How CRM Learned to Partner

Boston-based marketing and distribution channels consulting firm Savatar, a member of the WPP Group, fully committed to PRM several years ago with the acquisition of MSI Consulting Group. "MSI focused on setting up channels for big technology companies," notes Savatar president John Marcario. "That acquisition bolstered our distributor channel capabilities."
Similarly, the co-founders of VisionSource Consulting in Salt Lake City, UT, Ryan Olsen and Craig Condie, began focusing on PRM about four years ago, after they had completed a vendor analysis for Novell of vendors offering PRM functionality and decided to consult in that field themselves. Their business has grown steadily ever since. "For us, PRM started out as a regional market," says Olsen, "but now it's become national."
On the client side, the earliest adapters of PRM were the telecom and technology sectors, which typically generate as much as 90 percent of their sales indirectly. HP, Cisco Systems, Verizon, IBM, AT&T, BMC Software, Sprint, and Compaq are among early users, and several of these companies have embraced PRM in a big way. Using Siebel's eChannel software, for instance, Compaq has put together a network of 60,000 partners and 20,000 users in 50 countries.

More recently, other industries have begun to turn to PRM solutions, in large part because of the increasing importance of indirect sales. Scott Creighton, general manager of partner relationships for Siebel, cites a Booz-Allen study showing that in 1995 only 15 percent of all corporate revenue was generated indirectly. "That's increased by 5 percent a year, so today more than 40 percent comes from indirect sales," he notes.
Many consultancies that started out working with high-tech clients have now expanded their reach.
Savatar, for instance, has applied some of the channel implementation capabilities it acquired with the MSI purchase in working with clients such as Lipton Foodservice and Verizon.
With the slowdown in technology, VisionSource has expanded into new markets as well. "We initially targeted the high-tech sector," says Olsen," but that's really changed. Now we are focusing on insurance and banking, with solutions they can use to better leverage their sales and marketing personnel."
Today, a number of major companies outside the tech arena, such as Maytag, Bank of America, Kawasaki Motors, Fidelity Investments, Allstate (with its agent network), American Express, and Hartford Insurance, are purchasing and implementing PRM solutions. They often are replacing their now-outdated extranets in the process. "Today, you have traditional organizations, such as insurance companies, that sell through independent agents using PRM capabilities to support their partner relationships," says Matthew E. Johnson, vice president, readiness practice, Akibia Consulting. "In addition, there are businesses such as Barnes & Noble that use the Web-based commerce model and rely on PRM capabilities to connect with suppliers and other business partners."

Different Routes

Consultants pursue a variety of approaches to the PRM market, depending on their areas of expertise, the vendors and integrators with which they work, and the other practice areas in their consulting portfolios. Seurat, a consultancy headquartered in Waltham, MA, for example, takes a holistic view of relationships, asserting that the combined value of a company's relationships with partners, customers, and employees represents a major portion of its market value. "We're a relationship capital company," explains Managing Director and Chief Marketing Officer Russ Maney. "We focus exclusively on maximizing the value of our clients' relationships. That's how we distinguish ourselves in the marketplace."
Working with a major U.S. bank recently, Seurat segmented and profiled its partner base to support prioritized targeting, identified key partners and retention factors by segment, and then developed relationship strategies and value propositions for target strategies. In the end, says Maney, it provided major revenue and cost savings opportunities and enabled the bank to better leverage its partner channel. The client is now developing a pilot PRM program.

Savatar focuses on strategy as well as tactics and implementation, working with the client and a vendor to put CRM/PRM solutions in place, tracking performance, and measuring ROI. The firm recently worked with Lipton Foodservices to define its overall CRM/PRM technology strategy and identify business process and IT requirements. "You need to drill down into all the business processes to see what needs to be changed or improved to support the system," Marcario  explains.
Based on the business process review, Savatar defined Lipton's CRM/PRM capability requirements, managed vendor selection, and planned the architecture and systems rollout, with the result that Lipton was able to realize a quick payback in key areas like marketing material fulfillment.
In working with its clients, VisionSource also puts heavy emphasis on laying a strong business process foundation for any PRM solution. "If an existing business process is broken, digitizing it and putting it into the system isn't going to fix it," says Olsen. "We try to take a look at how business processes are working and then offer best practices solutions and possibly some re-engineering to optimize the effectiveness of the solutions."

