Can this marriage be saved? - strategic business alliances - Second Partner, Once Removed: Maintaining the New Extended Corporate Family

Chief Executive, The, June, 1997 by Peter Hapaaniemi

LIKE DOMESTIC BLISS, RELATIONSHIPS DEPEND ON TRUST AND SHARED VALUES.

Strategic outsourcing is often compared to marriage - and that's as it should be, says Gene Slowinski, managing partner of the Alliance Management Group consulting firm in Gladstone, NJ. "I've learned more about alliances from marriage counselors than any other single source," he says. That's because domestic bliss and business alliances both depend not only on the day-to-day practicalities of sharing responsibilities, but also on intangible qualities such as trust and shared values. In a world where technologies and markets are constantly changing, those attributes provide a point of stability for a partner. Indeed, most observers see a good cultural fit between outsourcer and customer as key to making long-term relationships work. As a result, executives should approach outsourcing as a sort of merger and look for similar but complementary cultures, says Dennis McGuire, president of Technology Partners Inc. (TPI), a Houston-based firm that helps companies evaluate and manage sourcing arrangements. "You don't want someone with a culture exactly like yours - but you can't have oil and water either."

Experience has shown that there are several guidelines that can help keep a strategic relationship - whether marriage or business alliance - healthy and whole. For example:

Take your time. "These are deals that really require a lot of thought," says McGuire. Allow six to 12 months for setting up a strategic outsourcing relationship, and use the time to hammer out contractual details and to get to know your potential partner. By watching the outsourcer over time - and dealing with different parts of its organization in different situations - you can get a deeper sense of the company's culture.

Know their background. An outsourcer's track record can speak volumes about what its people know and how they work in a partnership. According to research from Dataquest, companies overwhelmingly consider a vendor's past experiences/current relationships and word-of-mouth references to be the two most important sources of information when evaluating an outsourcing partner.

Keep communicating. Once a partnership is in place, keep the channels open at several levels, from senior-management joint-governance boards to the blending of partners' front-line workers. This makes it possible to resolve problems early on and keep partners up to speed on changing needs. "If you are going to have alliances working around your core, those supplier organizations need to become part of the 'business," says Joellin Comerford, worldwide managing partner of Andersen Consulting Business Process Management. "They must be part of the decision-making process and share in the risks and rewards so they can make the tradeoffs necessary for the good of the core."

It's really more of a 'relationship of equals' than the traditional master-servant relationship," says Colin Goodall, CFO of BP Europe, which maintains several successful alliances. "A relationship in which the parties feel entitled to make suggestions - and those will be listened to - is a more powerful relationship. That doesn't mean you always agree. But you work it out."

Keep the other person's needs in mind. Fairness is critical: If an agreement somehow shortchanges one partner, the partners will find themselves working toward different goals - undercutting strategic benefits.

Be ready for change. Rather than cover every contingency, a long-term agreement should recognize that things will shift. It should include mechanisms for dealing with change - for monitoring the relationship and re-negotiating service and compensation.

Finally, as any marriage counselor will tell you, the success of a long-term partnership depends most of all on the effort partners are willing to put into it. Says BP's Colin Goodall, "The difference between the relationships that work well and those that work less well is the amount of TLC that is put into it by both sides."

Andersen Consulting is a leading global management and technology consulting firm whose mission is to help its clients change to be more successful. The firm works with clients from a wide range of industries to align their people, processes, and technology to their strategy to achieve best business performance. For more information, please contact: Andersen Consulting, 100 South Wacker Drive, Suite 1051, Chicago, IL 60606. Telephone: 312-507-2900. Facsimile: 312-507-7965. On the Internet: http://www.ac.com