PARTNERSHIP

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By Nick Wakeman

Artwork: Dave Cutler/SIS

To partner or not to partner is not the question for U.S. companies pursuing business opportunities with international governments around the globe.

Forming alliances and partnerships are an essential element in the global government strategies of companies such as AT&T, IBM Corp., Oracle Corp., Science Applications International Corp. and TRW Inc., all of which are involved in key information technology efforts overseas.

For these companies, partnerships with U.S. and foreign firms serve both as a way to enter a specific country's market and a strategy to move solutions more easily from one country to another.

A government project in Malaysia, South Africa, Switzerland or the United Kingdom can serve as a springboard for similar work elsewhere in the country or even the other side of the globe.

These systems integrators and telecommunications companies are increasingly on the lookout for partners that can migrate with them from one effort to the next, analysts and company officials said.

At the same time, the pursuit of partners for international government business is focusing on fewer companies. For example, IBM officials said their company's goal is to narrow its number of partners to a core group.

Last year, Armonk, N.Y.-based IBM revamped its partnership program after a review of its far-flung global business operations, said Ned Lautenbach, senior vice president of global distribution and sales.

Ned Lautenbach, IBM's senior vice president of global distribution and sales

IBM moved away from profit centers in individual countries to an approach where a manager like Lautenbach oversees business units on a global basis. As a result, IBM's partners no longer have to sign a separate agreement with IBM for each country in which they will work together.

"We have been working hard to make [the] terms and conditions for our business partners simpler and more global in nature," Lautenbach said. "We want to make it very easy to move from country to country."

IBM signs a business partner charter agreement that sets out what IBM will do, what the partner will do and how the two will work together, he said.

"It is not a blanket approval," Lautenbach said. "We have to understand our partner's capabilities." If a partner wants to work with IBM in Singapore, for example, the partner had better have a presence in Singapore, he said.

Many of IBM's partners also were pushing for a change to the partnership agreements, said IBM's Jeff Rhoda, manager for merchandising, distribution and business partners. "We were listening to our partners," he said of the changed approach.

Agreements between a partner and IBM were called different things in different countries, which added confusion to the hassles of negotiating and signing separate agreements, Rhoda said. Now, there is a single umbrella agreement that is modified slightly if there are special requirements from country to country.

IBM partnered with Muller Martini & Co. of Zurich, Switzerland, to build an automated mail sorting system. That system has become a product for IBM and Muller Martini, and together they won another contract recently in Norway, Rhoda said.

By sticking together, IBM is saved from having to "reinvent the wheel each time and in each country," he said.

A partnership with J.D. Edwards Co., Denver, a financial services software company, is working well because that firm has a presence in many of the same countries that IBM does, Rhoda said. One of those projects is an online financial management system for the Commonwealth of the Northern Mariana Islands in the South Pacific.

While IBM will always have hundreds of partners to draw from, the company is focusing on developing a core to draw on, Lautenbach said.

But IBM is not alone. This trend is on the rise throughout the information technology industry, said Linda Cohen, an analyst with the Gartner Group, a market research firm in Stamford, Conn.

Cohen described the phenomenon as the "favorite date." Partnerships are becoming more meaningful because companies, primarily systems integrators, are accepting the fact that they cannot do everything, she said.

Trying to be everything to everybody is expensive, Cohen said. "To get the better margins you have to focus on being the best on certain packages," she said.

And forming long-term partnerships with providers in other areas allows the lead partner to move quickly. "They can implement solutions faster, better and with better margins," she said.

Alas a favorite date doesn't mean the only date. "I don't see many marriages," Cohen said.

Tighter partnerships, especially with other companies that have a global presence, are expected to rise, said Michele Grisham, vice president for the public sector practice with G2 Research Inc., Mountain View, Calif.

"It is a more synergistic approach," she said. By staying with the same partners for similar projects, leveraging projects is easier.

Leveraging projects and having broad-based partnerships is easier when companies have a global structure, such as the form adopted by IBM and Oracle Corp., Redwood Shores, Calif., Grisham said.

"They are sort of the guinea pigs right now," she said. "People will be watching for their success.'

Oracle photo Jack Pellicci, vice president of Oracle's global public sector

Forming partnerships around vertical markets such as defense, public safety, transportation and public administration is absolutely essential, said Jack Pellicci, vice president of Oracle's global public sector.