What Works, What Doesn't

No matter what their approach, consulting firms have learned that there are certain keys to launching a successful PRM program. For starters, it's critical to get buy-in beforehand not only from the client, but also from the client's partners. "We usually try to make existing partners — especially key partners — part of the interview process for designing the system," Foley explains. "That way, they feel it's something they've asked for."
"There has to be a value proposition for the partners," adds Russ Maney. "And it has to be clearly defined at the outset."
Not getting that buy-in can create major headaches.

Akibia's Johnson cites an instance in which an insurance company failed to clearly define the benefits that would accrue to underwriters from a PRM system it was setting up. "The underwriters felt threatened because they thought the company was using automation to circumvent them," he explains. As a result, the system went unused and ultimately had to be shelved.
Getting an up-front buy-in is especially important with a multinational client's system where multiple cultures are involved. "Too many times, a U.S.-centric view of a program can cause irritation and resentment on the part of the non-U.S. stakeholders," says Johnson. Consultants working in this environment need to be particularly sensitive to focus on the special requirements of non-U.S. participants.
 The good news here is that some of the leading PRM vendors have already zeroed in on some of the major issues in implementing a multinational system. "Our products come in 20 different languages and currencies," says Siebel's Creighton.
Another key has to do with taking on too much. One of the major mistakes PRM consultants made early on was to try to provide solutions across the entire enterprise. "With PRM, that's a little like trying to boil the entire ocean," says Marcario.
Today, when most companies are extremely reluctant to cough up major financing for big, long-term technology projects, consultants have generally adapted a modular approach that yields a short-term payback. "We're taking a piece at a time, building an ROI, and then going on from there," explains Olsen.

In conjunction with Siebel, Inforte has formalized this incremental, quick-start approach with what it calls the Rapid Alliance and Channel Enablement (RACE). It includes a free, one-day diagnostic to determine a potential client's PRM needs; a fixed-fee, fixed–time frame proposal for rapid implementation of Siebel's eChannel solutions; and PRM strategy recommendations and change management guidance as required. "We commit to a dollar number and a number of weeks for implementation," Foley explains. "If we miss the boat, I'll add bodies to make up the difference at my cost."
Foley claims that on average, Inforte is able to deliver PRM solutions in from eight to 12 weeks. "Rockwell required 11 weeks, as an example," he notes. And if the client decides to add functionality or make changes after the initial agreement has been set? The added costs go on the client's tab, Foley says.

Signs of Maturity

To date, most of the PRM consulting efforts have been carried out by small and midsize firms that typically saw this as a niche they could carve out for themselves. "We felt that as a mid-tier firm, we weren't going to get mind share from the big CRM vendors, so we passed on that market and focused on PRM instead," says Marcario.
Now that PRM has become a big-ticket item that ultimately impacts the entire enterprise — and must be integrated with both existing CRM systems and the back office — the big integrators and consultancies are getting ready to move in. Siebel has been working with Accenture, Deloitte, and PricewaterhouseCoopers on PRM initiatives for more than a year, says Creighton. "Now they're ready to go at it, offering PRM either as part of their CRM portfolio or as a lead industry practice," he asserts.

That, of course, isn't good news for the smaller firms that have already paved the way in this new technology sector. But they can take heart. Frontline's Thompson says that only 5 percent to 10 percent of American businesses have implemented packaged PRM solutions up to now, while in Europe the penetration level is even lower.

There may just be work enough for everyone.