Business partnerships, no matter how well they are helped along by inspired internet inventions, tanked-up telecommunications systems, and courteous collaborative software are essentially (thankfully) still about people. It takes human interaction, cooperation and agreement to form business alliance. And it’s human, not technological qualities that ensure whether or not an e-business partnership will last the distance.
As you’re sure to have noticed, the adoption of “e” applications, technologies and business models has transformed traditional business processes. Companies are increasingly looking at e-business with view to simplify, accelerate, automate, globalise, nationalise and rationalise business processes and strategies.
And it’s all happening despite the so-called “dot-com crash” because businesses are learning properly planned and executed e-business systems can and will improve business efficiency, profitability, and competitive advantage.
With e-business, there are almost no time barriers to sudden success or threat. In matter of weeks competitor can be using e-business to market globally, to increase the efficiency of supply chain, to create new business channel, or to drain every last drop from new marketing opportunity.
Businesses that want to compete in this environment simply cannot afford to take their time building up e-business skill from within. That means finding IT/e-business partners who can analyse e-business need and deliver projects on time and within budget.
Few companies can pull an e-business project together through simple supplier/customer relationships with their e-business partners. To get e-business right requires significant time and management investment on the part of the e-business specialist and IT vendor – which is why these companies seek long-term mutually beneficial e-business partnerships with their customers as opposed to short-term supply relationships.
We spoke to several partnered companies for this article and found that they all wanted the same thing from their e-business partnerships – business benefit through the e-enabling of their business processes or specific systems. They also all agreed that for such partnership to work there needs to be integrity, trust and professionalism between the partners. And that can sometimes be difficult to pin down.
Partnership problems
Partnership problems and the potential for disaster are perhaps nowhere better illustrated than by the true experience of three New Zealand business partners – two IT/e-business specialists and one very important customer. The e-business specialists, (who wish to remain anonymous so we’ll call them CFC for Coal Face Corp and BWL for Big Wig Ltd) teamed up 12 months ago to develop and deliver an e-business solution to prominent customer in an industry sector they specialised in.
CFC, small local company, and BWL, multinational, had previously partnered, and had successfully delivered joint IT and e-business solutions to customers in the same industry sector. The large VIP customer had both thoroughly evaluated before choosing them. Agreements were drawn up, and the work began.
Shortly into the project the customer informed CFC that BWL had verbally promised that CFC would deliver extra work not outlined in the written agreement.
The customer also believed the extra work was part of the initial contract price. When CFC challenged BWL, BWL admitted it had indeed made the promise in an attempt to win the customer from another competitor. It had not told CFC, which was now being asked to provide six months worth of work for no extra cost to the customer.
CFC was understandably angry. It was small local company and could not afford to honour verbal promise made without its knowledge. CFC was not contractually bound to the extra work, but in the interests of the partnership offered to do it provided it would be paid for it. However the customer refused this solution.
Anxious not to lose the customer, BWL then threatened CFC with partnering with another CFC-type vendor if CFC did not deliver the extra work for free. CFC held its ground and the three partners came to very unpleasant and expensive stalemate. Despite consultants being flown in from around the globe to help the partners sort it out, they couldn’t. The customer claimed BWL had misled it and its management was divided as to whether to dissolve or keep the partnership, and the trust between CFC and BWL was lost.
Surprisingly, this real-life partnership is now slowly moving forward because the partners have since all realised they need each other. But hundreds of thousands were lost in hours of negotiation and meetings, once secure and positive relationships were irrevocably damaged, and the reputation of the two IT partners was dragged through the mud thanks to “bad press” circulated by the customer.
Partnership power
For some managers, the moral of the above story is simple: avoid partnerships at all costs. But in today’s e-business world, that’s just not realistic any more.
So how do IT/e-business specialists form trusting and honest partnerships? And how can customers help ensure e-business partners will deliver an e-business solution whilst working with providers that in some cases, the IT/e-business specialist may be in competition with?
As we used an actual example to illustrate troubled partnership, we’ll do the same to illustrate successful one – and this time there’s no need for anyone to remain anonymous.
We spoke to IT and e-business partners Asparona, Oracle and Unisys about customer partner they all share in common – The Warehouse.
In brief, The Warehouse runs an Oracle e-business financials suite, and uses local IT outsourcing provider Asparona to implement the software and to protect and manage the data that runs through it.
Both Oracle and Asparona were established partners before being (independently) selected by The Warehouse for the financial system upgrade and now both work in partnership with The Warehouse’s IT hardware infrastructure partner Unisys, which in turn works with reasonably significant competitor, NCR, on jointly managed IT system for The Warehouse.
Don Sykes, managing director for Asparona, says carefully established and managed partnerships are necessary in IT and e-business projects today because the shape of customer organisation can be changing all the time.
“For example, The Warehouse is presently expanding into Australia and it might acquire other companies. So we might end up needing to interface the Oracle system with number of other supplier products and services. This means you have to be aware of all the elements of information systems in company and then preferably partner with those suppliers to ensure all the systems work together.”
Sykes says true partnerships are driven and defined by the customer, which looks for cultural fits between suppliers and itself. “They evaluate whether you are listening and understanding the relationships that are in place. They consider whether you perceive their staff as people. Once they feel secure, they’ll let go of the control they would have had in traditional customer/supplier relationship and the relationship will become partnership.”
Sykes says it’s crucial that IT/e-business partners are honest with each other and are able to communicate the ups and downs of their product or service. “If partner is not honest with us, it can damage our business. But if there’s reciprocal trust and integrity relationship, it can even be positive to partner with competing company.”
He says trust between IT partners is at an all-time low because it has been tough few years in the industry. “The acid test of so-called partnerships is that everyone’s now competing for limited business. Your partner can suddenly become your biggest competitor.”
He says Asparona sits down with its suppliers at the beginning of their fisca
