Searching for business soul mates

Like many business relationships, the strategic partnership between systems integrator IBM Corp. and mobile computing provider Xybernaut Corp. was sparked by compatible goals. In this case, each company wanted to strengthen its position in the homeland security market.Xybernaut of Fairfax, Va., needed to pick a manufacturer for its next-generation product, while IBM of Armonk, N.Y., was looking for mobile computing products to support the integrator's homeland security solutions, said J.B. Rauch, Xybernaut's executive vice president of sales and marketing."We were trying to find a next-generation manufacturer, while they were investing in the next generation," Rauch said. The partnership between the two companies "is now bearing fruit," he said.Xybernaut's Mobile Assistant V, a wearable computer, is being used by government agencies for functions ranging from fleet repair and maintenance to law enforcement and emergency response.Xybernaut and similar companies contribute to partnerships with integrators by offering technical expertise and by bringing their knowledge of specific industries to bear on market opportunities, said Kent Blossom, director of IBM global services' public-sector for safety and security."With that knowledge of the industry comes ... in-depth knowledge of customers needs," Blossom said.Since Sept. 11, IBM had been searching for companies with which it can partner for solutions involving biometrics, smart cards, wireless data-sharing systems, wearable personal computers and digital video surveillance. The partnership with Xybernaut is one of a number of strategic alliances and partnerships IBM is developing for homeland security, company officials said.Alliances and partnerships are a key part of doing business in the state and local marketplace for systems integrators, according to analysts and industry officials."Any organization that wants to have the size and scale of a market leader has to have a vibrant process," said Greg Baroni, president of global public sector for Unisys Corp. of Blue Bell, Pa.The expectation that integrators will form alliances for major information technology projects "is dramatically greater than five years ago," said Bob Campbell, senior partner with Deloitte Consulting of New York.Barry Ingram, vice president of global government for Electronic Data Systems Corp. of Plano, Texas, said the government sector outstrips the commercial sector in its ability to assemble alliances and partnerships on major information technology projects."Usually, [a strategic partnership] is a long-term marriage, where the integrator and supplier want to form a powerhouse to replicate solutions across the market," said Ray Bjorklund, vice president of consulting services for the market research firm Federal Sources Inc., McLean, Va. In contrast, a tactical partnership or alliance occurs when an integrator needs a company to perform one or two pieces on a project, he said."A major integrator will need to use both strategic and tactical partnerships depending upon their business goals and market circumstances," said Tom Davies, senior vice president of the business intelligence firm Current Analysis Inc. of Sterling, Va. Baroni said the company has a three-tier structure for its partnerships: tier one is for strategic partnerships, tier two is for program- or market-specific partnerships, and tier three is for ad hoc partnerships. The company puts the most effort into the tier one partnerships, he said.Strategic partnerships often entail formal processes for identifying, evaluating and selecting partners, analysts and industry officials said. The final selection of a strategic partner might consist of reviewing a company's financial information, attending a technology demonstration and checking customer references, company officials said.IBM reviews a prospective partner's technology offering, financial stability and references, Blossom said. If the company passes those tests, then the integrator checks to see if there is a strong market opportunity, he said.Because hundreds of companies wanted to partner with IBM on security solutions after Sept. 11, the integrator had to strengthen its evaluation process to handle the large volume of requests. "We had to get organized and take a consolidated look at these requests," Blossom said. "We wanted something that was reasonably quick, fair and equitable and that would yield [business results]."But the job isn't finished once a partner is selected, Baroni said. Unisys puts principals in charge of the partnerships and conducts quarterly reviews to make sure both parties generate new business, he said.The process that Deloitte Consulting uses for forming partnerships has its origins in major cross-industry alliances, but now extends to market-specific alliances as well, Campbell said.A strategic partnership at EDS typically arises from sponsorship of the partner by a specific business unit of the company, Ingram said. For example, EDS' U.S. government group met with EzGov Inc. of Atlanta in 1999 to see whether the companies might benefit from a strategic partnership focused on e-government solutions.Before forming a partnership, EDS checked EzGov's business plan, market strategy and technical expertise. The companies announced a formal partnership in 2001, and they have worked together on e-government projects in the United Kingdom and Massachusetts, said Ed Trimble, EzGov's president and chief executive officer.Larry Davis, Unisys' Florida portfolio sales executive, agreed. "We don't jump into it and go full bore until we can develop a track record [with a company]. If it comes to a large bid, you want to have a track record before you pursue a large contract with a small company," he said.Florida has served as a fertile breeding ground for some of Unisys' partnerships and alliances. The most successful of these is an alliance between Unisys and facial recognition company Viisage Corp. of Littleton, Mass., that has matured into a strategic partnership, Baroni said.The companies have partnered on a driver's license system for the Florida Highway Safety and Motor Vehicle Department and a jail management solution for Pinellas County, Fla., Davis said.