Co-innovation partnership model emerges as best practice

Digital transformations have pushed technology to evolve rapidly, sparking co-innovation as a partnership model to drive change among vendors, channel partners and customers.

Despite how competitive tech markets can be, co-innovation partnerships have emerged as a model to help businesses drive faster deployments and adapt.

With the push for innovation and digital transformation, partner relationships require more fluid agreements and collaboration among all parties to keep up with the pace of technology. Recent technical advances -- such as cloud, mobile, social media and containers -- change how businesses build and maintain their IT infrastructure and offer more flexibility in how they deploy tech solutions.

The impetus for co-innovation partnership models

In the past, updating an application could be a cumbersome process that required weeks, months or even years to complete. Legacy application deployments often followed a long complex deployment model. Steps included issuing a request for proposal, soliciting bids, narrowly defining the work needed, hiring a third party, setting milestones, beginning work, checking deliverables and delivering the specified system. That process can be too rigid, cumbersome, segmented and slow for digital transformation projects.

Alexandra Zagury photoAlexandra Zagury

"Traditionally, organizations were quite siloed. Engineering would not interact much with the management team," explained Alexandra Zagury, vice president of partner managed services and as-a-Service sales at Cisco's Global Partner Organization. "As timelines become more compressed, they need to work symbiotically."

At its core, co-innovation is a collaboration model designed to speed up deployments.

"Co-innovation is not the classic consultant job, like installing an ERP system or building a data warehouse," said Erik Duffield, CEO and co-founder of channel partner Hakkoda.

Erik Duffield photoErik Duffield

How co-innovation partnerships work

Where traditional consultant jobs have set objectives, timelines and budgets, co-innovation requires and allows for more fluidity. A project may have a few broad goals, such as improving customer service or creating a new offering for customers. To realize such objectives, the customer, partner and vendor need to closely examine existing business processes, identify areas in need of modernization, create new outcomes and put metrics in place to determine how well the changes work. As a result, a project's scope is much less defined at the project's beginning than in the past.

"When a transformation project starts, a customer often lacks the detailed sequence of steps of how they are going to move from where they are now to where they want to be," explained Duffield.

Co-innovation leverages partners' knowledge to help them forge that path.

Claudio Pinto photoClaudio Pinto

"We rely on our partners for co-innovation to create unique, industry-specific solutions based on their industry know-how," said Claudio Pinto, senior director of partner ecosystem success at SAP Ariba and Fieldglass. "MSPs operate with strong innovation teams that consistently converse with the client and monitor the execution of their programs. Through these engagements, MSPs obtain a great deal of information regarding how to improve workflows and reduce client costs, especially as it relates to unique industry needs."

To encourage co-innovation, partners must adapt their own business practices and deliver a just-in-time consulting model. In this model, partners spin up technical resources as the client needs them rather than as part of a preprogrammed project with clear established milestones.

Partners require dramatic changes to support as-needed consulting. They no longer know how long an engagement will take and how much the customer will spend. Partners must structure their operations with a cloud-like, usage-based collaboration model. To support this approach, they must develop new project management tools and put new business and financial processes in place.

Co-innovation often involves sharing intellectual property, and partners need to know how to monetize it.

"In most cases, co-innovation entails the integration of our partner's [intellectual property] within the context of Channel Partner solutions, or the Partner Channel they choose to utilize to help them reach our customer base and expand their audience," explained SAP's Pinto.

Tips to tackle changing business models

The technology market's rapid movement provides partners with a growing number of potential engagement opportunities and new partnership models.

"My advice is to build your business with clarity," said Hakkoda's Duffield. "There are lots of possible models but not all will be effective."

Co-innovation partnerships dramatically alter partners' daily operations. They need to become more agile in their approach to each assignment. During the transition, partners must be flexible and perhaps even test out a few new business models. In some cases, one group of employees might be responsible for supporting the legacy business model and processes and a second for digital transformation opportunities.

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