As the industry gets more competitive, partner programs are under increasing pressure to produce tangible and significant results for their corporation. Traditional measures of partnering productivity (like revenue and lead generation) have become increasingly outdated - relics of a simpler industry when deals were taken direct and partners worked independently if at all.

Other financial measurements like Return on Investment (ROI) are productive starting points, but they require a significant bending of traditional accounting principles to be useful. The inputs to ROI calculations as applied to partnerships are almost always subjective and, therefore, the results are open to debate. Still, ROI calculations represent a significant step forward for vendors that had heretofore based their partnering decisions on the experience of their sales executives.

Any calculation of partnering effectiveness requires a rigorous set of metrics applied over a period of time, a disciplined corporation that continues to gather the information required to calculate specific successes or failures against those metrics, and a management vision of how partnering is going to help them achieve their corporate goals. By nature, this kind of calculation is highly detailed, takes time to set up and administer, and produces results that will be most interesting to executives with a long view of their marketplace. However, as ROI calculations have often shown, even a passing attempt at process-driven decision-making can have dramatic results in an environment without defined metrics and processes.

To improve the quality of partner decisions, corporations must identify the specific partnering core competencies that are required for success in their market. They must then measure the impact of investments against these competencies. With this information, corporations can begin to predict the impact of any partnering action they make take.

One solution is implementing a Partnering Results Optimization (PRO) discipline that focuses decision-making on specific objectives and results. PRO is a decision-making process that removes much of the emotion from investment decision-making, and replaces this emotion with a detailed framework of information. It takes a multi-dimensional problem, formats the required inputs and outcomes, and provides direction to executives that want to increase their odds of success.

While not necessarily a linear process, PRO activities can be broken out into five steps, with each step taking the corporation closer to a complete understanding of their partnering activities.

1.   Review Corporate Objectives

These objectives might include increasing revenue by some percentage, driving costs down as a percentage of revenue, increasing brand awareness, improving customer satisfaction, shortening the delivery cycle, or signing up new partners. Partner managers must know about these corporate objectives and understand how their activities help support their company in achieving them.

2.  Select a Strategic Partnering Framework

The Technology Channels Group framework is based upon the concept that the entire corporation must be involved if partnering success is to be achieved. The Partnering Results Optimization (PRO) framework divides partnering activities into seven Key Performance Areas (KPA) and evaluates activities and results in each area. The seven key performance areas are:

1. Market Mapping
2. Whole Product
3. Partner Screening
4. Channel Enablement
5. Partner Programs
6. Sales Productivity
7. Company Alignment

Categorizing partner programs and activities into this framework makes it easier to manage partnering activities.

3.  Isolate Your Partnering Core Process Competencies

Within each of these seven key performance areas are a large number of specific processes. The processes can be isolated, understood, and studied for their impact on revenue growth and/or cost to the corporation.

Among these processes are a number that disproportionately impact results. These are the partnering core process competencies that drive partnering success over time.

There are usually no more than 20-25 partnering core competencies in any market or channel. Examples of partnering core competencies are: Partner Screening, Demand Creation, Product Training, and Technical Support.

4. Determine the Current Impact of Each Core Competency (Cost and Revenue)

Each potential partnering core competency has a cost and a corresponding impact on revenue. Unfortunately, in the beginning, it can very difficult to break out the costs associated with any specific core processes, and even more difficult to calculate the impact on revenue. However, when corporations fail to grasp the relationship between cost and revenue, they risk losing any economic advantage that might be gained from working with partners.

5. Calculate PRO for Improving Each Core Competency

Improving performance in any core competency will require an investment. To calculate the PRO level, determine the impact, which is cost reduction added to the revenue increase that would be caused by the action. Then divide the impact by the cost required to achieve the impact. The resulting number is the PRO level. PRO levels can then be compared to determine which potential actions will have the largest benefits.

There are a number of benefits to a corporation that follows this kind of rigorous decision-making process. It builds consensus within the corporation as the information is gathered and discussed. It standardizes the process and focuses on the business issues in a methodical manner. It establishes a historical record, and if done consistently, engenders confidence among senior executives that partner investment decisions are being made rationally. It is this kind of process-orientation that enables a corporation to create competitive advantage through partnerships.◊