When Vendors Become Partners

BOSTON (05/24/2000) - Talk about kismet. Three years ago, Widener University was looking for ways to provide distance learning beyond its campus in Chester, Pennsylvania. Tegrity Inc. wanted to target the Web-based education market with whiteboarding technology, which enables remote PC users to view what's written on a whiteboard. The two organizations' technical people met and began a yearlong collaboration in which Widener helped San Jose-based Tegrity turn its plain whiteboarding application into a Web-based learning tool.

Widener identified key features that would enable Tegrity's WebLearner to serve the education market and the university's needs. "We said, ‘You really need client interaction, the ability for students to communicate back to the presenter, to make this work in our environment,' " says Gary Habermann, the university's director of technical resources. WebLearner is now a key component of Widener's distance learning environment.

Ten years ago, vendors basically told their customers: "Here's a product, hope you can use it," according to Frank Dzubeck, president of Communications Network Architects Inc. in Washington. Today, he says, vendors are aggressively partnering with corporate customers, soliciting their advice on questions ranging from what features to put in, to what works and what doesn't.

Driving this phenomenon is a fast-paced market in which vendors can no longer afford to figure out what customers want by trial and error, says Steve Jumonville, a director of marketing at 3Com Corp. in Santa Clara, California, which had a partnering relationship with Widener prior to the networking vendor's recently announced restructuring. "You don't have a second chance to get it right," he says.

Vendors also see partnerships as a good way to keep valued customers, says Al Hershey, a partner at Ernst & Young International. "I'm much more likely to stick with someone who's doing his darnedest to listen to my needs."

Computer Associates International Inc. in Islandia, New York, for instance, wants Ernst & Young's help in developing mobile laptop management software - and not only because 80 percent to 90 percent of the professional services firm's employees are mobile laptop users. Through the partnership, "They hope to encourage us to use them more in the U.S., as we do in Europe," says Hershey.

Not that customers get to dictate product strategy. "You can't change a vendor's overall product road map, but you can make sure the products they have deliver the feature sets you need," says Habermann.

And naturally, influence has its price. "If you want to be able to say to a vendor, ‘I want you to provide these features,' you have to give back," says Habermann. What corporate partners mostly end up giving to the relationship is time. During Widener's close relationship with 3Com, Habermann typically spent 40 or 50 days per year working with 3Com people.

Reaping the Rewards

The rewards, however, are well worth it, vendor and corporate IT spokesmen say.

Today's vendor/customer partnerships go far beyond typical beta-test programs.

New York-based Ernst & Young, for example, was one of only 30 firms selected to participate in Microsoft Corp.'s Windows 2000 Joint Development Partner program. "People were beating down the doors to get in," says Hershey.

And no wonder. Ernst & Young technical engineers got to work closely with Microsoft's product engineers as they tested Win 2k for bugs and tried out various features. Best of all, when they talked, Microsoft listened. "They told us they wouldn't release Win 2000 till we agreed it was ready," Hershey says.

"They wanted real feedback."

To get that critical feedback from valued customers, vendors are willing to provide all sorts of privileges and perks.

"It's a golden egg, giving vendors feedback," says Kevin Hamilton, chief technology officer and CIO at MediaNews Group Inc., a Denver-based national newspaper chain. "In return, you get special pricing, sample code of advanced stuff, undocumented features, free licenses."

There's also the opportunity to get a strategic, unshipped product well ahead of the competition. "We'd get access to technology six to 12 months ahead of everybody else, so we [could] plan ahead," says Habermann.

Furthermore, vendors provide their most valued product-testing partners with a level of support that regular customers can only dream about.

For example, Widener extensively tested 3Com and third-party products in close collaboration with the vendor's product engineers. "If we [had] an issue with a product, we didn't talk to support; we talked to the people who wrote the code, who actually know how it runs," Habermann says.

Influencing Products

But what most often draws corporate IT departments to partner with vendors is the chance to influence product direction.

