Service providers increasingly rely on partnerships to fuel revenue growth, retain accounts and enhance profitability.
According to a December 2016 Detecon Consulting study, 75% of service provider respondents say partnering is much more relevant in their company today than it was three years ago, and 76% predict it will be much more important to their organization in the next three years compared to today.
Partners Grow in Relevance
Teaming up with third parties will increase in importance,
service provider executives say.
(Source: Detecon Consulting)
Partners' impact on sales is often small but positive, according to service provider executives surveyed. In fact, more than 90% of respondents say partnerships are profitable, Detecon finds. Slightly less than half (48%) of those polled report an increase of 3% to 5% return on sales, although 44% cite returns of 0% to 2%, according to the study.
"We believe that there is still unmined potential in partner management that could be exploited through partnering to generate contributions to revenues of more than 20% of total revenues (achieved at 36% of the respondents) or the benchmark of 3% to 5% return on revenues," writes Dr. Christian Kramer, managing consultant at Detecon, in the report.
Likewise, more enterprises today rely on independent consultants or partners, Justin Davis, director of Enterprise Sales in California at
CenturyLink Inc. (NYSE: CTL), tells the New IP Agency.
"In-house testing is always going to be significantly smaller than the consulting partner will have done. They've already vetted out a lot of smaller companies and asked the deep questions," he says. "It's a hard thing to task any CIO or IT director or COO -- or increasingly the CMO -- without the knowledge that's necessary for all of this."
The partner edge
Working with a consulting firm, value-added reseller (VAR), systems integrator or other partner can empower enterprise customers to retain their existing technological investments or specialized horizontal solutions, says Paul Cooney, president of Shamrock Consulting Group, in an interview. Cooney, who previously worked for AT&T and whose firm counts several service providers amongst its partners, has seen these relationships from both sides. Partners also can introduce or recommend one service provider over its competitors, he adds.
"The managers that were open to working with partners did substantially better. Obviously a huge part of any sale -- it doesn't matter if you're selling oil rigs or telecom -- is the cost of acquiring clients," says Cooney, adding that partners often bring in a specific service provider to meet a customer's needs.
Consultants and integrators, which often do not sell any product, generally focus on an enterprise's requirements, recommending solutions that meet their needs regardless of vendor or service provider. By bringing in a service provider partner to existing customers, they're offering a de facto seal of approval for this particular implementation, says Cooney.
"We maintain a very strict 'what's best for the customer' stance. We have to. We can sell all these carriers by ourselves through the channel or I can partner with a [CSP's] direct rep. For small transactional business, there's no need for me to partner with a rep. We just order those," he says. "Now, for strategic accounts where we are evaluating different carriers' services it's got to be a situation where we're able to work with their sales team. I've got to decide, 'Do I want to work with a direct sales rep?' I might lose 10% of my comp. I will do that for the help, the assistance, pricing and the proposal help. His team and my team both lose some comp."
For its part, tech integrator WWT helps customers test, build and integrate emerging SDN solutions from networking partners such as Cisco and Dell.
"We actually do a lot of integration work for our customers. Specifically in the NFV space, we're building out a lot of nodes going out into AT&T's integrated cloud -- the AIC project," Joe Wojtal, vice president of the World Wide Technology (WWT) Service Provider Solutions Practice, tells NIA. "From just the logistics side of this, we think we can save greater than 50% of the time they currently are taking, simply by streamlining equipment-acquisition, placement of equipment into racks and deploying it for them. Each of the different service providers tend to do that differently. We do think we can save, at a minimum, 20% in terms of just doing the testing in one particular location and tying that into the design system."
In another partnership, WWT is building optical networks for a tier one service provider to ensure all components are integrated and work well together when the equipment is installed on-site, he adds.
— Alison Diana, Editor, The New IP Agency. Follow her on Twitter @alisoncdiana or @The_New_IP.