend time with the good-fit partner companies.

In Maidsfield, we work to start calling your prospective corporate partners within 5 weeks of initial engagement.

Watch out next week where we talk about how we analyse your target market with our “Ecosystem & Trends Summary Report”, combined with lists of target customers and prospective corporate partners.