What do companies that succeed at partner integration do that unsuccessful companies don't?
In the companies I've studied, the most successful ones either make up a large share of a small and medium-size company's business, or they use a standardized approach that smaller companies can use with their other partners. Intel has implemented this sort of proprietary network and is trying to migrate all its partners to this way of doing business, and it is doing so quite successfully. Part of what they have done is to allow the smaller enterprises to connect via RosettaNet standards, which is a solution that the smaller enterprises can then leverage with other partners in the industry.

Now, there are other things companies like Intel have done. One is to give partners many different ways of interacting with them technologically, and not forcing them to integrate. Naturally, companies appreciate not being forced to do something. Intel has made that strategy work by outsourcing the maintenance of some of the different ways of connecting. By allowing people many different choices of ways to connect, and by not requiring them to invest heavily in IT or process changes, companies like Intel ultimately help draw their partners into the integration game.

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Another thing is that large organizations are recognizing that they will benefit disproportionately from integration, so it makes sense for them to shoulder a larger share of the costs. They can subsidize the cost of the software needed for the connection, or they can negotiate an arrangement with a value-added service provider for a lower connection cost. In some cases, companies are providing direct technical support themselves, or engaging a third party to provide that support to their partners.

Are industry standards a strong incentive for getting your second- and third-tier suppliers on board?
They are, because they help convince companies that if they are going to integrate via standards, they will be able to leverage that investment in learning and technology with their other partners. The inability to use technology across multiple partners is really one of the major barriers to partner integration. Standards significantly reduce that barrier. It's not a magic bullet, but it helps.

What other benefits can companies share with suppliers and customers to get them onboard?
When companies take their partners' point of view, they often find they can offer considerable benefits that cost relatively little to provide. One of my favorite examples is Lawrence Livermore National Laboratories, which implemented an Internet-based purchasing system. They learned that what would be of great benefit to their suppliers was improved payment terms and much speedier payment. They successfully used that as an incentive to migrate people to their online purchasing system.

Another example is Enterprise Rent-A-Car, which was trying to partner more closely with its insurance company customers. One way they could provide benefit was by online sharing of information between automobile repair shops and the insurance companies. A lot of this information was passing back and forth by telephone, and this was interrupting the mechanics as they tried to work. The electronic network Enterprise put in place provided an opportunity for those repair shops to communicate once a day about the status of all the cars they were repairing, reducing interruptions.

How can companies make sure to offer their partners benefits that will actually make a difference?
You know, in the field of human/computer interactions, we often find that when we sit users down in front of the computer and watch what they're doing, we can learn a great deal about what works with the interface, and what doesn't work. Sometimes we only need to work with a handful of users before we start seeing the same thing over and over again. The analogy with electronic partner integration is a good one. If we can take time to visit some of our partners, understand the conditions under which they are working, and look at how working with us creates both benefits and problems for them, I think then we have much better intuition.

Next page: Overcoming Obstacles to Integration

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