How to Maintain a Healthy & Strategic Security Business Partnership
Breaking up is hard to do.
The last two columns of “Today’s Systems Integrator” in SDM examined the value of becoming a Facilitator of Excellence. (Read here.) A facilitator of excellence builds trusted partnerships and embraces a partner-collaborative business model to expand revenue and become more strategic to their clients.
I believe it is not about if you should partner, it is about finding the right trusted partner. However, even finding the right partner is not enough to assure continual success.
As a practicing “facilitator of excellence” and as a workshop facilitator, I have been exposed to hundreds of stories related to partnerships. The examples highlight partnerships that have worked very well and stood the test of time, but just as many of them have broken up like a nasty divorce.
Recently I heard from the CEO of a copier company that had a strong managed print service, with great recurring revenue. He called me out, saying that he had followed my guidelines in developing a partnership with a networking company, but the partnership was on the brink of divorce. He and his partner company had done marketing events together, were quoting each other’s services, and had sold to each other’s clients. The drawback was that the networking company had decided to get into the managed services business, thinking that managed print services would be a great place to start knowing how lucrative it was from their partnership. They wanted back their customers that they had introduced and expected the managed print business to come with them. Fortunately, they had taken the right steps upfront and signed contracts. After a lot of aggravation and a few legal letters, they decided to break off the partnership and agreed to allow each partner to keep their respective business services for 24 months. This is what I would call a somewhat hostile divorce, but in the end it was manageable.
Recently I reached out to my good friend Chuck Wilson, executive director of the National Systems Contractors Association (NSCA), a large national association of A/V and security integrators. Due to the convergence nature of networking technologies with A/V and security, partnerships have become a quick way to address the changing market demands. Wilson took time to answer a few questions — and he gave it to me straight.
Cronin: What is your overall view on where partnerships are heading?
Wilson: Full steam ahead, driven by the demands of the networked A/V and security converged solutions.
Cronin: Breaking up is hard to do. Partnerships are like marriages; more than 50 percent of them end in divorce.
Wilson: Agreed and in my experience I have found it is mostly due to inflated expectations, ego and reports from the field.
Cronin: What are the top two reasons partnerships end?
Wilson: 1. Too often integrators partner to fill a short-term void or weakness and use the other partner to learn their scope of work from them. Once they get experience, training and confidence, the partners split up and become competitors. 2. Keeping score. Too often field techs report back that “we did the majority of the work” to prove their worth. This gives an often erroneous portrayal that one partner was of higher value to the project than the other. This often leads to a re-negotiation of terms, which leads to a bad breakup. People value smarts and parts very differently and, when misunderstood, the profit split seems skewed.
Cronin: Are partnership breakups bad?
Wilson: Yes, especially when partners end up as competitors. Proper non-competes, non-disclosures, employee poaching, etc. need to be considered in advance. Often the customers are stuck in the middle and are forced to choose between the former partners.
What I have witnessed is that partnerships usually have a lifecycle; on average, it is less than five years. The more specialized skills and the more differentiation between markets served, the more likely that the partnership will last. For example, if one partner sells application development services and another sells networks, they are more likely to collaborate and coexist and less likely to dissolve. Partners need to document who owns the client, and be dedicated to regular executive exchanges, discussing the success and challenges of the partnership. No one said it would be easy.
Paul Cronin is a facilitator of excellence, as exemplified through his thought leadership and his participation on multiple boards across converging industries and technologies. Paul is a partner at Atrion Networking Corp. and serves as the senior vice president. Learn more about Paul through LinkedIn or his organization at www.atrion.net.