Take Ernst & Young. Several years ago, the Big Five firm recognized the vast business potential of knowledge management and found nothing in the market that met its needs. "[Lotus] Notes was just a set of tools to manage simple discussion groups and e-mail," Hershey recalls. And so, he says, the consulting company, in alliance with Lotus Development Corp., "took a sledgehammer to Notes and turned it into something that could form the basis for certain parts of our knowledge-management infrastructure." Ernst & Young worked with Lotus to provide administration tools that could scale up to thousands of users. Such tools were necessary for "Erny," the global knowledge-management service Ernst & Young built with Notes. Erny automatically routes customer requests to the right experts.

During Widener's partnership with 3Com, "we were able to lobby for whatever features we wanted to see next," Habermann says. The university had been pushing for directory-based management of additions, moves and changes of user addresses, a crucial capability since it has about 100,000 user ports on its network.

But overly close partnerships can become liabilities, as Habermann can attest.

The school had based its network strategy almost entirely on 3Com equipment.

3Com's recent decision to jettison its network switch product line has set back Widener's networking strategy by a good six to 12 months, Habermann says: "I'm on a level playing field with everyone else now, and I don't like it."

Dependency's Drawbacks

Vendors, too, have learned the perils of dependency. A few years ago, many went from taking no customer input to letting their favorite customers dictate what went into products, Dzubeck says. Most of the resulting products served neither the general market nor the customers that originally demanded them, he adds.

"The competition would come up with features customers never thought to ask for," he says. "Guess whose products they bought?"

Today, most big players tend to use their own market judgment on major product decisions. And they often elicit feedback from a pool of customers. 3Com's Technical Advisory Council (TAC), for example, is made up of chief engineers and network architects from key customers, who meet with the vendor's product engineers several times per year. "We have some good battles and whiteboard sessions," says 3Com's Jumonville.

The meetings are of inestimable value to 3Com, Jumonville says. "At a recent TAC meeting, we said to customers, ‘Here are 85 [proposed] features; we only have enough engineers to develop 43. Which ones do you want?' Then the engineer can go back to [upper management] and say, ‘There really is a market for this feature; we're not just guessing.' "Not that vendors have completely given up one-on-one partnerships with customers. "What I've seen over the past couple of years [are] vendors listening to large clients who are deploying groundbreaking technologies," says Widener's Habermann. "We're usually the first ones to find the deficiencies in their products."

For example, Widener, an early explorer of the Web as a learning medium, was among the first organizations to start sending multicast traffic. It gave 3Com, its main networking provider at the time, a valuable heads-up that it needed to support that capability in its stackable switches, Habermann notes.

Helping the Little Guy

Smaller companies may be more willing than big ones to take the advice of a single corporate partner, particularly one that votes with its pocketbook.

Take FDX Corp., the parent of Federal Express Corp. in Memphis, which helped fund the development of Velociti, a message-oriented middleware product from Vitria Technology Inc. in Sunnyvale, California. "We wanted to make sure we could get the publish/subscribe messaging capabilities we needed for moving data between applications," says Rob Carter, chief technology officer at FDX.

Corporate customers like Ernst & Young have even provided vendor partners with homegrown code as the most efficient way to get a feature they need into a product. And sometimes customers can plant the seeds of ideas that move vendors in a whole new technological direction.

"Vendors often focus on a very narrow range of things," says John Voeller, chief technology officer at Black & Veatch in Kansas City, Missouri. As a global construction and engineering company with ties to almost every industry, Black & Veatch can provide vendors with a broader perspective.

For example, Voeller says he's talking to several communications firms about how to "leapfrog the next generation of networking technology."

"This will enable them to provide a bunch of things we're interested in seeing sooner," he says.

"We're not after just the next big thing, but what's beyond that," Voeller explains. "That means we have to be a source of innovation."

Horwitt is a freelance writer in Waban, Massachusetts.

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