What is Partner Ecosystem in simple terms?
To demystify the Partner Ecosystem, it is all about covering the market through different channels, and creating an ecosystem that can significantly enhance the value of the Products or Services offered by the Principal, to the end customer, by innovating or delivering value added IP around the Product offered.
No one person or one company can do it alone. So, the Principal engages a suite of partners who can not only Resell or Co-Sell the product on behalf of the company, but can also offer Services over the Life cycle of the Customer to help the customer extract full value from the Product sold by the Principal.
With Digital Transformation impacting many businesses, it calls for a transformation in the way the Principal and the Partner mutually engage and provide their deliverables to the end customer. The type of the Partner required varies with the type of Product sold and its complexity, and usually, it is an organization and not just an individual. For example, a Product that is highly commoditized and does not involve any value addition, follows a distribution model, whereas a Product that needs value addition while selling, follows a Reseller model that is normally packaged and sold for an Industry or a target customer segment.
On the career front, Partner Ecosystem provides a huge opportunity to people to become certified in this space and sell on behalf of the principle which can well be a lucrative career option.
What are the ways in which Partners can engage with the Principal?
The Ecosystem of Enterprise Software Vendors make money in a number of ways. One, they Resell the Software and, in the process, are compensated with Resell margins. Two, they offer Services to deploy the software and support it over the customer life cycle. Three, they build their IP and innovate around the Software and Business Processes to have One-time and Recurring Revenues. In the process, the Partners may embed the software into their offerings through an OEM Contract.
How should partner ecosystems evolve for them to survive in the present and to thrive into the future?
- They must have a strong customer focus that offers them a compelling business value proposition
- They must have very effective relationship acquisition processes that integrates Digital Marketing into it
- They need packaged templates to generate demand and to create repeatable volume business which is a good way to stay relevant
- They require a sales methodology which is more prescriptive and follows the Challenger Sales Methodology that always offers a ready-made and compelling Business Case for the customer to act NOW
- They need long-term contacts that provide annual recurring revenues
- They need to focus on IP Building with add-on Solutions and Extensions leveraging the PaaS (Platform as a Service) capabilities offered by the Principal
- Lastly, a remote delivery mechanism which is cost effective and assures faster delivery would be an added advantage
In this era of The Cloud, what are the areas of profitability for the partner ecosystems?
First of all, the Ecosystem has to make a conscious effort to recognize the fact that Profitability models in the Cloud world are significantly different compared to the On-Premise world. The Cloud world involves quicker deployment (in weeks versus months and years) and hence the Services Revenue Streams are significantly lesser. The Partners need to separate out their Cloud business from their On-Premise business strategically and operationally, and start making changes to focus on driving Recurring Revenues built on Customer Centricity and IP built around innovation.
How can the relationship between the principle and the partners move from 1+1 =3 to 1+1=11?
Any relationship is based on trust and to build trust there must be win-win with a very structured Program that defines the Partnership Gives-Gets. There has to be:
- A smooth and frictionless development journey where the Partner can innovate, build their IP by having access to experts from the Principal
- An ability to easily monetize the IP and take the Products to the market
- Seamless and effortless User experience for the Partner working with the Principal
- Be compensated well to stay profitable and grow with the Principal
What can Enterprise Software Industry Partner Ecosystem learn from other industries and their distribution systems?
Yes, Cross-pollination is a great idea and am sure that the Ecosystem of Enterprise Software vendors can learn from other industries. Few good examples that merit consideration are:
- The “Build and Operate’ model of the Real Estate organizations: Similarly, Partners of Enterprise Software can offer ‘Managed Cloud’ Services around Products of the Principal
- Car leasing companies offer ‘’asset-based services’ which can be a motivation to offer Services around the Enterprise Software
- The contract manufacturing/co-packaging processes of Consumer Goods Industry can be an example of how the Ecosystem can significantly enhance the Software to ensure that the end customer receives the product in a consumable form
What are the universal principles that govern Principal and Partner relationships?
To be precise, what I mention below are a set of guiding principles for any Partner Relationship. And if adhered to, it can make both parties successful and satisfied.
- A clear Engagement Model that spells out rules, support and a framework for Partners to get recruited and grow
- Clear Deliverables and Governance in terms of what each party will deliver with milestones
- Partner compensation & Profitability based on performance and deliverables
- Customer Focus that always puts the customer first
- Solid Support Services from the Principal to the Partner for onboarding and sustenance
- An Innovation Platform for Partners to build their IP and monetise