Rules Of Engagement

The best run organisations are usually characterised by the quality of their people, processes and relationships. But in today’s frenetically changing ebusiness-driven world, smart enterprises are also looking outside to ensure they get the local and global market positioning they need to succeed.
Companies are forming alliances with their trading partners, strategic suppliers and service providers. They are looking to wring the most out of these alliances by maximising the potential of the epartnerships they create.
But while this now is rapidly evolving competitive strategy, it is still in its infancy in New Zealand. Companies are, however, working globally to identify key alliance partners, and then investing both time and money to establish processes for developing and managing an effective alliance model.
Globalisation, deregulation and technology innovation have dramatically increased competition in most industries. To remain competitive companies are outsourcing to reduce costs, increase efficiencies and refocus resources. But alliances and epartnerships don’t just promise to cut costs and boost efficiency. They offer the prospect of generating and tapping new and additional sources of income.
New Zealand is, it seems, inching its way up the knowledge economy league table and becoming more prepared for ebusiness, according to recent analysis published by IT industry monitor IDC. It has moved its world ebusiness ranking from 18th to 16th place this year among sample of 55 nations.
New Zealand is no longer consistently falling behind, according to IDC’s Auckland-based consulting manager, Michael Cranna. “While we have some way to go before the halcyon days of 1996 when we were ranked inside the top 10, this is only the second year since 1996 that New Zealand has moved back up the table.”
The picture is not entirely rosy, however. Now that the dotcom bubble has burst, sustainable growth in revenues and earnings is paramount. “Our ISI [Information Society Index] forecasts to 2004 show New Zealand to be peaking this year, then slipping one place every year to be down to 20th in four years, with rapid expansion in Singapore, Taiwan and Korea the main cause. If we can’t match those countries, next year will be different story,” says Cranna.
So how will companies in New Zealand maintain their forward momentum in the battle to capture more ebusiness? The answer, according to some, is PRM – partner relationship management.
It might be yet another management acronym but it is rapidly becoming big business. But what does PRM really mean?
According to Mark Barrenechea, author of the recently published e-Business or out of Business, Oracle’s roadmap for profiting in the new economy, “PRM is strategy for managing indirect channels in relation to the overall business enterprise.” It is, he says, “an adjective for software, it designates applications intended to help company manage its partner channels”. It is designed to “increase the effectiveness, with which channel partners can sell goods and service customers”.
Having the right software is obviously only one aspect of PRM. Key alliances are forged after extensive joint planning around overall strategy, specific market sectors, accounts and also individual opportunities.
So how do companies avoid partnership breakdowns? After all, issues could easily develop around dividing the value of an opportunity, shifting priorities and separate strategies.
Dealing with ‘co-opetition’ – working together closely one day and competing fiercely the next – is always an issue, says Paul Cook, senior vice president at Cap Gemini Ernst & Young. “We have large number of alliances with major hardware and software vendors, and in some cases with service providers. The majority of these are non-exclusive. We will be partnering in one situation and competing in another. We haven’t had any partnership breakdowns as such – perhaps some realignment of the level of interest and investment to reflect the commercial opportunity,” he adds.
The initial stages of setting up an epartnership are obviously crucial and, if managed properly, can minimise problems at later stage. Todd Irving, director of ebusiness at Compaq explains the process. “We treat epartners in much the same way as we would handle normal partnerships. We have specific templates, review forums and ‘opportunity owners’ that we use to qualify, categorise, agree and then establish what we term ‘emerging’ partnerships. Compaq runs channel and solution review boards to review the operations of existing partnerships and to consider new ones. We also run channel and solutions alliance programme both internationally and locally to support new partnerships.”
Established companies attract new partners with their name, credibility and branding, the global reach of their marketing and ebusiness channels, and their business and technical support. “New ventures or epartners come to Compaq as much for how we can help them drive forwards and overcome obstacles as any other advantage for see for us,” says Irving.
Other companies in the IT industry echo the two-way nature of partnerships. Last year Unisys won five year NZ$50 million information technology outsourcing contract with Clear Communications. Unisys designs and builds infrastructure services and supports existing mainframe, server, local and wide area network and desktop operations for Clear corporate IT systems.
“Unisys’ expertise in creating better value through shared services – as well as the company’s access to global best practices and technical knowledge – are reasons for choosing Unisys to manage our IT operations,” says Graham Walmsley, IT director at Clear. “This type of partnership en-ables Clear to focus on telecommunications innovation and growing its [core] business.”
In June last year Unisys announced that it would use Clear’s fibre optic network as its preferred method of delivering its application services provider (ASP) service in New Zealand. Unisys promotes Clear’s service as its preferred platform and Clear identifies opportunities where it can sell the Unisys ASP programme to its customers. “Ultimately it will be the shared customers from each business who will reap the benefits of this relationship in an expanded and more cost-effective service,” explains Walmsley.
More cost-effective service was one of the reasons xtra and Yellow Pages went to the next step with the launch of bzone.co.nz – website designed specially for New Zealand’s small to medium business community. The new site contains comprehensive offering of business news, products and services. It brings together information, advice and business tips across 12 channels ranging from start-ups to venture capital.
“New Zealand businesses use the internet to find business news and information that is applicable to them. So far most of that online information has come from overseas or from specific companies promoting their own wares,” says Ralph Brayham, general manager for xtra business. “We observed trends in the small to medium business market for more than year to make sure the business website we developed was relevant and easy to use.”
Bzone will continue to develop to meet the expected growth in demand for more complex offering. The bzone team is working on the next stage of its development, which will include offerings such as hosted software applications. Hosting options will allow users to pay per use for essential business tools such as payroll and GST systems rather than buy software outright – marketing strategy now being advocated by Microsoft.
Telecom recently announced that its internet service provider (ISP) xtra Ltd has been separated out and is now stand-alone wholly owned subsidiary. The split will simplify the contract arrangements of xtra’s partnership with Microsoft and allow others to take up strategic positions in the business.
Alliances, say the advocates:
• reduce risks;
• enhance rewards;