Myth-Stakes of Partner Building 106

Myth-Stakes of Partner & Alliance Building 106: PLM channel partners not grasping that industrial users don’t want to be “sold to” and that solution providers no longer need someone else to “do their selling” for them. Instead, as solution software and their underlying technologies have become more complex to learn about and apply in practice, both users and providers are seeking partners who have such deep expertise that they become Value Added Collaborators (VAC) of co-innovation.

The numerous solution software market segments (e.g. CAD, CAE, PDM, EDA, CM, PPM, AMT, etc.) within the $40B PLM industry have been well served by a rich and diverse ecosystem of Value Added Resellers (VAR), System Integrators (SI), and Consulting Service Providers (CSP). These partner types have emerged and grown over the past two decades to play an important role for both industrial customers and solution providers.

For software providers, VAR partners typically offer a more efficient sales channel to sell and support customers, especially in the SME market.  For industry customers, working with a right-sized supplier that is more accessible and responsive than a larger organization is often preferable. The knowledgeable sale and support of software products was often all the “value added” required to be successful.

However, for the reasons expanded upon in previous Alliance Alchemy posts, that historic form of value added is no longer sufficient and rarely sustainable. The process for users of identifying, researching, evaluating, buying, and deploying solution software has dramatically changed for the better in recent years, especially with SaaS and cloud delivery platforms. Getting trained and receiving support no longer requires sitting in a live class or waiting in a phone queue. Likewise, solution providers of highly technical niche applications no longer need partners to find, sell, deploy, or support their products with the consequential loss of 30-50% margin. Especially when the partner often requires as much or even more sales support than that which would have been required to sell the customer directly.

Does that mean that the PLM channel is no longer relevant or dead? No, not for those who evolve their business models.

In a recent Alliance Alchemy post about the future of the PLM channel I introduced the term Value Added Collaborator, or VAC, to describe a new hybrid type of channel partner. In my experience with the highest performing partners of any type (e.g. VAR, SI, CSP) I have come to appreciate what they have in common. They don’t sell products to their customers; they collaborate with them. They don’t sell software for their solution providers; they collaborate with them. Their value added is in collaborating at such a deep level that the sale, support, consulting, and integration of software solutions is the by-product of a larger trusted adviser relationship.

Now collaboration sounds ever so easy, as if it is just the next social media mania that anyone can enact, but it is not. To collaborate effectively within PLM solution markets requires that a partner possess deep expertise in the application of a software solution to address the most challenging problems and needs of specific industries (e.g. A&D, automotive, industrial equipment, medical device, energy, high-tech, etc.) in which they operate.

Users don’t have that expertise and value it in others who do. Yet, software providers often don’t have it either since their products are used across many different industries, each with their own set of unique challenges, requirements, applications, processes, best practices, ROI expectations, and management predilections.

Partners who narrow their scope of business to focus on just a few software products in a select few industries can develop a level of competency in the face of complexity that few others will be able to challenge. With that deep expertise and embedded intimacy into their customers’ business they can develop innovative insights and gain exposure to new opportunities that add value far beyond what their competitors can imagine.

In a future Alliance Alchemy post we will explore the most notable elements of productive collaborations and characteristics of successful collaborators. Read more in this series by subscribing below.

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