Partner ecosystem strategy: Co-innovation and other variants

Co-innovation, generative partnering and co-creation describe alliances among customers, service providers and tech vendors. But what do the terms mean and what are the benefits?

IT services companies, customers and technology providers are reinventing how they work together in a partner ecosystem strategy.

A growing number of engagements feature closer relationships, a focus on business outcomes and a willingness to create entirely new offerings. Such collaborative approaches operate under several labels:  co-innovation, generative partnering, co-creation, service creation and strategic partnerships.

The terms carry different shades of meaning, but stem from the same forces. Technical complexity, time-to-market demands and IT skills shortages encourage alliances rather than DIY approaches. The impetus to rethink partnerships is particularly strong among enterprise customers that rely on technology to power their core business models. Such companies seek relationships that offer innovation rather than off-the-shelf technology offerings. Service providers, meanwhile, believe the newer collaborative approaches foster long-term customer relationships, zero in on customers' specific needs and accelerate delivery schedules.

"The speed of technology change is getting faster and faster," said Brendan Walsh, senior vice president of partner relations at 1901 Group, an MSP in Reston, Va., and a wholly owned subsidiary of Leidos. The pace of development favors partnering over building technology in-house or buying it through an acquisition, he noted.

"Partnering is going to become bigger versus creating everything on your own," Walsh said.

Terms of engagement

Partnering in the IT sector has been around for years. But arrangements typically resulted in one-off product sales or discrete projects. The emerging set of alliances fall into several categories.

Co-innovation. This term describes relationships where customers and partners, such as consulting firms and other service providers, develop new offerings that address a particular business outcome.

"We look at today's tech execs, CIOs and CTOs, and they need to deliver business outcomes," said Matt Guarini, vice president and senior research director at Forrester's CIO Practice, in a co-innovation podcast. "How do they do that when you are limited by how much tech talent and how much capability and how much money you have to spend within your organization? You can't do everything yourself."

Ted Schadler headshotTed Schadler

Co-innovation extends the technical capabilities of resource-constrained IT executives. A partner's contribution, however, goes beyond technology to include the methods of invention -- ways to innovate quickly and at scale, noted Ted Schadler, vice president and principal analyst at Forrester.

"You are looking for partners to bring new ideas, sure, but you are also looking for partners to help you get it done in ways you want to get it done," he added.

Co-innovation can also occur between service providers and technology vendors or involve service providers, technology vendors and customers. The task of building an industry cloud, for example, could bring together the customer, a consulting firm and a public cloud provider.

Generative partnering. Market research firm Gartner describes this type of partnership as one in which a customer and a technology partner collaborate to build something that doesn't currently exist. Such efforts aim to achieve a particular business outcome.

Mark McDonald headshotMark McDonald

Generative partnering is especially prevalent among digital businesses that lead with technology. Those companies view technology as a source of competitive advantage, but can't gain that edge with traditional, market-defined offerings available to any business, said Mark McDonald, a vice president at Gartner and the company's lead analyst on generative relationships.

In this approach, the customer has an outcome in mind, but doesn't specify the technology or combination of technologies needed to reach its goal. The enterprise and its partner work together to figure that out. Generative partnering stands out for its open-ended nature in contrast to tightly scoped projects or deployments based on predefined solutions. The method provides an "unbounded view of technology," McDonald said.

Co-innovation shares the fluidity of generative partnering in that the parties typically don't start with a preconceived notion of what the solution ought to be.

Co-creation. This type of partnering has some of the characteristics of co-innovation in that the participants build something new together. Such arrangements often involve a service provider and a technology vendor, which work together to build an offering that meets customers' needs.

Co-creation arrangements often focus on building an asset -- an app, for example. The partners typically look to commercialize their co-created intellectual property beyond the initial customer or customers, so the asset becomes a saleable product.

A generative partnership, in comparison, would not start with an expectation of commercializing a jointly developed offering, McDonald noted. The partners could tweak an offering for a broader market, but only after the initial customer's business outcome has been achieved, he added.

