State of the Market Preview: When Solutions Providers Take Partners

When VARBusiness asked solution providers about forming partnerships next year, half of them replied that they would do more partnering than they did in the year 2000, and large solution providers plan to increase their rate of partnering to a strong 60 percent.

To tease out the reasons for the dramatic upswing, the VARBusiness State of the Market issue will look at the reasons why solution providers turn to partners, what subcontractors or partners provide in a relationship, and what solutions providers look for in formalizing these relationships into legal contracts.

The five top reasons for subcontracting all point to the tremendous growth in the solution-provider industry and the rush to seize opportunities and fulfill customers' requirements. In interviews with a variety of solution providers it becomes clear that the top reason for partnering, "to overcome resource limitations" is indeed related more to solution-provider expansion into new market segments and to the growing complexity of existing market segments as technology responds to ever more complex customer desires.

Jeffrey Tarter, editor and publisher of Softletter, Watertown, Mass., plays devil's advocate to this exuberant growth, however, taking the side of the customer to raise issues of quality, flexibility and timeliness of solution providers working in partnership.

"It has to be a little scary from the customer perspective when you a hire a company to provide an important service and that company does not have in-house expertise," said Tarter, pointing to other service industries.

Using the example of a Web integrator, Tarter acknowledges the difficulty of finding a Web integrator with the necessary skills to do all that's required to mount a complex Web site. With Web site development requiring a carefully structured blueprint that is subject to change throughout development, Tarter noted that such flexibility becomes more difficult as more players become involved. He also pointed to the need for timeliness and flexibility when Web sites go live, when they are subject to even more frequent tuning and change.

As solution providers themselves point out, the gains in expertise must be weighed by the pitfalls of managing ever more complex solutions.

"It's hard to develop a good Web site when you have a bunch of subcontractors. If you don't do it carefully, like building a house with a set of blueprints, you end up with cost overruns and blown schedules," Tarter says.

Watch for VARBusiness' State of the Market issue, December 18th, for more on partnering and other key solution-provider issues.