Partnering To Grow Your Business

It is something of a paradox of the technology industry, that as programs and customers’ needs become more integrated, technology providers are becoming more specialized.

So, to provide customers with the service they need, more and more technology providers are seeking to partner with other specialist businesses.

From the point of view of tech providers, there are a number of reasons that partnering is a good idea - from allowing a company to focus solely on what they are good at, to expanding its customer base through sharing resources.

There are essentially two models for the relationship between partners and the customer, and which one is most successful mainly depends on the kind of product each partner offers.

Alpha company produces Widgets, and Beta company produces software to run Widgets. Without partnering, the customer buys a Widget, then has to spend time and effort finding software to run that widget. A partnering agreement helps all parties.

In the first model, Alpha company partners with Beta company to produce Widgets with inbuilt software. When the customer buys a widget from Alpha company, they automatically get Beta company’s software as part of the package. The customer works only with Alpha, Beta works only with Alpha, and Beta never works with the customer.

This form of partnering works best if Alpha’s Widgets absolutely need Beta’s Widget software to work effectively. While there are other companies producing Widget software, the customer needs one form of that software or other to run their Widget.

However, there are some things to take into consideration:

  • Alpha is responsible for not only its own service but also will to some extent at least be responsible for Beta’s service. Does Alpha company trust Beta company’s software?
  • What is agreed with the customer, does Alpha company represent this accurately?
  • What if Alpha company makes a commitment, but is not supported in that by Beta?
  • What are the details around intellectual property ownership?
  • Does Alpha need to respond to requests relating to Beta’s service and if so how is Alpha equipped to do this?

These issues are particularly important in a formal arrangement where Beta’s software is integral to running Alpha’s Widgets.

The second partnering model may be more appropriate if Beta’s software is merely designed to work best with Alpha’s Widgets, and makes using those Widgets easier and better for the customer. In this scenario, both Alpha and Beta may find themselves working directly with the customer and their own partnering may be closer to an endorsement of the other. As both companies grow and both Widgets and Widget software becomes more and more sophisticated, Alpha company and Beta company may find themselves working more closely together, especially if it allows greater specialization and cheaper development costs for both parties.

In all partnering agreements, it’s important for all partners to address possible problems and desired outcomes in writing, as well as stating who is responsible for dealing with the customer and any particular issues they may have. Even when there is no formal arrangement, being proactive about solving problems helps cement a partnering relationship which is beneficial to both parties.

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