August 10, 2011
I’m in Las Vegas attending Infosys’s Connect 2011 client event, and one of the recurring themes in sessions and side conversations has been the nature of Strategic Partnership. The phrase risks becoming a meaningless cliché, so I was interested to research what it actually means to Infosys execs and clients. I got some interesting, varied perspectives.
A large CPG company’s central IT group described its interpretation in a couple of sessions. It demands, among other things, a strong cultural fit, a commitment to win:win solutions to problems, and regular meetings with partners’ CEOs. This group has 12 “strategic partners” who get a lead role in a specific area, but may not even be considered in other areas, even though they have good solutions in their portfolio. I might argue the semantic point about whether this means they are merely ‘important, at the moment’ rather than ‘strategic’. However, the key point is that the two parties’ commitment to making the partnership work creates a better, stronger commercial framework than any legal agreement could deliver.
Raj Joshi, MD of Infosys Consulting, described his group’s Value Realization Method (VRM) that formally tracks each project’s expected business benefits from the initial project business case through design and implementation and onto ongoing value delivery. Joshi stressed the importance of shared incentives, such as risk/ reward sharing commercial models, in ensuring projects’ success.
Contrast this with traditional software companies that demand money up front and refuse to accept any of the risk that a product may under-deliver, or even fail to get implemented at all. Many Infosys execs tried to excuse this contrast by distinguishing their offerings from traditional software products (they don’t want to upset their own “strategic partners”), but the dividing line is increasingly blurred. For instance, Infosys’s products, platforms and solutions division will look to buyers very much like a software company, albeit offering flexible contracts based on business metrics rather than traditional commercial models.
Bottom line: these examples echo the trend I highlighted in my Software Pricing And Licensing Trends 2011 report, of technology providers having to prioritize customer success over revenue recognition. We’ll be returning to this theme of strategic partnership and what it means at our Sourcing & Vendor Management forums in November. I hope to see you there. In the meantime. please tell me, what does 'strategic partner' mean to you and your organization?