As talk fills the industry with the need to partner up to increase profitability, ARN tests the theory with resellers, assessing the pros and cons of channel collaboration.
The term collaboration is ambiguous in its definition, meaning many things to many businesses.
For some partners, collaboration can be used to access specific capabilities required to complete specific projects, while others view it as an on-going business asset to further growth.
Yet amongst the crowded channel in Australia, resellers remain who wouldn’t dream of joining forces with potential competitors, for fear of losing out on future deals.
But perhaps it’s a game for the younger generation of businesses, with Sydney-based systems integrator (SI) and consultancy firm, NK2IT, open to bringing in technical expertise to deliver specific solutions to customers.
“Partnering is vital because without that particular capability or personnel we would not be able to get that project across the line,” NK2IT managing director, Nitin Kuchara, explained.
In leading a company four years of age, Kuchara said during the early stages of the business, finding the right partners to provide these capabilities proved to difficult undertaking, but as relationships were built, the barriers to collaboration dropped.
“Initially I had to work with vendors and distributors who are a great resource because they know which partners play in a particular space,” he recalled.
Kuchara said at this stage in the life of the business, he would prefer to engage other partners when the need arises rather than trying to bring these skills in house.
“At this stage I am not looking to bring those capabilities in house because it will add extra cost and I feel that it may adversely affect our core business,” he adds.
Mature view
While this can have a positive impact for young guns such as NK2IT, at the more mature end of town, certain resellers do not view it in the same way as they look to bring capabilities in house.
As an Australian company with roots in the virtualisation, BEarena has walked the collaboration path when necessary, but now looks to take on projects it can complete using internal capability rather than partnering.
For BEarena managing director, Darren Ashley, however, tapping into like minded companies with similar experiences and skill sets proved a key factor when joining forces.
“During the early days I was fortunate enough to engage at a managing director level with a number of other resellers who were flexible enough to want to partner,” he said.
“But there is a big trust issue. I would say in 90 percent of the cases partnering was successful but for the other 10 percent, once the first project was complete there was the question of who was priming the deal.
“It’s crucial for both parties to feel they are getting the value out of the engagement.”
Ashley explained that in the circumstances where deals were unsuccessful, typically the other party had felt they had carried out the majority of the work and therefore, any subsequent engagements should be directed towards them.
Unsurprisingly, this caused tension because as Ashley puts it, BEarena “always puts the customer relationship first”, yet this not always the case for other partners.
In the vast majority of cases however, this worked in BEarena’s favour, and remains a crucial component in growing the business to the point it has reached today.
“That is how our business started,” he recalled. “We were purely a white-label professional services organisation and used to work with a number of companies.“It was beneficial for us because they didn’t have a professional services organisation and we were able to deliver that so it was a win win scenario.”
Citing a few select cases, Ashley said BEarena engaged with the channel on deals where they brought the relationship, and the external partner brought the expertise.
“But it’s all about the personalities involved and honouring commitments,” he explained.
“When you are trying to grow a business, any opportunity is attractive. What we have found in the process of growing our business is the most profitable engagements are the ones that we are proficient in.
“For the ones that don’t, we’re not as profitable because we spend a lot of time learning how to engage with another partner and how to manage that relationship.”
During previous engagements, Ashley said the company has walked away from such opportunities when sufficient business presented itself, and for those areas of value, the organisation has now acquired in-house skills.
“What we really want is the right outcome for the customer and even if they want to deal with us exclusively, we encourage them to contact another provider,” he added. “We have become a lot more focussed on what we do and what we don’t do.”
Customer requirement
While Ashley’s notion of meeting customer requirements sounds cliched, for most partners in Australia, collaboration is a business consideration fuelled by such a requirement or demand in the market.
NTT sales director, Joseph Vijay - in housing a strong customer-centric strategy - said the decision to work with another partner in certain circumstances is nothing new, with the IT provider recognising that combining capabilities helps create new revenue streams, lower costs and minimise risk.
“We have always chosen to collaborate with partners who are able to help us deliver outcomes for our customers, so collaboration between partners is not a new concept,” he said.
“It’s important for NTT to be prepared to address new requirements so we are always proactive with identifying and investing in the right partnerships.”
Through ironing out a customer-driven decision strategy, Vijay acknowledged that whilst there may be an overlap in capability with a partner, the customer leads the way in choosing the best solution and relationship for specific needs.
