Alliances and Partnerships: Getting By With a Little Strategic Help From Your Friends
When I was at Symitar, I was constantly approached by vendors who all asked me the same question: How do I become a Symitar business partner?
It seems to be the common thinking among fintech vendors that if they can just team up with a big core processor, the gates of heaven will open up and … well, I don’t really know where I’m going with this metaphor, but you get the picture. They think great things will happen.
The Path to Success
And sometimes they do. SMA Solutions (full disclosure statement: a customer of mine) is a Symitar business partner for both its OpCon and Ascern products and from what I’ve seen, the partnership has been very fruitful for both parties. But for as many core partnerships that I’ve seen blow it up, I’ve seen at least as many completely fizzle.
What makes the difference between success and failure?
I can use SMA Solutions as an example. I think there are two things that make SMA’s OpCon a high performer as a business partner product:
It’s a product that actually makes Symitar’s Episys platform better. Obviously you can run Episys without OpCon, but those who use OpCon can’t imagine life without it.
OpCon is truly a best-of-breed solution. There are a lot of job schedulers out there, but none that I’ve seen can touch OpCon in terms of total cross-platform IT automation.
It’s important to keep in mind, too, that when you’re the subordinate partner in such a relationship, you’re always going to give up something – and I’m not just talking about revenue. I’ve seen partnership deals structured where the core vendor takes exclusive responsibility for sales. The problem is, that core vendor’s sales team may be pimping a hundred or more different products and unless yours is a big moneymaker, it may not get the love you think it deserves.
Consider the Alternatives
Fortunately, Symitar had another option: its Vendor Integration Program (VIP). IMHO, VIP is nothing short of brilliant. All core vendors offer some sort of program for third-party product integration. However, with the exception of VIP, they are all very exclusionary. Specifically, they wouldn’t dream of allowing in a vendor whose product competes with one of the core provider’s products.
Not so with Symitar’s VIP. They’ll let any vendor in that has a client sponsorship – even if that vendor competes directly with one of Symitar’s ancillary products. Symitar recognizes that clients are going to buy what they’re going to buy, no matter what. VIP creates a win for everyone involved and also puts a little extra coin in Symitar’s pocket. The vendor gets a certified integration and they’re name associated with Symitar – plus they keep control of the sales process and don’t have to share any revenue.
What About Peer-to-Peer?
As I mentioned earlier, third-party vendors are always anxious to partner with a core processor. What’s always baffled me is why more third-party vendors don’t partner with each other in some sort of a peer agreement.
Think about it. One reason a core partnership is valuable is because it assures the financial institution that what they’re buying works with what they already have. For example, if a vendor is partnered with Fiserv, the Fiserv bank or credit union knows the product will work with their core platform.
So why wouldn’t this same logic apply to two third-party products. The ABC Widget Company teams up with the XYZ Dongle Company so that their widgets and dongles integrate well. Then when ABC’s customers go shopping for dongles, they know the smart money is on XYZ, and vice versa. Seems simple enough.
If you got three or four related vendors teamed up, you could really create a juggernaut. At least that’s the way I see it.
It’s Still a People Business
The right business relationship can give your company a real strategic advantage. Maybe that’s the reason that strategic alliance is one term for such relationships. Unfortunately, most companies I’ve encountered manage these relationships with a very tactical hand.
Maybe strategic alliances are handled by the VP of sales. Maybe they’re not handled by anyone in particular at all. How can you expect to create strategic alliances if you don’t approach them strategically? If you’re going to take this seriously and really leverage your business relationships to their maximum potential, you need a specialist – part artist, part technician and part BSer – somebody who knows how these relationships work and more important, knows how to make them work.
Somebody might punch me in the head if I use the term “paradigm shift,” but let’s just say the right relationship can change everything. Devote the resources to strategic alliances accordingly.
That is all.