Published June 27th, 2007
The Partnership Trap
You don’t catch partners with the partnership trap. The partnership trap is not a physical entity. It is a belief, borne on the wings of hopeful optimism, that you can partner with another technology / software company to deliver products that better address markets, satisfy customer needs, and will ultimately make both companies more successful. Partnership is usually more than meets the eye, and in the worst cases, a major loss of time and money for both companies. However, partnerships can work.
The common denominator of successful partnerships that I have observed is the degree of coupling that is required or rather, the lack thereof.
Suppose that two software companies, Distributed Object Graphics (DOG) and Coordinated Active Technologies (CAT) each produce products that perform certain niche functions. Both are well into the sales cycle with a very large and lucrative account when they become aware of each other. The customer turns out to want a combination of their two products, and has decided that each standalone product will not be sufficient. In fact the customer may make the introduction between DOG and CAT and ask them to work together.
The executives of DOG and CAT are initially pleased and sign an appropriate MOU, LOI, NDA, or some such similar three-letter agreement to work together and respect the other’s intellectual property. As the two companies move forward, this story can play out in several different ways.
- DOG and CAT can make their two products work together by using a common, standard interface between their offerings. Development and internal test of this interface ensues, then they move to lab interoperability test. A few bugs are fixed and then a solution is brought to the customer.
- DOG and CAT need to figure out how to get both of their offerings to work as two separate applications on the same hardware platform. This takes more time and energy from both companies, as the behavior of one application can impact the behavior of the other in subtle ways (e.g., memory usage, CPU usage). The number of test cases scales multiplicatively with the test cases associated with each individual product. After a long testing cycle, the integrated product is ready, but questions remain about its stability in certain scenarios.
- DOG and CAT have to integrate at the code level. Engineers from both companies need to work closely together for long periods of time determining the most efficient and effective approach. Each company is reluctant to expose too much of the proprietary software to the other. The investment that needs to be made in this sort of solution is so great that each company is reluctant to continue dedicating their resources to the project, even though the project sorely need active management. Each company tries to get the other to do the more time consuming and expensive tasks of integration. Disagreements are frequent and tempers flare. The result (if the project in fact completes) is a solution that no one is happy with, including the customer.
Partnerships are not a magic pill that solves all problems - they result in a new product offering that needs its share of development, testing, and management. Additional resources are required. Many organizations will not realize this and will walk into partnerships that look great on paper but do not deliver because it is assumed that the resulting product comes for free.
Who you partner with matters. Make sure your partner is technically competent and has a good track record, or at least a solid reputation in the industry. Where your partner is in the world matters as well. If your partner is headquartered 10-14 time zones away from you, as is the case between North American and Asia, communication will be difficult and travel will be long and expensive. Language and cultural barriers will also threaten your partnership, so be aware of them and budget for the appropriate training and overhead. And be wary of your partner’s motives. Large companies sometimes find smaller partners to fill a gap in their product offering for just long enough to either find another partner or develop the product themselves.
The more tightly coupled the combined product offering is, the more likely that new features will lag each company’s standalone versions of the product. Additionally, defects will be harder to find and debug. If the combined product is deployed, the customer will quickly become frustrated if the two partners spend more time finger-pointing than working to resolve the issue.
To repeat the general rule, the greater the degree of integration, the tougher and longer the project will be. Don’t be fooled by statements such as “We have A and they have B, so if we combine what we have, we get A+B.” In reality you often get something less than A+B at an additional cost. In order to minimize risk in any partnership, know your partner and their motivation, make the requirements on each party very clear, and be ready to dedicate the appropriate level of resources to make the partnership successful.
