This piece was written to accompany the story, "The Romance of Partnerships--Is it Good for You?" in the June 2001 issue of CRM magazine.
Q: How did Siebel's Alliance Program start?
A: Around the September time frame in 1997, we had an executive offsite up in Lake Tahoe where one of the topics was the fact that we had begun to get calls from a variety of companies--consulting companies, software companies, hardware companies--who all wanted to work with us in some size, shape or form. They were assuming because we weren't replying to them that in some way we had no interest in working with them. In actuality, the reverse was true. We had lots of interest but no time and nobody had the charter to work with them. So I brought it up. Tom said great, why don't you figure out how we can work with these companies?
Q: What did you come up with?
A: I wrote the Alliance Program Guide Version I, which effectively took consulting partners, software partners, and platform partners, and tiered the relationships. There are some partners who really want to help us build an ecosystem. Those are symbiotic relationships, where both companies are investing in it and they both survive because of their joint investment.
Then there are what I, perhaps negatively, call parasitic relationships. Parasitic relationships are relationships where obviously one of the partners is living off the other. It's not that that's necessarily all bad, it's just a fact. So what we wanted to do was increase the investment on our part and our partner's part in symbiotic relationships and decrease or at least minimize our costs in parasitic type relationships.
Q: How did you do that?
A: At the lower level, at what we call the base level partner, there are companies that are very small that would like to participate in our ecosystem, would like to effectively build a business of the market that we have created. They need access to training, to software, to co-marketing, all the things that they don't necessarily have the resources to be able to do themselves--they need our help. So we want to make sure they get access to those things but we wanted to do it in a way that was at minimal cost to the company.
We then described something called the premiere level partner. A premiere partner is a company that is perhaps bigger than a base and they're willing to put something into it--they're not sure about how they fit in with us, they don't want to commit a whole bunch, but they are willing to commit more. So we have a little more stringent requirements at that level.
strategic even more so and global strategic, which is a newer level that we introduced this year is the highest. And so we articulated a set of benefits and requirements based upon each tier that we were willing to do. And then we used technology to help at the lower part, at the base level, where we let people apply online, interact with us online. We use our valuable human capital to invest at the higher levels.
Q: What does Siebel get out of these partnerships?
A: The strategy and the goal of these partnerships is to allow us to move into new geographical and vertical markets where we may or may not have significant presence. We use our partnerships to enable that to occur. So, for example, we may not have any credibility in the retail industry, so the strategy is to borrow the brand of our partner who's recognized in that particular area. We bring, of course, a suite of application technology and skills, they bring content and domain expertise, and by working together we both end up being successful. The structure of the partnership, the stable alliance program, only exists to provide a framework so we have consistency in how we build the partnership, how we manage the partnership and how we hold ourselves accountable.
Q: How did it go?
A: We formally launched the program in April of 1998, and here we are about 2 1/2 years later. We started with about five, a handful of partners who were not part of that program originally, they were just partnerships that we had formed in the absence of a formalized program. Since then we now have more than 700 partners across the world. We have somewhere around 20,000 consultants who are trained on the E-Business applications.
In the absence of having them, we would not be able to fulfill all the implementation demands that we have generated to date. So the growth of our ecosystem would have been constrained had we not chosen to develop powerful alliances with these large integration companies. We would not have been able to hire and train all of those people on our own.
Q: What would make Siebel consider acquiring instead of partnering?
A: I think that most companies would agree that in this business you either make technology, resell technology or acquire the technology. Our strategy has been to do acquisitions for the following reasons. We acquire a company when a couple of things are true. The company must have market leading position, whether it's a services company or a technology company, in an area that we think is highly complementary to what we do or is a part of the ecosystem of ancillary products and services. We will acquire an organization if we think that we have a similar culture, a similar market opportunity. We will acquire if they have great technology, a great team, and if acquiring is faster than trying to compete and build.
Q: Are there any difficulties that arise from partnering with partners that compete with each other?
A: Sure. Our program is open to anybody so there are true competitors of ours who are part of our program and then there are companies who we partner with who are competitors to each other. We'll start with the latter. Let's talk Price Waterhouse versus Accenture. We have a philosophy in our program called partner harmony. We do not pit our partners against each other. We do not participate in negative press endorsements, etc. Instead, when we bring on new partners who compete against companies with whom we already have a relationship, we try and find new geographies and new markets that we can go after. At this stage, we are able to effectively find market opportunities for all partners that allows them to grow their practices, grow their businesses to the degree they want to invest.