Service creation. Cisco devised this multistep process to co-create offerings with mid-sized to large channel partners.

Service creation begins with developing the offer and building the service. Next, the parties craft a business plan and pilot the service with customers. Subsequent steps in the process address sales readiness and revenue forecasting, culminating with the launch of the new service.

The process is modular so providers can integrate it within their own service delivery frameworks, according to a Cisco spokesperson.

Strategic partnership. This approach brings together a services provider and a technology vendor or vendors that co-develop technology and also pursue a joint marketing strategy.

Brendan Walsh headshotBrendan Walsh

Walsh said cooperatively built technologies could potentially just "sit in a lab" without a plan to address the buyer's journey. "The strategic partnership is that one-two punch of innovation and go to market, together," he noted.

Companies entering such partnerships must focus on the operational details, particularly when it comes to defining who does what in a relationship. To that end, the RACI (responsible, accountable, consulted, informed) matrix provides a mechanism for assigning roles, Walsh said.

Benefits of partner ecosystem strategy plays

Those emerging partner ecosystem approaches lend themselves to the boldest business and technology initiatives.

Co-innovation, for instance, "is appropriate for the most risky, uncertain ventures," said Alexei Miller, co-founder and managing director of DataArt, a software development services company with headquarters in New York. He cited unproven, experimental technology and untested business models as areas suitable for co-innovation.

Alexei Miller headshotAlexei Miller

The risk of journeying into the unknown means the parties involved should be prepared to accept a total loss, Miller said. He suggested partners consider creating a separate company, with independent management, to control costs and manage the rules of a co-innovation effort.

In addition to tackling new ventures, the engagement models can also help cultivate repeatable offerings.

A partnership between Chicago-based service providers Asperitas Consulting and Villa-Tech provides a case in point. The companies created a virtualized network test lab for two clients that needed a faster way to test on-premises networks. An enterprise's networking team typically struggles to keep up with its cloud counterparts, according to Derek Ashmore, application transformation principal at Asperitas. Cloud personnel can quickly make changes in code, but networking staff must deal with physical devices, he said.

The companies' virtual lab, however, creates a digital twin of a customer's network or a subset of its network for testing. The digital twin links to a customer's cloud providers and services, so customers can evaluate a hybrid environment. An IT group can quickly spin up virtualized networking devices for testing versus maintaining an array of gear in a physical lab.

Asperitas and Villa-Tech now plan to take the virtual lab, which is delivered as a managed service, to a wider audience. "We're coming up with a feature set and consumption model that makes sense for customers," Ashmore said.

The companies will share the revenue and may also include colocation providers as additional partners. Colocation companies have expressed interest in hosting the virtual testing lab, Ashmore said. Their involvement would give customers the option of an externally hosted lab in addition to having Asperitas and Villa-Tech manage an on-premises deployment.

Amol Ajgaonkar headshotAmol Ajgaonkar

The result of co-innovation or co-creation, however, isn't always an individual product or service.  Amol Ajgaonkar, distinguished engineer at Insight, a solutions integrator based in Chandler, Ariz., said the company's collaboration with ISVs and cloud providers results in "offerings" that include a mix of products, services and processes.

Customers gain cost and speed benefits when they adopt an industry-specific offering that Insight has deployed on previous occasions. "Since we have done it before, we understand what the cost is and what the real timeline is," Ajgaonkar said. "From a customer's point of view, it gives them peace of mind."

AI has emerged as one technology in which the newer partnering methods come into play, Ajgaonkar noted. Customers may have data to exploit but don't know how to build an AI model. Or, they know how to build a model, but don't know how to scale it from pilot to production. Insight teams up with an inference engine ISV to create or scale an AI model. Working together, the companies can offer an AI pipeline and process that makes those goals easier for customers to achieve, he added.

Results stem from partner discussions focused on strategic problem solving rather than transactional sales.

"You have a part of the solution; we have a part of the solution -- so, how can we make it better?" Ajgaonkar said. "Having those conversations up front has really driven a lot more innovation."

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