Forming a strategic alliance with a few
well-chosen vendors means having
someone in your corner when you need it the most.
“When you plan to have multiple transactions with a company, signing a contract is
a good place to start, but to really benefit
from an association with that company,
you should consider forming a strategic
alliance,” says Ronald Stein, vice president
of business development for Principal
Technical Services. “When you sign a contract, you make an agreement; but when
you form a strategic alliance, you build a
relationship.”
Smart Business spoke with Stein about
the benefits of forming strategic alliances
and what to look for in a strategic alliance
partner.
What’s the difference between a contract and
a strategic alliance?
A contract or Master Service Agreement
(MSA) is just a piece of paper that outlines
terms and conditions under which a vendor sells something to a customer. A strategic alliance is so much more than that. It’s
a living, breathing relationship that evolves
over time as companies in the alliance
work together for mutual benefit. A strategic alliance partner isn’t just interested in
selling you something; a true ally is interested in understanding your business and
helping you to achieve your business goals.
Not all business connections need to be
strategic alliances. If you need a new copier, you simply call your vendor and order a
copier at an agreed-upon price. But when
you’re shopping for professional services,
it’s not as simple as looking up a model
number and placing an order. You’re in the
market for people with specific qualifications who will be essential to the smooth
operation of your company. A strategic
alliance partner has a vested interest in
your success and will make it a priority to
provide exactly the type of personnel you
need.
What are the key elements of a strategic
alliance?
A truly beneficial strategic alliance
requires communication and trust. You
need to be willing to disclose specific information about your company to your strategic alliance partner, and to do that you
need to be able to trust that the information you disclose will not be shared with
your competitors. You should invite your
strategic alliance partners to your shareholder meetings and holiday parties. You
should schedule regular meetings with
upper management. The more information
you communicate to them, the better
they’ll be able to anticipate your needs and
provide the right services in a timely fashion.
What should companies look for in a strategic alliance partner?
I’ll tell you what not to look for — the
lowest price. I’m not saying that price isn’t
important, but the lowest bidder isn’t necessarily going to get you the best products
and services.
What you do want to look for are qualifications such as years of experience in your
business niche, number of clients in your
business niche, and favorable recommendations from those clients. You want a partner who’s a real player in the industry —
one with a history of providing a large volume of exactly the type of services you’re
looking for.
When choosing a strategic alliance partner, you also need to consider qualifications that aren’t so easy to measure. Strong
ethics are a must, since your partner will
be entrusted with sensitive information.
Also, think about the personnel you’ll be
dealing with at the vendor. Will you talk to
the same person all the time, or will your
needs be handled by several individuals,
each with only a partial understanding of
your situation? Continuity is key.
What are the advantages of forming a strategic alliance?
The advantage of having a partner that
can understand and even anticipate your
needs is huge. Some strategic alliance partners may even be able to help you better
define your needs. They often work in your
industry on a broader scale and have useful
(nonproprietary) information to share. You
also need to remember that a strategic
alliance is a relationship — not just
between companies, but between people
working for those companies. Someone
you have a relationship with is more likely
to work hard on your behalf and put your
needs on the top of his to-do list.
RONALD STEIN is vice president of business development for
Principal Technical Services in Irvine. Reach him at (888) 787-3711, ext. 23 or [email protected].