Building a Partner Ecosystem, Part 2: Partnerships with Professional Service Providers

Consider Building a Partnership Strategy for Professional Service Providers

A few weeks ago, I wrote about the importance of building a complex, ever-expanding network of partners for expansion-stage companies. However, given the typical resource constraints of expansion-stage companies, the efforts to develop a partnership network tend to come in fits and starts, lacking a systematic approach or an overall comprehensive strategy. Moreover, because partnership building efforts do not have immediate impact on the top line, partnership programs tend to be either quickly written off or narrowly focused on a very small “low-hanging fruits”(i.e. a set of potential partners that are easiest to get and to get revenue from).
By itself, this is not a bad strategy for rapid growth and immediate impact, but it can obscure the fact that there are many other types and forms of partnerships. Companies should keep in mind that there is a wide range of market participants that goes beyond the traditional sales and marketing channels that tend to dominate ecosystem partnership strategy discussion.
I started this blog series with a typology of those sales and marketing channels, and also briefly discussed the partnerships that can be built around the integration of technologies between compatible technology vendors. Today, let’s focus further on the partners whose core business is not selling actual technology products, but rather providing services around or to support these technologies.
As I have mentioned, service providers are crucial to allowing a technology company to provide a satisfying full product experience for its customers. This is true not just for enterprise business software, but also for small business application vendors — for example, Intuit’s Quickbooks product is supported by a cadre of Quickbooks’ certified consultants. When the term “services providers” is mentioned, one may typically think of the system integrators and IT consultants, but in fact, there are many other types of service organizations that live in a technology ecosystem, and all of them are important for various reasons.

Technology Service Providers

The first group are technology service providers: these are typically professional service organizations or individual professionals who work directly with the technology product on a day-to-day basis, either with the end clients, or in conjunction with other partner organizations. One can roughly break them into the following types:

1. Implementation Partners: These are consultants who help customize, configure, and implement technology products. They allow vendors to extend their reach to local markets and ease the process of adoption for complex solutions.
2. Vendor Management Consultants: These are consultants who help end customers manage their vendors, typically from setting the technology strategy, vendor selection, negotiation, and procurement.
3. Custom Development Services: These are specialists who customize and build applications or technology based on off-the-shelf solutions to serve the need of particular clients. They do not typically build proprietary solutions or own much of the IP built, and are more focused on high margin, specialized professional services billing.
4. Joint Technology Service Provider: This is a case when the professional service organization of a vendor acts as the professional service or support service group for another vendor, via a partnership arrangement. Such an arrangement can be mutually beneficial because it allows the vendors to offer support and professional services while pooling the overhead of running such organizations and gain from the economies of scale.
5. Support Service Providers: These are specialists in providing maintenance and technical support for technology products, a task that is typically best done by specialized groups of agents operating at scale.
6. Change Management/Outsourcing Service Providers: These consultants bring major change to the business operations by implementing new business workflows, reduce operating costs by shifting labor to lower cost markets, and typically will bring in new automation and management technology solutions to support their transformative initiative.

Non-Technology Service Partners

The next group can be called “Non-Technology Service Partners”: these are also service organizations who do not work directly with the technology product or sell a service that is directly based on technology products, but are important in influencing the decision of prospective buyers in the market.

1. Target Market Industry Associations: These associations (or lobbying groups) are extremely influential in shaping the perception and evolution of a technology market. In a more mature market, industry associations are powerful, entrenched organizations that hold unparalleled access to buyers and influencers.
2. Technology Standard Developers, Owners, and Enforcers: In a fast-growing or disruptive technology market, the role of standard developers/standard owner coalition is crucial in shaping the buzz around the technology, and in determining the winners and losers of the market.
3. Training and Personnel Certification Providers: Once there is a universally accepted common set of standards for technology solutions in a market, then there will invariably be a group of providers of training and certification services that help further maintain and strengthen those standards. These organizations are very important influencers and endorsers of new technology products.
4. Industry Experts Such as Industry Analysts and Test Labs Analysts: These are key influencers whose discourse on the evolution of the technology and its application to business objectives typically helps to guide major buyers toward their preferred vendors. Building a productive relationship with them will also provide the technology developer with valuable feedback from the market and a glimpse into what the future needs of the market are.
5. Technology Evangelists: Typically technology practitioners, consultants, or even buyers and users themselves, this group will devote significant coverage toward popularizing new technology, a new methodology, or a new way of thinking. For example, the growth of agile development tools came on the heels of spirited, indefatigable advocacy from agile development pioneers like Jeff Sutherland.
6. Business or Trade Promotion Bodies: Local chambers of commerce or local business associations can play an important role in introducing new technology or products to local businesses, as well as to help support small technology firms get financial or marketing support when they are just starting out.

These are just some of the most common and important types of service providers that an expansion-stage technology company can consider partnering with. In my next post, I will share how OpenView helps our portfolio companies identify potential partners in each of these categories in a comprehensive manner, so that they can develop a all-rounded partnership strategy.
Please also read my first post in the series: Building a Partner Ecosystem with Sales, Marketing and Technology Partners
And my follow-up post, The Business Case for Partnership Development