Alliance-driven Solutions & Services: Business Need for both Customer & IT Service Providers

By Rajesh Gupta, consulting partner for CRO initiatives at TCS and Sunil Kumar, head of the Financial Crime Compliance Centre of Excellence of BFSI CRO initiatives at TCS

In the present-day IT solution landscape, we are seeing an emergence of solutions that are designed by bringing together various best-in-class tools and components connected through API’s. This is a departure from the “end-to-end” solution approach which used to be a preferred one not very long ago. Organizations are moving towards use of multiple solutions while designing the solution landscape consisting of components that are scalable, cost effective, best fit for the customer and can co-exist in the ecosystem. With the advancement in technology like Rest APIs, Cloud etc., it has become easier to integrate the applications coming from multiple organizations now.

From the vendors’ perspective, alliances allow partner vendors to scale quickly and build innovative solutions to enter new markets or expand existing footprint. It enables them to gain competitive advantage through access to a partner’s resources, including markets, technologies, and capital.

The Alchemy of Alliances

While there is alliance galore in today’s IT marketplace, successful alliances require a proper balance between partners who bring in synergy and work together to achieve the common goal. For an alliance to be sustainable, there should be transparency among partners on how they operate in the partnership. Key considerations to make alliances work are:

Figure 1

Types of Alliances

• Strategic – These alliances are generally signed at the corporate level and provides an umbrella to multiple solutions and services-based relationship led by offering leaders in the organizations that are under alliance. The benefit of corporate level strategic alliance is that it allows the partners to reach basic understanding across all business areas in one shot and expedites the process of entering into specific arrangements by negotiating only the incremental terms and conditions.
• Tactical – These alliances are entered with an intent to meet specific shared objectives between the partners in a focus area viz., presenting a set of AI based offerings leveraging each other’s core competencies to take on competition and make a bigger impact in the market.
• Pursuit-specific – These alliances are entered to meet a specific need to improve chances of winnability in a particular deal in a competitive scenario such as joint bidding for an IT RFP (Request for Proposal) by a Solution Provider and System Integrator. The good part about this arrangement is that it can be entered into faster and and creates obligations for the two parties within a limited scope.

Alliance Driven Ecosystem for Customers

Positioning and Winnability of Offerings

When it comes to opting for alliance-driven solutions, customers have plenty of choices nowadays. Therefore, it is incumbent upon partner vendors to differentiate themselves favourably from competition in order to be visible in the market and get proper customer mindshare.

For an alliance-based solution to be successful, not only it has to add value in the customers’ solution landscape but should also be commercially viable from the perspective of all involved partners. To achieve this, alliance partners need to ensure the following:

Figure 2

Benefits to Customers and Vendors

Some of the key benefits of partner solutions from the perspective of Clients, Partners and both parties are depicted below: –

Figure 3

Risks and Pitfalls

While alliance-led solutions have certain benefits, there are a few risks present as well that needs to be taken care of pre-emptively. These include: –

Figure 4

Due-Diligence of Alliances

For Customers

While it is important that the customers perform proper vendor assessment before availing any services, they have to be extra cautious if the offerings are provided by two (or multiple) vendors under alliance. Some of the key points for assessment are given below.

• Perform due diligence in the following areas:
  • How the services will be provided by the partner vendors?
  • Is there clarity in the roles played by the partners so that all the services are covered by at least of them and they are collectively responsible for each of the terms of service under the contract.
  • Is it a seasoned relationship among the vendors of a one-off arrangement to secure a deal?
  • How services will be availed from partner vendors in case the alliance is called off by the partners or if there is a breach of contract?
  • Assess the implications of various partnership options such as, entering into a tripartite deal with the partner vendors or sign agreement with principal contractor and involve the other partner vendor as sub-contractor and choose the best option under the circumstances.

For Alliance Partners

From the partners’ perspective, the following should be ensured: –

• Conduct proper due diligence of the other party entering into the alliance
• Perform cost benefit analysis to support the business case for alliance and get an internal buy-in from all relevant stakeholders.
• Review the terms of reference of alliance analyzing rights and obligations thoroughly
• Examine any possibility and consequences of any liability arising from partner (the other party of the alliance) or customer (to whom the services have been sold under alliance) in the event of any breach of contract or calling-off of the alliance.

Conclusion

Any alliance is as good as the alliance partners’ reputation, their intent and commitment towards the alliance and their willingness to sort out any differences amicably through negotiations in case there are any. Once the alliance is formed, it is incumbent upon partners to make it a success as failure to do so can lead of losses and even reputational damage for both. If bigger alliance poses a risk, one can make a modest start to a relationship by partnering for a small Proof-of-Concept (PoC) delivery to a customer or forging alliance for a small territory or single solution, experience the relationship for some time, remove any initial hiccups and then get into bigger relationship. In this way, potential partners can ward off any fear of failure of alliance and meet their objectives in an a more organized manner.

Rajesh Gupta

Sunil Kumar

About Authors:

Rajesh is consulting partner for CRO initiatives at TCS, responsible for establishing, nurturing, and growing the partnerships for the unit. He has 25+ years of experience in delivering multiple Risk programmes and managing large portfolios. Currently provides advisory services and innovative solutions in Risk and compliance area.

Sunil Kumar heads the Financial Crime Compliance Centre of Excellence of BFSI CRO initiatives at TCS, responsible for leading solutions & advisory services in AML, KYC, Compliance, Control Room & Capital Market Surveillance. As an industry leader, he brings in rich consulting experience of over 28 years in BFSI domain and has led several transformation programs for Banks, Financial Institutions and Regulators globally.