Co-innovation shakes up partner-client relationships

The emerging partnering approach creates closer ties between clients and service providers, but also has implications for risks and rewards; other IT channel news.

Co-innovation relationships between partners and clients are critical for a business's "creative success," but also change the nature of consulting and systems integration.

Analysts at Forrester Research, based in Cambridge, Mass., said they believe enterprises must focus on creativity to differentiate, noting that access to cloud-based technologies is now ubiquitous. Partnering provides a key source of creativity, as enterprises look beyond their walls for novel product ideas, sales methods and business operations, according to the market research firm.

"You are going to need the help of service providers that are investing with you to create that value," said Ted Schadler, vice president and principal analyst at Forrester. Schadler spoke at Forrester's Technology and Innovation conference. The online event, which ran Nov. 2-3, was geared to CIOs and other technology managers.

Ted SchadlerTed Schadler

Co-innovation, or co-creation, is central to the "important role partners play in your creative success," Schadler noted, citing consultancies, integrators and agencies as examples. Customers benefit from faster time to value, while partners benefit from improved margins and the ability to become preferred service providers, he said. Accenture has also noted the push for co-innovation within partner ecosystems.

Such relationships, however, require new ground rules between partners and customers. Partners must invest in expertise, analytics and AI, and assets, Schadler said. The latter category includes a partner's custom proprietary offerings and, increasingly, assets built on top of alliances with technology providers. Schadler pointed to alliances between partners and SaaS companies, hyperscalers and analytics providers as examples.

"There is a lot of investment that [partners] need to make in order to win your business and help you achieve your goals, which should be their goals," he said.

Partners need to assume more risk in co-innovation relationships, investing ahead of revenue, Schadler said. Customers, for their part, should reward partners based on outcomes. Those outcomes don't have to focus strictly on revenue, but should consider other results such as product launches or marketing conversions, he added.

Outcome-based contracting will edge out service-level agreements (SLAs) as the way partners and customers manage co-innovation relationships.

Fiona MarkFiona Mark

"Where the old way may have focused on managing costs and SLAs, your new relationships are going to be focused on outcomes," said Fiona Mark, principal analyst at Forrester, who presented at the event.  

Service providers anticipate a growth in outcomes as the way to measure performance. Providers "are expecting to see an uptick in agreements with clients that emphasize outcome-based delivery," Mark said.

Logically acquires Halski Systems

Logically, an MSP with headquarters in Portland, Maine, acquired Halski Systems, a service provider with expertise in Citrix technology and unified communications.

Halski, based in Gainesville, Ga., focuses on the southeast, where it manages more than 5,300 endpoints. The company's Citrix desktop virtualization skills fit into Logically customers with work-from-home and hybrid-work initiatives, noted Michelle Accardi, CEO at Logically. The UC capability, meanwhile, contributes to Logically's communications-as-a-service offerings.

Michelle Accardi Michelle Accardi

Two or three additional deals are on the horizon, she said, noting Logically looks for MSPs in the $5 million to $15 million revenue range. "We don't see ourselves slowing down on the acquisition track," she said.

The company aims to create a national footprint and plans to surpass the $100 million revenue mark late this year or in early 2022. 

The Halski deal marks Logically's fifth acquisition in the last nine months and its 10th since 2019.

Tercera invests in Hakkoda

Tercera, an investment and advisory firm specializing in cloud professional services, has made Snowflake specialist Hakkoda its latest target.

Where the old way may have focused on managing costs and SLAs, your new relationships are going to be focused on outcomes.
Fiona MarkPrincipal analyst, Forrester

Hakkoda has U.S. headquarters in Boulder, Colo., and operates its main delivery center in San Jose, Costa Rica. The company will use Tercera's $5.6 million funding to boost its presence in North America and Costa Rica, expand its data engineering team in Latin America and build vertical-specific offerings on Snowflake's cloud data platform.

Erik Duffield, CEO and co-founder of Hakkoda, said the company plans industry offerings in the healthcare vertical, for both payers and providers, and financial services, specifically retail banking. Hakkoda has hired architects and application developers from those industry sectors and will partner with clients and customer advisors, ideally under co-innovation relationships, Duffield said.

Hakkoda provides its Snowflake services, which include data migration, governance and application development, in a market dealing with data sprawl. A Hakkoda-commissioned survey of more than 300 IT and business data leaders found 35% use five or more data warehouses.

"We knew, from experience, there was usually more than one, but 35% having more than five is a big surprise after all these years [of business users] chasing a single version of the truth," Duffield said. The need for an enterprise-wide data repository has spawned layers of IT projects aiming to consolidate data to improve consistency and quality, he added.

Other news

  • Cloudbakers/Qwinix, a Google Cloud Premier Partner based in Chicago, launched Cloudbakers University, which offers online learning for Google Workspace users. The university provides advanced and essential-level courses, instructional videos, practice activities and questionnaires. Cloudbakers/Qwinix offers its online training to new customers in conjunction with Google Workspace migrations, a company spokesman said. Existing customers can tap the university to train new hires or offer employees continuous learning, he added. The company plans to start with Google Workspace education and end-user security and add Google Cloud Platform and ISV partner platform education curricula.
  • Upstack, a web platform that sells cloud services through sales agents, has obtained $100 million in financing from MidCap Financial and Morgan Stanley Private Credit. Berkshire Partners earlier this year invested $50 million in Upstack, one of many moves investors have made in the cloud consulting services market in 2021.
  • Aryaka, a managed SD-WAN and SASE vendor, rolled out a channel program for sales agents. The Aryaka Accelerate Partner Program offers strategic account mapping, sell-for or sell-with models, and online quoting tools.
  • Inoapps, a systems integrator and Oracle partner with U.S. headquarters in Houston, inked a partnership with DocuSign. Inoapps will offer integration services to shared DocuSign and Oracle customers.

Executive appointments

  • Deep Instinct, a cybersecurity company based in New York, appointed Brian Feeney as vice president of global channels and MSSPs. Feeney previously ran channel sales for Cortex, Palo Alto Networks' security operations business unit.
  • Addigy, an Apple device management software vendor, promoted Jason Samples to chief revenue officer. Samples will evaluate new business opportunities in the MSP market, according to the company. He was previously Miami-based Addigy's vice president of worldwide revenue.
  • MSP360, a backup and IT management vendor for MSPs, appointed Kurt Abrahams as vice president of marketing. He joins the Pittsburgh-based company from Veriato, where led internal and external marketing and communications initiatives.

Market Share is a news roundup published every Friday.

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