challenges in implementing and managing alliances in technology industry

Abstract

Alliances are hard work. No other business combination is quite as demanding to execute or as susceptible to failure. Despite significant growth in the sophistication and seriousness of alliance practices, fundamental strategy and execution issues plague even the best efforts [10] Alliances, Mergers and acquisition and organic growth are recognized as three growth pillars of any organization. Amongst the three, alliance growth is set to witness the maximum growth rate, thus fuelling the overall future growth. Major elements of an IT sales channel are IT vendor or IT provider, channel partners and customers. One observes increasing partnering in the sales channel because IT provider does not have direct sales resources to reach out to all its target customers. Because customer needs product services bundle, one observes channel partners and IT vendors forming alliances. IT sales channel for an IT vendor today consists of few strategic partners, moderate number of tier-2 or tactical partners and a majority of resellers based on arms-length transactions. Phenomenon of increased partnering in sales channel is explained by customer s buying behavior of IT, growing influence of strong channel partners, and wider acceptance of IT across industry domain and emergence of a partner ecosystem for every IT vendor. Overall, major IT vendors have a higher credibility than channel partners in the eyes of customers. On customer buying behavior, customer on large size deals, prefer vendors to front end the entire deal Small and medium businesses prefer a channel partner spearheading the IT sales process. This buying behavior translates to push-pull forces that results in higher number of alliances between IT vendors and IT channel partners. Also, as a future trend, sales channel of IT vendors will see a consolidation of channel partners. Channel partners have to focus on niche areas if they have to break open into top tier cadre of IT sales channel of preferred vendors. Understanding these long term implications is crucial for channel partners to align accordingly. This report focuses on channel partners and different kinds of alliances it gets into. A channel partner like Wipro forms strategic alliances with leading vendors like HP, IBM, CISCO, SAP etc. Wipro also forms domain focused and technology alliances with vendors like Blue titan, Metasolv, Unisys, Symantec, Siemens IT solutions. Strategic alliances have an average life of 3+ years whereas domain focused and strategic alliances are in 1-3 year category. Wipro has 125 alliances out of which 8 are strategic alliances. Financial measure is the most important outcome for both kinds of alliances. This report is an outcome based on survey of 19 alliance managers managing a total of 56 alliances amongst themselves.