The IT Ecosystem Problem, Part 2

Part 2 (With some answers to questions / feedback)

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In Part 1 of this topic, I stated a thesis about the inability of IT vendors to operate an ecosystem strategy in their GTM … and there were many reactions, as you can imagine. In this article I’ll explain the reasons why I believe vendors are struggling, and the key capabilities that are missing in the ecosystem GTM process.

(Apologies in advance … this isn’t a quick article. It’s a complex topic, and it needs a brain dump at the beginning to open an effective dialogue. For the TL:DRs among us: ecosystems are hard … most vendors suck at it … you can get better.)?

To be fair, most people who work in vendor GTM teams have heard and embraced the concept of an ecosystem strategy. Some have made major changes to partner programs, and others have even banished the term “channel” from their program vocabularies as a sign of ecosystem solidarity. After the first article, I heard from quite a few vendor program folks who were adamant they are ones who have truly evolved into an ecosystem strategy. But while some are surely further along than others, I’ve still yet to see a fully-formed ecosystem in the wild.

Still … we are doing a lot of good work to adapt, and I am fully supportive of these efforts. In response to customer buying preferences, vendors are adapting to provide more choice in where and how customers can adopt their offerings. Very many vendors have, indeed, engaged partners in more than one indirect channel and have deployed hybrid sales methods for internal teams that include field sales, inside sales, and digital commerce. Chances are you have a mix of direct and indirect resources … as well as more than one type of indirect partner. (Resellers … integrators … service providers … marketplaces … developers … etc.)

But does that mean you actually “do” ecosystem?

Here's a practical logic test to illustrate my point: can a customer begin their active buying journey with you by visiting your website … follow up with a call to an inside rep to get additional info … get a referral to a local partner who has specialized knowledge in their vertical market … scope a solution that includes product from you (and perhaps other complementary vendors) and services from multiple partners (for technical + consulting needs) … purchase that solution where they choose (your website, a marketplace, the partner, etc.) … and then enjoy an integrated implementation / go-live experience that hits the promised outcomes you advertise on your website? And are the parts of this system interchangeable based on where / how the customer chooses to begin?

If your answer is sincerely “yes” … kudos to you and all your cohort. You have moved in the direction of an ecosystem GTM. But before you get comfortable, stretch the logic of my question to address multiple customers of different sizes, different verticals, different IT strategies, different financial positions, different technical challenges + product needs + business objectives. How integrated is the experience now? You see my point. Ecosystems are hard.

Remember: my definition is that an ecosystem strategy allows customers to move through their buying journey without obstacles of siloed sales teams or legacy systems. We are surely not talking about this evolution of GTM strategy because it is easier than the previous linear model, but because we seek to engage more customers, cover more of the market opportunity, and leverage the capabilities of different types of partners where they add complementary value.

So if we all understand that an ecosystem strategy is a superior method (it is), it begs the question: Why do vendors struggle to implement an actual ecosystem strategy? Through my industry research and consulting engagements I see ten essential obstacles. (Believe me, these are not just the random musings of a guy who spent some time noodling about ecosystems. Dozens of vendors … thousands of partners … thousands of end users. These conclusions didn’t arrive fully formed in a dream.)?

STYLE NOTE: I’m deliberately not numbering these obstacles because I don’t want to create the impression that one obstacle may be more “important” than another. Any one of these obstacles can cripple an ecosystem strategy … and most vendors can identify 5+ obstacles in their own GTM strategies. I know one vendor who checks the box on all ten … yet insists they run an ecosystem. Go figure. Ask yourself, sincerely, have you successfully overcome each of these obstacles:

Human Misalignment. Despite all the ecosystem talk within partner program teams, not all vendor GTM leaders agree with the ecosystem approach, and too many are either relying on habits from previous market phases (this is how it has always worked), or they are fighting to protect their domain (thus refusing to integrate with new routes / partner types). Global, zone, country & partner leaders must all be on the same page … across the functions of partner management, partner sales, direct sales, vendor services, sales ops, country P&L management, etc. And if you’re honest, you’ll agree many simply cannot or decline to participate in the new ecosystem strategy, especially those who grew up in non-channel job roles.

Tools Before Process. Many tools (sooooo many tools) have been built to specifically address the GTM puzzle, but software doesn’t solve the business problem on its own. Vendors must first know what their ecosystem strategy is, what interactions are needed, who the players are, what systems and data are needed, which legacy systems will be involved, and how opportunities will be managed. Out of the box, GTM tools are merely as effective as SFDC without customization (i.e. not.). And there’s no such thing as a “universal” GTM tool … this is why Jay McBain has spent so much effort documenting the hundreds of vendors who sell tools to help vendors go to market.

Isolated Partners. Having resellers, integrators, service providers, influencers, consultants, platforms, marketplaces, etc. is a good thing … if they talk to / work with each other. But partners often see new routes as competitors rather than collaborators and require both education and motivation to alter entrenched business models and sales systems to incorporate new ecosystem players. If partners do not know each other … trust each other … know how to engage each other, they won’t. And if those various types of partners are managed by different internal teams, your own people can get in the way of P2P collaboration, either intentionally or unintentionally.

