An alliance is an open-ended contract between organizations in which each partner has limited control and the emphasis is on collaborating to reach a mutually agreed on goal. The sad truth from other industries is that alliances have a high failure rate.The main reasons for failure stem from choosing the wrong partners and incompatibilities in company culture. Unlike other joint ventures that have clear organizational boundaries and management responsibilities, strategic alliances are often less certain, less stable, and more difficult to manage.
Relationships between organizations evolve like relationships between people, starting off with the right partner is essential.
Whereas PSA is a long running organization (over 40 years) with well-documented processes and procedures, the smaller National Security Integrators is a good example of the principles used to choose members in the beginning.
“All of our members carry only one access control line, they are all dealers for Software House. This makes sure that they can all support the same technology in national projects. In addition, they must operate in different locales from one another, to eliminate the threat of sharing competitive information. They must be interested and motivated to get in-bound business and take care of their clients. And last but not least, there must be a good personality match. I pick members based on their capabilities and philosophy,” explained Kruglak.
For more mature organizations such as PSA, in order to stay relevant the alliance must provide different services for different sizes of integrators. “That is how we can stay successful. For example, a small player might benefit from our education programs or the credit we extend for equipment buying; larger integrators find national deployment more valuable. For us to stay successful it is imperative to cover all verticals and all the sizes of integrators, from 5 million a year to 75 million a year,” stated Bill Bozeman, President of PSA Security Network.
Training and knowledge sharing
An important benefit of integrator alliances is sharing and pooling together resources for training. “For example, a small player might want education for their sales or technical team. Whereas large players can have internal resources for training or can afford to hire experienced people to begin with; this is a challenge for smaller ones. Our training programs give integrators an opportunity which they might not pursue otherwise,” explained Bozeman.
Bozeman pointed to cyber security as the most recent example of a topic the PSA helped introduced to its members. “In the last two years we are successful in introducing cyber security to our members. It is the most important new service we are providing and 77 percent of our members saw it as important. We provide education first but we are also developing strategic partnerships through PSA with hardware, software, and security manufacturers so our members can team up with manufacturers or partner with a cyber security vendor or professional.”
Although National Security Integrators doesn’t conduct any formal training sessions, a lot of information is shared informally. “Manufacturers only tell you 85 percent of the things you need to know. So if I have a question or need help in product vetting I can usually get eight or nine answers from experienced people within 15 minutes or so,” shared Alan Kruglak, President of National Security Integrators and Principal of Genesis Security Systems.
Competing with big name national integrators
For mid-size integrators who want to expand their businesses, the main competition for national accounts comes from large-scale integrators like Tyco. Clients tend to see the size and geographic dispersion of big-name integrators as an advantage. However an integrator alliance bringing together companies from different parts of the country also has its advantages.
“When you go to a big brand, each office is a separate profit center, so the local office is not motivated to help out as much as a local company. The organizational structure of the national company is motivated by earnings-pershare, so you can’t replicate the feeling you get with a small business, and the amount of customer care a small business can give clients,” explained Kruglak. “Our clients like it since it they get better service and it is transparent. In big companies they don’t get the same response.”
Apart from keeping end users happy, Bozeman also makes sure alliance members turn a profit from their membership. “What we do differently is ask the partner to give a turnkey price which we minimally mark-up. To get good service there has to be a motivation to make money so the partner is the one providing both material and labor,” he added.
Bozeman pointed to another benefit of using local integrators in each location — continuity, as local integrators stay committed to their community. “Unlike in big companies where people are moved around the country every two years, local integrators stay in one place. In case something goes wrong the customer always knows whose neck they have to wring,” he said.
Alliances are hard to maintain
Alliances are a good way for integrators to increase their competitive positioning. Advantages are abundant: alliances can help members achieve greater influence and control on the market, compete with large businesses, influence standards and regulations, and get better prices through group buying. However, they are not easy to establish and maintain, especially the co-op model which includes equity buy-in and extending credit to members. Nonetheless, for medium-size businesses facing competition from bigger companies it is a form of cooperation worth consideration by integrators worldwide.