An IAMCP Members’ Guide to International Partnering
By Paul Solski
The benefits of partner-to-partner (P2P) relationships are no secret to IAMCP members. In fact, we have seen success stories from around the globe where members have formed alliances, both locally and internationally, to provide innovative customer solutions and win business.
The forging of local partnerships often takes place through IAMCP chapters, where members have the opportunity to get to know one another, learn about respective skill sets and form a bond of trust.
International partnering can be much more challenging, however, with the obvious complications of distance, familiarity, and cultural differences.
Challenging, but with the right groundwork and approach, IAMCP members are poised for great success through partner knowledge- and skills-sharing on a global level.
Key Factors to Consider Before Attempting an International Partnership
There are two phases to this section: firstly, considerations prior to launching internationally and, secondly, considerations in forming an international partnership.
Before Launching Internationally
It’s important to evaluate your success in your domestic market. Simply put, it is much easier, cheaper and faster to grow market share in a market where a company already has a presence, is familiar with the way business is done, and has existing contacts and people that know their competitors, the industry and potential clients.
Good indicators of being ready to expand internationally include:
- Having established a profitable business locally
- Having a significant domestic market share (e.g. 10%)
- Having developed an existing partner network in your home country
- Experience in selling and winning against global competitors
- Some experience with selling and supporting international clients
- Willingness to invest in activities and resources in a new country for 12 months, even without generating new sales there.
- Having a notable number of international brand name client references (at least 3)
Forming International Partnerships
Consider which of the following two scenarios best describes your business:
a) A company with packaged repeatable software IP, such as an ISV
b) A company with specific professional services expertise such as an SI, MSP, or VAR
For ISVs, the main objective for building international partnerships is to achieve increased scale in sales, marketing and support. This can be best achieved by levering international partners who already have the people, premises, infrastructure and local contacts that can be applied to these areas.
To maximize the impact of partnerships there has to be a thoughtful matching of partners. When evaluating potential partners, consider:
1. Their ability to reach their target customers and build a pipeline
2. Their ability to sell, implement and support customers
3. Their willingness to invest in training and resources to create the desired scale
Beyond the individual attributes of partners you are considering, it’s also important to:
- Assess the market opportunity and ROI for specific countries you are considering
- Define the GTM (go-to-market) strategy for each country – direct or indirect, industry specific or horizontal
- Define meaningful differentiators to competitors already in your identified target markets
- Identify the right partners for your target industry segments
- Define a clear business case for partners to justify in partnering
- Prepare a complete partner program that enables you to ramp partners up and rapidly enable them to become self-sufficient.
Barriers to Success – And How to Overcome (or Avoid) Them
One of the keys to partnering success is having a thorough understanding of the target market.
A market that isn’t dominated by a single competitor is more open to best-of-breed solutions and therefore to international solutions. Where there is a dominant single competitor, it’s more likely that there is a vast ecosystem of partners and customers who have a preference for the dominant competitor, e.g. SAP in Germany, or Dynamics NAV in Denmark.
Cultural considerations are another important factor and need to be taken into account.
How is business done? Are customers open to foreigners or do they have a preference for doing business with locals? Do customers expect to be wined-an-dined or is it strictly professional? Do customers or partners expect “gifts” to do business with you and is that acceptable to your company (and government) policies? Which factor dictates the purchase: price or value?
Underestimating the cost and time for success can be a key financial trip-wire.
It takes time to gain sales momentum in a new country, especially if the GTM is through partners. Expect to invest approximately 3 months to recruit and activate a partner. Then, the sales cycle for a particular solution has to be added before the first partner sales are realized. An expectation of 12 months to build a customer opportunities pipeline and sales momentum is realistic and should be factored into your projections.
Even if an ISV solution is in the cloud and sold through partners, anticipate the need for at least three resources in a new country: the Business Development Manager, the Pre-Sales Specialist, and the Technical Implementer. Then there are expenses for a serviced office, communications, and travel, etc. to consider. In the US, a three person subsidiary may cost $500K per year.
Approaching an international venture as a long-term investment, vs. an opportunistic one, should be part of your partnership strategy and planning process.
Ability to offer meaningful differentiation to drive customer appeal and business growth.
When considering dealing with an outside entity, international customers and partners will want an answer to this question: “Why would I buy/sell your foreign solution when there are already good local ones available?”
Having meaningful differentiation is a must. This can lay in features, capabilities, TCO (total cost of ownership), or ROI (return-on-investment). Price can be a differentiator, but is not always a good one as it can be associated with inferior products or services.
