Megatec’s international IT services business owes a lot of its success to good strategic alliances. But the real success secret is picking and managing alliance partners.
| Entrepreneur |
Peter Spring, Vice-President, strategic market development |
| Company |
Kanbay Pty Ltd |
| Business type |
E-commerce services |
| Founded |
1981 |
| Head office |
Melbourne, Victoria |
| Contact details |
+61 3 9874 3633 |
Key Learning Points |
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Strategic alliances
View alliance strategies as a crucial part of your organisation’s development strategy.
Alliance formation
Take the time to carefully evaluate a potential alliance. It is too important for both parties to rush.
Partner selection
You can rely on good-quality partners; poor partners can quickly hurt your business.
Alliance formation
Clarify expectations. Bring whole teams from each organisation together face-to-face - not just one or two representatives. Ensure that all important issues are thoroughly addressed.
Alliance relationships
The relationship between partners must be constantly - and carefully - developed in order to keep the alliance working well. Document how this is to be approached and set up benchmarks.
Personal chemistry
Interpersonal chemistry is vital for a smooth and efficient relationship. Trust your gut feel.
Managing alliance partners
‘Management by walking around’ can work as well with your alliance partners as in your own organisation.
Alliance values
For a long-term, high-quality relationship, the cultures of alliance partners must fit together smoothly. That means that partners' values have to match.
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The Kanbay Story
This is a real bedroom-to-success business story. In 1981, Peter Spring and Barry Gange began selling information technology (IT) services to medium-size and large companies from a house in suburban Melbourne. In those early days of the IT era, their company, Megatec Pty Ltd, provided IT solutions - software development and systems integration.
By October 1999, when Megatec was bought by Chicago-based Kanbay Inc, Spring and Gange had a business with revenues of $25 million and 100 staff. In October 2000, the name of the Australian operation was changed to Kanbay Pty Ltd and it is now part of an international organisation - Kanbay Inc - of 1200 employees. Spring is vice-president of strategic market development and Gange left to pursue his own interests when the buyout went through.
Spring and Gange have long understood the importance of supplying consistent good service. The success of their company, which has grown alongside its clients from being a local Australian operation to an international one, testifies to that. The secret of their success? Servicing customers with the help of carefully selected and developed partners in strategic alliances.
Anyone can form alliances, but making them work at all levels is another matter. Culture clashes between the partners can destroy good intentions - and that makes understanding one’s own culture a crucial starting point.
Spring says: “Good alliance partnerships bring much more than just new technology. They can dramatically improve methodologies, management and organisational culture - even the very way you think. And to get the most out of an alliance strategy, you need to look at all your business relationships - beyond the more obvious supplier and sub-contractor-type alliances.
“For example, we looked at our financiers as being one of our key alliance partners, so we would invite our bank to twice-yearly presentations to keep them informed.
“Getting experienced people to help manage the business was another area we saw as a key alliance issue. To ensure a global orientation, we adopted a public company model from quite early on, with a non-executive chairman (retired public company finance director), and non-executive directors on a properly constituted board.
“Our first alliances were with organisations such as WRQ (network connectivity) and Cognos (Powerhouse coding language), as well as Hewlett-Packard, and as these organisations expanded their capabilities, so automatically did we.
“So as market demands moved from issues of connectivity, to the internet, to information security, our alliances helped us meet client needs.”
“In summary, you can never have absolutely everything you need in-house, so if you adopt the mindset of supplementing a core organisation with a network of really good and well-managed alliances, you have a business model which is very adaptable to change.”