Customer Intimacy wins in SAP SI's and Channel Partners

Yesterday, several bloggers at the SAP TechEd conference in Phoenix had an opportunity to speak with Zia Yusuf, EVP, Global Ecosystem & Partner Group of SAP.

I asked Zia what characteristics typify the best SAP partners. He rattled off five qualities that the best systems integrators and channel partners possess. These qualities and my comments on each include:

1) Have individuals that are deeply involved/connected with SAP’s product direction. We had a great conversation on this point. It’s obvious that implementers who know where the product roadmap is going are better able to serve customers. What too few implementers may do is the extra step to connect themselves to the product development side of a vendor like SAP. Software buyers need to review potential systems integrators on this point. They should see evidence of the implementer’s presence at venues like TechEd, their participation in forums like SDN, etc.

2) Ensure all their SAP implementation professionals are getting the training and product knowledge they need to be successful. Software buyers should insist that their implementers are certified on the products they install. Better still, see what the implementer’s overall level of certification is for their practice. Those firms who don’t invest in their people probably have a low-cost orientation and/or experience high turnover. Either way, firms with lightly trained individuals can’t possibly deliver the same level of value as one who invests in talent. Who do you want installing your software – people who know the product well or people who want to learn about the product on your dime?

3) Can adapt, quickly and easily, to ever-changing markets and market dynamics. When the marketplace demands a systems integrator possess a global delivery model, can the local, New Jersey firm you’re considering deliver a mixed mode solution? If it can’t, it better have some compelling other reason for your firm to use them (e.g., intimate industry knowledge). Markets move and move frequently. Integrators must move resources to different verticals (e.g., is anyone still selling new work in the Automotive sector?) and different labor markets (e.g., shifting more offshore work from India to China). Adaptability to changing markets is a proxy to illustrate how well a vendor can adapt to changing customer needs, too.

4) Are focused on customer service/value delivery – I’m still surprised at how many firms say words like ‘We deliver outstanding value to clients’ but can’t really prove it. Saying and doing are two different things. Smart services buyers get this difference and will ask for proof.

5) Tie their revenues to the delivery of value to customers – Better firms don’t front-load a lot of costs while value delivery is back-ended. Better implementers can craft plans, cost structures, etc. to align these two concepts. Customers will expect and demand this.

A few years ago, Michael Treacy and Fred Wiersema wrote the book The Discipline of Market Leaders. They posited that firms need competency in three key disciplines but they must excel at one of these if they are to be successful. Those disciplines include:

- customer intimacy - product innovation - process excellence

In their book, they highlighted companies like Nordstrom as an example of a customer intimate firm. Product innovators would be firms like Intel. Process excellent firms do something better than anyone else in their segment. Those firms could be like Dell and its supply chain or WalMart and its logistics (i.e., cross-dock, low inventory focus) or attention to cost reductions. Quality producers and low cost leaders in a market sector often are process excellence firms.

I pushed Zia to then pick one of these three market disciplines. I wanted to know which one is key for systems integrators/channel partners. Without a moment’s hesitation, he said customer intimacy.

That’s really no surprise as most consultancies sell work and sell follow-on work due to the long-standing relationship they have with their clients. Some firms bend over backwards to place their ex-employees into key clients. If a service provider has ‘customers’ instead of ‘clients’, then they probably aren’t customer service focused.

The best integrators really try to understand their clients. They know what the value drivers will be for a given initiative and will construct an implementation plan that aligns with it. Integrators who take a one-size-fits-all approach to projects lose some deals and don’t delight some of the customers they have.

Customer intimate integrators know the client’s industry, know the personal/career/political/economic agenda and needs of each client executive. These integrators win because of their client knowledge.

Customer intimacy alone will not carry the day. If an integrator is customer intimate but not winning 60+% of their proposals, then they probably aren’t doing enough in the other two disciplines. For example, knowing a client’s needs well won’t be enough if your cost structure is way too high. It also doesn’t help if your firm has nothing new, original or proprietary to add to the standard SAP solution sets. Better integrators bring their own intellectual property into a deal. These added extras are the competitive differentiators implementers must possess.

My view is that implementers need to be something like 40% focused on customer intimacy, 30% focused on product innovation and 30% focused on process excellence. If an integrator is overly skewed in just one discipline, they may be unable to win the work they need to be a sustaining or growing service provider.