Ideally, your solution will address the needs or “pain points” of certain types of customers who are currently underserved.
The ability to form effective partnerships - the engine that drives increased scale. There are two types of partnerships to consider: re-sell and co-sell.
In re-sell partnerships, an ISV can leverage partners’ resources and contacts - the primary revenue drivers. The ability to clearly state “what’s in it for the partner” is a key success factor in the formation of re-seller partnerships.
Co-Sell partnerships with other partners, and with industry leaders such as Microsoft, can help to identify more opportunities, build more credibility for your brand and enable you to offer clients more complete solutions.
Developing Your International Partnership Strategy and Business Case
Your partner strategy should be based on building a partner network that is able to deliver complete solutions to specific target customers with the highest value. Therefore, defining the target customers in terms of industries/verticals, customer segments (SMB, MM, Enterprise) and the optimal solution is a pre-requisite to engaging with potential partners.
With your strategy in hand, it is then about recruiting the right partners based on the three key criteria mentioned earlier.
Your business case will define the market opportunity for partners – i.e. (target customers) x (likely to buy) x (sale price) x (retained margin). A multimillion-dollar per year market opportunity is necessary for your proposition to be compelling to partners.
Defining the ROI for potential partners is equally as important. Your prospective partners will need to know how much they should expect to invest in people, training, marketing and support. Justification of this with the retained margin on sales and maintenance are important elements of your business case.
There are also strategic elements of a business case to consider from the partners’ perspective, such as the ability to cross-sell other products and services, become more strategic to their clients by becoming a trusted advisor, and improving their ability to compete with other partners.
Leveraging The IAMCP for Success
IAMCP partners are well-poised to succeed because, through partnerships, they can sell better solutions to more customers.
Many partners focus on an area in which they have become experts, for example partners who have developed practices in Microsoft Dynamics, Sharepoint or security. However, customers often look for complete solutions that may include all three components. An individual partner offering only one of these components may not be as attractive to a customer as a consortium of partners that can provide a complete, integrated solution that they undertake to deliver together for an agreed price. The advantage to a customer is that there are no surprises or disappointments. Often, when the partner who has the relationship with the customer takes the lead, there is just a single invoice to pay, one throat to choke and no finger-pointing.
IAMCP partners can also identify and address more opportunities. Each IAMCP partner is prospecting for clients in their local markets and customer types. By partnering, instead of prospecting in one location, you can prospect nationally, and even internationally, to identify more opportunities.
Also, you can prospect more diverse customers because, through a consortium of partners, you can collectively sell more diverse solutions. This has the potential to have a significant impact on the businesses of all the partners within the partnership.
Appealing to Foreign Companies
Partners can appear more attractive for both re-sell (with ISVs) and co-sell (with other partners) partnering opportunities by demonstrating a clear focus and leadership in particular customer segments, and solutions that solve specific business challenges.
This can be achieved through specifically targeted messaging on your website, featuring customer references and case studies, articles and blogs, and by engaging in social media discussions.
You can also use various databases and tools, such as the IAMCP’s INDEX, to profile your company and solutions expertise and make it easier for other IAMCP partners to find your organization.
In addition, you can establish visibility by engaging with Microsoft solution, industry, product and field teams to increase your opportunity to be recommended to other international ISVs and partners.
Globalization - Partnering in a Global World
As our world “gets smaller”, there is an expectation to be global and many customers today expect that their technology providers are global – especially when dealing with Microsoft partners.
Therefore, answering questions about providing services and support in other countries need to be a part of your story in appealing to other IAMCP partners internationally.
The IAMCP itself can be a part of this story when partners engage together. With 4,000+ partners across the globe, in most major countries and across all Microsoft technologies, the IAMCP forms a common foundation for the delivery of solutions to customers worldwide.
For example, if a partner in France is bidding a Dynamics CRM sale to a winery which also sells its products in the United States, there are ample IAMCP partners within the U.S. who can provide implementation, maintenance and support for the solution at the local level.
It is becoming easier than ever to go global!
With the growing expectation that technology partners can provide solutions globally, the technology, tools and partnerships are arising to make that easier. A good example of this is the transition from on-premises to cloud computing. With Microsoft Azure, the platform and applications are available anywhere in the world, and even data security and privacy issues are addressed. 24/7 support is commonplace with support centers located across multiple time zones.
The shift to globalization is here – embrace it!.
About Paul Solski
Paul Solski is Managing Director and Founder of AIM International, which specializes in enabling software companies (ISVs) to expand their market reach, build partner channels and win new clients in targeted vertical markets both domestically and internationally.
Paul is also the President of IAMCP Seattle.