-????????????? One-Trick Partner Management. This is not intended as a knock against partner managers – I believe this role is pivotal to any vendor GTM strategy. No matter how much we wish they would, partnerships do not operate on autopilot. Especially if your solutions represent a material contribution to partner business results, relationships must be managed, actively. But what are your partner managers capable of bringing to the relationship? Traditional partner-facing staff are primarily transactional / reactive … and even when they are more evolved, they are often strictly limited in their ability to understand, engage, and influence partners across multiple GTM routes or partner business model types. Also: one partner manager can only manage a certain number of partners. Also, again: collaboration doesn’t simply happen, it requires orchestration in addition to pipeline checking.

-????????????? Ecosystem Gaps. The objective of an ecosystem strategy is to efficiently cover an entire market (e.g. partners in place to engage customers wherever they wish to purchase) not just to cover a territory (e.g. we have a partner in Territory X, so we are covered). No matter how large or sophisticated a partner may be, I’ve yet to encounter one that could sell all of their vendors’ products … to all verticals … for all customer sizes … including technical and professional services. Partners add tremendous value … but not universal market coverage. Your partner portfolio needs more partners of different types to address the specific needs of customers across your GTM and product catalog.

-????????????? Misleading Metrics. How do you calculate the capacity and productivity of your “ecosystem?” Number of partners … number of deals … value of deals … frequency of deals … collaboration among partners … CSAT … partner SAT? There are plenty of metrics, but it’s important to understand that if you measure the same things today that you did before you started calling it an ecosystem … then the machine hasn’t actually changed. Also, remember Goodhart’s Law: when a measure becomes a target it ceases to be an effective measure. So how would we define success in an ecosystem? And who is deciding which of the many metrics actually take priority over legacy measures / sacred cows?

-????????????? Multi-Product Portfolios. Not all products are at the same level of maturity, so a single GTM strategy cannot apply equally to each product. There is a scenario / time when it’s most appropriate to sell a solution direct (again, blasphemy). A time when we sell through agents … and another when we leverage service providers and marketplaces and integrators. If you sell more than one solution … and those solutions are at different levels of maturity … you’ll need to manage more than one GTM strategy simultaneously. Which means added complexity for marketing and sales routes and partner roles and programs and so on … so most vendors simply go with the simple and use one size hammer to hit every nail. That hammer may get a shiny new name, but it’s still just one hammer.

-????????????? Lack of Partner Attribution & Status. Referring customers from one sales route to another appropriate collaborator is a challenge, and keeping track in a system of record for future compensation is even more difficult. This leads to most vendors still relying on a legacy model in which they only compensate partners at the Point of Sale, rather than recognizing / paying partners for the value they add throughout the buyer’s journey. If you want partners to add value throughout a buyer’s journey, you’ll need to reward them in some fashion … and you’ll have to keep track of who did what and when in each opportunity. Challenging. Also: is it possible for a partner to achieve Platinum / Diamond / Plutonium status in your program without ever booking a deal? If not, they will surely do their non-transactional things for someone else who respects / recognizes those efforts.

-????????????? Manual P2P Collaboration Processes. Partner collaboration is a powerful engine for growth in an ecosystem. Distinct companies, working together, contributing complementary actions and deliverables, achieving a shared objective. But that’s not something that just happens. It requires structure, confidence in partner compatibility, well-defined commitments, clear timelines, carefully calculated compensation. And when we suppose that a human and a trusty spreadsheet can effectively orchestrate all the players and the plays, we are sorely disappointed. If only there were a software tool that could help with this process. Because the last thing you want is for people to “try” to collaborate with your logo in the agreement.

-????????????? One-Trick Partner Recruiting. Why would a partner want to be in business with you? Other than your groundbreaking technology, of course. A transacting partner will want to know about your products and your margins and rebates and incentives and training and certifications … but a non-transacting partner may not only not care about those things, they may find them entirely alienating. (Have you ever heard a partner say the phrase: It’s like you don’t even know what we do for a living or how we make money?) Different partners make money in different ways, but most vendor recruiters are armed with one form of a recruiting story / PPT deck … and no business savvy about the surrounding and enabling partner roles that eventually lead to your product transaction. Are your recruiters fluent in multiple partner models and do they have the ability to engage non-technical decision makers with financial and operational credibility? And can they calculate a business case that accounts for financial factors beyond helping you hit your revenue quota?

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Did I miss any?

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Can each of these challenges be addressed? Absolutely. Are most vendors currently succeeding in these areas? Nope. And until they are, the concept of “ecosystem” will remain all talk, no new outcomes. As you can see, the distance between the buzzword of ecosystem and the tactical operation of an ecosystem program is vast.

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Commercial Note: Unsure whether your strategy is on target … and where you stand relative to each of these ten ecosystem challenges? We can help you answer those questions and build a business case to senior management that not only explains the strategy, but secures their buy-in for the resources you need to fix things. And then show you how to make a material impact on your ecosystem operations. One way or another, we need to get busy fixing these things, or stop claiming to have made progress.

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That’s what’s going on in my brain. I’d love to hear your feedback. How are you addressing these ecosystem GTM challenges? What tactics are actually working? What results are you achieving?

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