The Value Addition Conundrum: What Makes Partnerships Truly Work

We are in an unprecedented time of the rise of SaaS software. Rise of SaaS is upending traditional models of software distribution as well as software consumption. IT Channel and alliances have existed as long as software and hardware sales have existed and if SaaS software has to grow to the next level of adoption, it has to make peace with the channel ecosystem, and vice-verse because selling to and with channel is an art, as much as it is a science.

Today we discuss one of the most used(or abused) word in IT sales ecosystem. "Value addition".

I have worked in channels & alliances roles most of my career; either with vendors or partners. They are two sides of the same coin and in most cases can't live without each other. In that sense they are like a couple who know they need each other but fight constantly :).

Way back in 1998 when I started my career, my first job was an application seller with an Autodesk reseller and almost the first thing I heard my boss speaking about was how we are dependent on our vendor alliances but; almost in same breath, how screwed the relationship was, as the vendor sales reps don't "add any value" to our sales effort. I would here this often all along my career and to be honest not much has changed. I still here this from peple working in the channel ecosystem; be it at the vendors or partners. Funnily, the fact that almost 60%-70% plus software and hardware business globally is done via channel and alliances speaks volumes about the inter-dependence and deep correlation, but the value added discussion somehow never goes away.

I call it the "Value Addition Conundrum". This refers to the challenge of ensuring that each alliance partner in a business brings something unique AND beneficial to the table. It's crucial for partners to contribute their skills, resources, expertise and efforts in a way that enhances the overall value and success of the partnership.

In an ideal partnership, each party should contribute something that the others do not possess, leading to a synergistic effect where the whole becomes greater than the sum of its parts. However, the Value Addition Conundrum arises when partners are unable to effectively demonstrate or deliver the promised value, which can result in several issues:

1. Imbalanced (Perceived or otherwise) contributions: If one partner significantly outperforms the others in terms of value-added, it can lead to feelings of resentment and unfairness, potentially jeopardizing the partnership's stability. e.g: sales account mapping discussions between partners where each party feels the other is not bringing enough intel to the discussions.
2. Misaligned Goals: When partners have different visions or objectives for the partnership, it becomes challenging to work together cohesively. Misalignment can hinder value creation and cooperation. e.g: KRAs for someone within a vendor team may be focused around revenue(quantitative) whereas the partner may feel KRAs need to be a more balance.
3. Lack of commitment: If a partner fails to deliver on their promised contributions, it can lead to a lack of trust and a breakdown in the partnership, resulting in decreased motivation and cooperation.
4. Ineffective communication: Clear communication is essential for understanding each partner's strengths and areas of expertise. Poor communication can lead to misunderstandings and misaligned expectations, impeding value-added efforts.

To address the "Value Added Conundrum", partners should take the following steps:

1. Transparency: Transparency begets trust. Partners need to openly discuss their capabilities, limitations, and expectations from any partnership. This will help to identify complementary strengths and areas for collaboration.
2. Partnerships need to be democratic: Only when there is a sense of equality in a relationship can it create mutual respect and partnerships are no different. There is no big or small in an alliance. Clearly outline each partner's roles and responsibilities to ensure they align with their expertise and resources.
3. Regular sit-downs: Conduct periodic assessments to evaluate joint goals by both partners and identify areas for improvements or adjustments.
4. Flexibility and adaptability: Be open to adapting roles and strategies as the partnership evolves to maximize value-added contributions.
5. Mutual benefit: Partners need to always think of the partnerships as paths to mutual success. Single sided success often results in deprecation of long-term commitment and enthusiasm in the partnership.
6. Conflict resolution: Establish mechanisms to resolve conflicts and disagreements constructively to maintain a harmonious partnership. Talk often and keep multiple lines of communications open for effective conflict resolution.

By addressing the "Value Addition Conundrum" proactively, partners can create a mutually beneficial and successful collaboration that drives growth and value for all involved parties.