Today’s hottest products are the smartphones such as the iPhone, Android phones, Blackberry Storms and others. While these products take phone capabilities to a new level, it is the apps, most of which are provided by either formal or ad hoc partners, that make these phones highly functional and attractive to businesses and consumers.

Companies with all but the most basic products need business partners. For many, these are channel partners, those who help get the products and services to market. For more complex solutions, these are often partners whose offerings help fill in the missing elements in the value chain. Because of their importance, the process of choosing partners requires the same diligence as other product and services go-to-market processes.

Beyond finding a route to market or filling a value chain void, partners provide other leverage when selling products, services and solutions. First, partners help share the risk of any offering. Because partners have made the investments in the assets they bring to the solutions, be they solution elements or channel capabilities, these are investments and associated risks that your company does not have to take on. Partners also extend the reach of the offering. Each company has some level of influence with their own set of customers and other members of the market community. This influence can be leveraged to extend the markets knowledge of the offering or extend the customers set for the offering, even if the partner is not a channel partner.

Much has been written about solution ecosystems and their importance to the success of an offering. An excellent example from the 1990s is IBM’s OS/2 vs Windows. Many would argue that OS/2 Warp was a superior technical product. However, Windows easily won the market. While there are many reasons for this, a critical one was that Microsoft had a very robust partner program, providing much assistance to application developers to have Windows as the main platform for their products. Their aid to developers was both technical and financial. IBM, on the other hand, had the attitude of “build it and they will come”. IBM provided some technical support but no financial support. While Windows was the top priority for Microsoft, OS/2 was not for IBM. Mainframes were still king. Customers seek applications, not operating systems and with Microsoft’s approach they went with Windows not OS/2.

Ecosystem members, as part of marketing their own offerings, help pull the rest of the ecosystem’s offerings along. This provides additional channels and in the process spreads risk across the entire ecosystem. If partnerships are either exclusive or strong, they can also deny these advantages to other companies trying to build their own ecosystems.

Choosing the right partners can be complex. The goal is to choose strong partners, but ones that are complementary and do not compete with the offering’s position and goals. To do this, the first step should be to create a value chain for the solution. For each link in the chain, a list of companies that are participating in that segment should be placed beneath the link. The value chain lets you organize potential partners by function. Too often, partners are picked without thought as to how they fit into the value chain of the solution. The result is that frequently your partners are also competing with your offering in areas you didn’t expect.

Once the value chain is established and populated with market participants, the elements of the value chain should be assigned a score based upon company goals. The scores could be based on financial potential of that element, strategic value of that element or the company’s capabilities for that element. Multiple scores can and should be assigned.

With the value chain and scoring established, the elements that are of the most importance for company goals and control of the market should be the ones that should be sourced internally if possible. Those that are the least important should be candidates for partnering. For value chain elements that are considered important, company capabilities need to be assessed. If sufficient capabilities exist within the company, then those are not candidates for partners. If, however, capabilities are not sufficient to launch a winning solution, then a decision needs to be made, either find a partner or make an investment to acquire the missing capabilities.

If there are value chain elements that are not important to the market or company goals that are being sourced internally, these should be reviewed to see if they should be done by partners and the resources reallocated to more important projects.

Once the value chain analysis is complete and the elements are chosen to source from partners, a ranking of partners needs to be done for each of these elements. This ranking should focus on the chain element for which the potential partner is being considered and should look at all aspects of that company including their ability to bring additional business to the candidate solution.

With the value chain analysis complete, the solution elements are either targeted for internal development or for external partners. For internal development, if the capabilities are not sufficient yet the solution element is deemed a control point, then an action plan must be developed to either build up the capabilities or, looking at the partner list and acquire a company that has the capabilities.

For those elements that are to be considered for partners, elements with the highest priority with customers should be looked at first and the strongest potential partner that is not a true solution competitor should be the target for partnership. Going through the value chain in this way a prioritized list of partners is compiled.

A solution sourcing plan can be created using the action plan for those internal value chain elements and the action plan to engage partners for the other elements. The use of partners in this way uses company resources efficiently while not compromising the solutions value in the market. In fact it increases the solutions value by including higher value elements from partners that do not threaten the company’s ability to exert control.

A small company with a single offering, be it hardware, software or a specialized service can also apply this process to find solution companies that could take advantage of their offerings. The first step is to create a list of solutions for which the company’s offering is part of the solution value chain. The next step is to populate the list with solution companies that offer these solutions. Break these solutions down by value chain elements and populate the value chain. Analyze the solution for strengths and weaknesses by value chain element and look for the companies and their solutions that are weak in the area of the small company’s offering. This analysis gives the company a list of possible partners and it gives the information needed to approach these partners with an attractive value proposition.

Large company or small, a systematic approach to selecting partners can enhance a solution, optimize resources or find mew routes to market for a point solution. Partnering strategies have been and effective element of Microsoft’s strategy over the years and in today’s “app” driven communication environment, partnering has taken to a new level and dimension. Developing a partnering strategy in a systematic way can help make the strategy more effective and avoid mistakes that can lessen the value of the offering.

Author Bio: John Wolff is an expert on new business development, marketing solutions, optimization and wireless communications. His knowledge and advice have helped companies around the globe. Find John on the web at:John Wolff

Category: Business
Keywords: partners,solutions,optimize,channels