The Value Guides — How to Select a Technology Partner Who Can Produce Value?

Published in

Technogise

6 min readDec 28, 2020

Enterprise software spending will cross the mark of $426 billion by the year 2023. To put it in context, that is more than the combined market cap of Dassault Systèmes, Workday, ServiceNow, Intuit, VMware, and Salesforce.

While the scale is often considered to be the launching pad of value creation, it can also create systemic inefficiencies. A PWC case study of over 10k projects found that only 2.5% of companies complete their project 100% successfully!

The blame often comes down to the inefficiencies in the technology partnership. And therefore, it becomes imperative to select the right technology partner.

While replacing the term ‘technology vendor’ with ‘technology partner’ has a great impact on the psychology of everyone involved in the engagement, you will have to take a few extra steps to ensure that it also brings tangible results to your business.

Here is a framework to help you navigate the process of selecting the right technology partner for producing value:

1. Develop Co-Sourcing Channels.

Most companies consider the technology partner hiring process as a system of filtering vendors based on their past projects, recommendations, and most importantly — the budget they quote. The idea is fundamentally flawed as it diverts the project from optimizing for value creation to optimizing for cost savings. The latter is a strategy when you know you are spending more than you should. But when you are starting a project, you don’t even have a benchmark to measure whether you’re spending more than you should. Hence, focusing on value-creation should be the key metric.

The problem is — how do you create value? The concept of value generally means you are getting more than what you are paying for. To achieve it, you can focus on co-sourcing. Look internally — what are the talents, skills, and resources you can find within your company? You don’t have to rely just on these to develop your project. But mapping out this part will help you understand the exact gap you are trying to fill.

You can focus on the model of agile development. Instead of being a ‘software vendor’ or an ‘ERP vendor’, your technology partner will provide you access to agile teams with cross-functional skills. You can have an internal team and look for a partner that brings in the expertise to fill the gaps in the current team. This is referred to as the Managed Capacity model, and it is picking up pace in teams that are focusing on value creation and not cost savings.

2. Calculate the Trade-Off Between Long-Standing Relationships and Niche Expertise.

The partner who helped you develop your ERP system might not be equipped to help you develop your Customer Self-Help Platform. There are many instances where customers prefer working with a technology partner who has had historical associations with the company. This is considered to be a sort of an ‘understanding edge’, since the vendor has a good idea about your modus operandi.

However, this can get in the way of unlocking value. The technology partner who has been associated with you for a long time might be aware of your operational cycles. But that does not make the same partner an expert in the capabilities you need for your next project.

Niche experts often provide a great platform to look at your entire project from a different, experience, and informed eye. You can have new features added, project costs reduced, and project lifecycles reduced. However, there is also a challenge here — niche technology partners often have deep knowledge about their domain and next to no ownership of how the product works outside the silo. In short, you will get exactly what you need — nothing more, and probably nothing less.

Hence, make sure you understand the purpose of choosing one partner over the other. It’s not a process of filtering and advancing the most likely technology partner. It’s a process of evaluating each technology partner and comparing its capacities with the other partners.

3. Evaluate the Partner Firm’s Leadership Involvement.

Suppose you are working with a partner who promises decades of experience and cross-functional expertise. In that case, it is worth noting how well is the technology partner’s leadership team involved in the process. If the leadership team is accessible, responsive, and taking ownership of the project, it is often a positive sign.

You should ask the prospective technology partners and frequently monitor the communication chains to evaluate whether you are getting the output of ‘experience’ and ‘expertise’ or not. This might not be possible if your partner is a large organization. Yet, there should be someone from the management team sponsoring your project at the technology partner’s side.

4. Define the Deliverables Explicitly but Optimize the Engagement for Results.

For the sake of contracts, you have to define high level deliverables. However, structuring a contract and running a product-development process are two different activities. While the contract can be used as the founding ground to map your engagement, it certainly is not a great place to note down all the features and outcomes and stick by it.

You should be focusing on results and value. For instance, imagine that your technology partner suggests adding a feature that was not a part of the initial scope. This will increase the budget and expand the project deadlines. Before you turn down the suggestion, evaluate the value proposition and the reasoning behind the suggestion. Try answering the question — can the addition produce more value than your initial scope?

5. Ask for Past Failures: Case Studies, Learning Outcomes, and Systemic Fixes.

When you are scouting for technology partners, you will find flawless decks, fully-functional products, and engagement outcomes that look like they were carved back in time. Assume that your project will not get the same results. Since it is a process of selling, each prospective partner will want to put its best foot forward, and that often means you will get to know the projects that worked. That is survivorship bias, and like other biases, it can be severely misleading.

Ask each prospect to walk you through one or two projects that did not go as planned. No one has to take names. The technology partner can simply guide you through what went wrong, who took ownership of the error, when & how it was fixed, and what has the team done since then to systematically ensure that your project does not see the same results. This will give you more information about what you can expect from your prospective technology partner, than a dozen decks and product reviews.

6. Establish Post-Engagement Data-Ownership Terms.

This particular step is to ensure that if the engagement does not work, in the worst-case scenario, who walks away with all the data and intellectual property created this far. The same term should also be expanded for successful engagements. Generally, each technology partner will hand-over all the rights to the intellectual property and data created in the engagement. Make sure the contract puts a deadline and a framework for a quality evaluation around this hand-over.

In Conclusion

Technology partnerships, when implemented successfully, last for years and have the potential to create exponential value for the engaged businesses. The foundation of such partnerships begins with ensuring that the expectations, project, and teams are well aligned and well-managed. And if you satisfy this one parameter, budget would not look like a constraint since the value you generate would exceed the budget by a large margin.

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