An effective partnership must be formed with a formal agreement before projects are pursued, he said. It is a waste of time to create partnerships on a project-by-project basis, Pellicci noted.

Partnership agreements must set out goals and ways to measure performance. "You have to ask how well are you doing and are you really satisfying your customers," Pellicci said. "This requires a more sophisticated approach."

Like IBM, Oracle concentrates on three or four primary partners in each of its vertical markets, even though Oracle has 3,500 companies in its business alliance program, Pellicci said.

But just because Oracle and IBM are looking for partners who are global and can easily move from country to country to pursue new projects, neither company is ignoring the importance of having country-specific partners.

"Barriers are breaking down but there is still a requirement for a local presence," Pellicci said. "You need people who know the culture and know how the government operates."

But if these companies have the skills, they can be nurtured. "Everybody wants to expand," Pellicci said.

That is the approach TRW Inc. of Cleveland, Ohio, has taken in pursuing a contract in South Africa to build the Home Affairs National Identification System, an automated fingerprint identification and ID card system.

Because South Africa's information technology industry is underdeveloped, TRW spent a year looking for the right partner before picking the 20-person Motswedi Technology Group, a Cape Town, South Africa, systems engineering firm.

TRW was looking for a small firm that knew the local government, customs and culture, said Daryl Solomonson, director of business development for TRW. "We are going to take them global," he said.

If TRW wins the identification system contract, Motswedi will provide installation, training and maintenance, saving TRW from having to transfer large numbers of workers to South Africa, Solomonson said. TRW is training Motswedi employees at training centers in the United States.

The training includes the latest in TRW's information technology but also how to run a business including contracting and pricing, he said. "We see huge potential in Motswedi," Solomonson said. TRW also plans to take Motswedi with it as it pursues contracts in other African countries, Australia and Asia, he said.

For some projects, TRW sticks with traditional global partners and is willing to be a subcontractor as it did in the case of an effort involving the United Kingdom's public safety radio system, said Woody Dyche, TRW's director of public safety systems. Partners included the U.K.'s British Telecom plc, Motorola Inc. of Schaumburg, Ill., and Finland's Nokia Corp. British Telecom is leading the team.

"This same team is considering competing for other similar projects across Europe," Dyche said.

Building partnerships that can move from country to country also is an essential part of San Diego-based SAIC's strategy, said Allen Herskowitz, sector vice president and general manager for studies and systems. "We almost never establish a partnership for a single project," he said. "We look at it as a strategic alliance with a view toward the long term."

But local reputation and knowledge is still an important value that partners bring to large integrators. SAIC is partnering with KUB Inc., Kuala Lumpur, Malaysia, to build an online university. The SAIC team is developing curriculum and technology, Herskowitz said.

"KUB is providing us the knowledge of the local sociology and the local system," he said. The partnership is helping SAIC pursue other work in Malaysia such as work on the information infrastructure for a new capital city and a business development area between the old capital and the new one.

Local access also is the key for AT&T of Basking Ridge, N.J., said Keith Springen, president of government communications international. "We think globally but every transaction is local," he said. "Partnerships are absolutely critical."

AT&T teamed with Samsung Inc., Seoul, South Korea, to build the information infrastructure for a new airport being constructed for the capital city of Inchon.

"We look at what we don't have and what best meets the needs of the customer and that is how these marriages get formed," Springen said.

As the airport, which is being built on a man-made island in Inchon's bay, is developing, AT&T sees other opportunities in Korea, he said. There will be new high-speed rail links, hotels and offices buildings.

"We hope to be there a long time," he said.

COMPANY	PROJECTS	PARTNERS
AT&T	Airport infrastructure	Inchon, South Korea
		Samsung, Seoul, South Korea
IBM	Financial management system	J.D. Edwards & Co., Denver
		Commonwealth of the Northern
		Mariana Islands in the South Pacific
Oracle	Phil-Net, information	Philippine Long Distance Telephone Co.
		superhighway, Philippines
SAIC	Online university, Malaysia	KUB Inc., Kuala Lumpur, Malaysia
		several U.S. universities.
TRW	United Kingdom National	ICL Enterprises, Thames Valley, England
	Fingerprint Identification System	Cogent Systems Inc., Alhambra, Calif.
TRW	Elector Registration	InfoGrace Ltd., Kingston, Jamaica
	System, Jamaica	Lau Technologies, Acton, Mass.
		Novateric, Ottawa, Canada