We begin our roundtable discussion below with a segment discussing the group's escalating midmarket ambitions.
How important to your advancement inside the middle market is your ability to partner?
Deloitte's Gerry Cunningham: I think that inside the middle market, alliances are even more important, because you need to walk in with the answer, and there's no real opportunity to try to sort it out. Most of them are looking for the answers that you've derived from your work with larger clients, which means that having an answer pre-thought-through, in essence, pulls us all closer together. And I think that this has become — as budgets have grown tighter — even more important.
IBM's Tim McChristian: Our challenge as far as teaming and partnering in the middle market goes begins with getting a common definition of the middle market. What may appear really obvious often isn't, until you sit down at the table and say, "Here's what we call it and here's what you call it, and this geography is different." Once we get through that, then the next step is, Is there enough critical mass that we can both agree to invest in a repeatable format? And that again is a challenge, too, because of, again, geographic issues, skills, locations, and everything else. So I would say that our partnering is not as far along as it is in the enterprise base, simply because the segmentation of midmarket is harder to do.
AMS's Wick Keating: It's interesting for us because the place we've done middle market is sort of local governments and things like that, but I have to tell you that our consultants are so used to big organizations that want it done their way and are willing to pay for the customization or the sort of reconfiguration that just making the mental transition to, "Okay, this is a smaller organization. It comes out of the box, it gets installed, you get on the plane and you leave" — that's hard.
CGEY's Frank Smith: We actually have a separate organization for middle markets for that very reason, and also because the solution sets don't necessarily have to be globally linked, etc., so you wind up with a subtly different set of solutions. They tend to be the same function objective, but they don't necessarily tend to be as intrinsically pervasive as big solution sets. But on the other hand, they tend to be implemented much faster. Middle market tends to be more willing to compromise. They're willing to take a solution that is quickly available.
Have you enjoyed success with the same partners in the middle market as you have had it with in the enterprise one?
Deloitte's Cunningham: Sometimes. Sometimes not. So in some specific markets where the pricing is a particular issue, no. We have other partners that we've struck arrangements with that are most cost-effective and/or have more of the functionality that's being looked for in that market. It's not to say that the same partner that we're dealing with on an enterprise level could not do it, but it's either quicker, faster, cheaper, or we figured it out with them first. Because in some cases, they will come to us and say, "We got it," and instead of trying to build something from scratch with someone else, we will work with them on a consistent basis.
The other dynamic I see happening maybe more than we have in the past is that the desire to work together probably comes from both directions or from all directions. So it's not one of us chasing the other in one form or another. I think there's a broader mutual interest in doing things together.
Alliances: The New Agenda
What developments have led to changes in technology partnering?
CGEY's Smith: Alliances have really gone from a product-centric focus to a solution-centric one. And a solution has multiple partners, multiple vendors, multiple teams that actually make up a solution stack. … So, now you're actually delivering more around well-rounded capabilities that the clients are demanding, as opposed to simply installing or implementing a package.
Microsoft's Jared Wheeler: Our interaction with a number of alliance partners hasn't really changed that much over the year, when you look at core software and other things that have been at the crux of alliance relationships. What has changed a little bit is that the relationships have gotten more specific, again around solutions, as Frank talked about. So that you're partnering on a business issue in a segment to go solve that problem universally. You're not just allied. And I think that the number of folks involved in delivering solutions has grown. The number of players that you're involved with in doing it has grown, and Frank, I think, pointed to a lot of that. I think that at the same time, that has created, rather than one or two directional alliances with one or two parties involved, sometimes three or four on a given opportunity or a given market solution.
Deloitte's Cunningham: We're seeing an increased level of partnering around building those reusable assets to go into a much broader, bigger solution. We've always been a partnering company, so we go through some cycles of how we perceive it, but alliances are certainly on the up versus the down.
Microsoft's Wheeler: In the heyday, the alliances were there to create communications channels. I think that more so today, the objective is relationships and revenue. There's a purpose for them that is very clear. Those of our partners who do well in that kind of role keep very good tabs on the relationships built and the revenue created as a result of those interactions and those relationships, and get to the point where there's a reasonably balanced scorecard of how we're doing.
IBM's McChristian: Within IBM, having the job I have is not a real popular one, because it's in the belly of the beast. We have 150,000 people who really wish that my customers would all just disappear. But the reality is, the only thing that counts is to follow the dollar. And when you take a look at where we put our budgets year to year, as far as incremental expense, the alliance organization has gotten incremental year-to-year funding the last three years.
Which firms here get the transparency
of being able to track the sell-through?
Lawson's Lou Pereira: From our side, we're tracking primarily hardware and software delivered through these routes to markets, so we have it down to the penny. From the dollars that are being influenced. When it's physical stuff, it's much easier to track how much is being delivered through various routes to market.
AMS's Keating: This is where I find myself getting involved in the accounting for IBM, and part of our challenge is that we're being asked, "Why do I need to tell you how much WebSphere license fees were part of this deal? Why do you need that?" They don't necessarily get the connection between the relationship and the metrics we need to track, and how they as a delivery organization perhaps in Cleveland or Seattle or someplace need to be reporting back. I agree, there's much more focus on the transparency and the tracking. The challenge, at least in our firm, is to sort of make that as efficient and easy as possible.
CGEY's Smith: What's the revenue track? What's the hardware burn? What's the software burn? And how do we wind up accomplishing the customer's goal while we're at it? This all has to be tracked. There's a management discipline and dictum around it. That's why we have a separate business unit specifically for alliances.
Co-moderator Wendy Lea:
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