Innovative Partnerships, Not Just M&A Deals or Venture Capital Bets, Will Fuel Growth in Tech Economy This Year, According to Ernst & Young Survey

Business Wire, Feb 27, 2001

Business Editors

PALM SPRINGS, Calif.--(BUSINESS WIRE)--Feb. 27, 2001

US Kickoff of Global Technology Partnering Conference Series

Brings Emerging Companies & Today's Market Leaders Together To

Talk Alliances

Partnering is a powerful business strategy in the current economic environment that will only increase in importance because the markets are changing faster than ever, according to more than half (52%) of attendees surveyed at the Technology Partnering Conference (TPC). According to the results from the Ernst & Young conference survey, the percentage of a technology company's business affected by partnerships should increase by two-thirds from 31% today to 53% in three years.

More than 100 executives from emerging companies -- representing a wide range of technologies from voice, Internet tools and applications to client server applications, networking and systems -- as well as industry leaders and the venture community shared their views on a variety of topics and issues related to the rapidly changing business and political landscape facing the broad technology industry this year.

Of those surveyed at the TPC conference, one-third (32%) said today's partnerships were "very different" from those formed five years ago, while only 10 percent said they were "the same." When asked for the most important reason to pursue a partnering strategy, almost half (44%) of respondents indicated that gaining new distribution channels was a key driver. In addition, one-quarter (25%) indicated that innovative partnerships help their company "meet new requirements for rapid change."

"As the technology, communications and entertainment industries converge, software development serves as a critical link in creating new products and services for business and home," said Stephen E. Almassy, Global Vice Chair of E&Y's Technology, Communications and Entertainment industry practice. "Strategic partnerships provide emerging and established companies with a way to keep pace with fast-changing technologies, expanding global market opportunities and increasingly sophisticated consumer demands. This survey confirms that partnerships are a key success factor in driving the adoption of new technologies, because no company, large or small, can afford to go at it alone."

Partnering More Important In Uncertain Market Conditions

Equity investments and exchanges were the preferred partnership structure for more than half (58%) of respondents, followed by marketing alliances (34%) and joint ventures (14%). In addition, the two most important success factors for any partnership, regardless of its form, were precise articulation of the partnership's goals (47%) and involving the right people from each partner company (36%)

"Conference attendees told us almost unanimously that the forming of partnerships and alliances were important to creating corporate agility, especially in today's uncertain market conditions," said Almassy. "We expect to see the percentage of a technology company's business affected by partnerships to increase by two-thirds over the next three years, according to the survey."

In terms of successful partnership experiences, respondents pointed to three key factors: integral part of the business plan (27%), senior executive commitment and vision (23%) and solid execution (21%), while failed partnerships were blamed on different expectations (49%) and poor execution (19%) by the two parties.

Technology Execs Want Results from Politicians Inside The Beltway

The survey also asked TPC attendees about their feelings on the markets and the U.S. regulatory environment this year. When picking winners and losers in the financial markets this year, more than one-fifth of attendees favored applications and commerce (26%) slightly over next-generation networks (23%), wireless companies (22%), platforms and tools (18%), and service providers (16%).

In addition, US respondents said the three most important items on the technology "wish list" for the new Congress and President Bush are:

-- reduce capital gains taxes and limit new taxes on such gains (27%);

-- eliminate trade barriers for e-commerce to increase exports of US tech goods
and permit more flexible sourcing of technologies from abroad (21%).

-- full protection of intellectual property rights around the world (16%)

About the Technology Partnering Conference Global Series

The Ernst & Young Technology Partnering Conference (TPC) global series is an intimate partnering forum where technology executives showcase the hottest new products and services in the market, including hardware, software, Internet, e-business, content and communications. TPC provides an opportunity to forge new relationships and alliances with a select group of smaller, emerging technology companies. The TPC forums balance formal presentations with informal and confidential discussions between interested parties, and replace the annual International Software Partnering Conference which E&Y created in 1993.

The Americas TPC conference was held this week in Palm Springs, CA. The European TPC conference is scheduled for May 16-18, 2001 in Amsterdam, and the Australian TPC conference will be held June 3-5, 2001 in Queensland. Attendees at all three global events include business development executives from Fortune 1000 companies, service providers, investment bankers, venture capitalists, and CEO's of early-to-later stage venture-backed companies.