You are on page 1of 12

FOR APPLICATION DEVELOPMENT & DELIVERy PROFESSIONALS

How To Pick Strategic Partners For Your Digital


Transformation
Use A Forward-Looking Assessment Of Your Key Technology Providers To Identify Potential
Partners For Your Transformation Journey
by Duncan Jones
July 18, 2016

Why Read This Report

Key Takeaways

Organizations that want to undergo a digital


transformation need strategic partners to help
them implement innovative technology and drive
process change. Strong partnerships enable
agile projects and strategic bets on technology
platforms, but finding and nurturing good partners
is tough. This report explains which qualities to
assess when evaluating technology providers as
potential strategic partners and includes a link
to a separate downloadable tool that application
development and delivery (AD&D) professionals
can use as the basis for that assessment.

Finding Good Partners In The Diverse,


Crowded Digital Transformation Market Is Hard
youre looking for a rare combination of
knowledge, skills, and delivery excellence, but
few firms can field the cross-functional team that
holistic transformation requires.

This report is an update of an earlier supplier


assessment framework that we published in
August 2013.

FORRESTER.COM

Assess The Three Qualities That Underpin All


Strong Partnerships
Rate your current supplier relationships in
terms of the three requirements for successful
transformation programs: long-term relationships
built on trust, innovation applied to your business
priorities, and a shared focus on your success.

For Application Development & Delivery Professionals

How To Pick Strategic Partners For Your Digital Transformation


Use A Forward-Looking Assessment Of Your Key Technology Providers To Identify Potential
Partners For Your Transformation Journey
by Duncan Jones
with Christopher Andrews, Carmen Stoica, Rachel Birrell, and Bill Nagel
July 18, 2016

Table Of Contents
2 Picking The Right Transformation Partners Is
Difficult, But Vital
Its Hard To Find Good Partners In The
Diverse, Crowded Digital Transformation
Market
5 Assess The Three Qualities That Underpin
All Strong Partnerships
Recommendations

8 If You Have Found Good Partners, Ensure


That You Keep Them
9 Supplemental Material

Notes & Resources


Forrester based this report and the associated
downloadable tool on ongoing research into
digital transformation and strategic partnerships
over the past few years.

Related Research Documents


The 2015 State Of Agile Development: Learn
From Agile Expert Firms
Best Practices: Strategic Software Development
Partnerships
Digital Turns Technology Services On Its Head
Forresters Supplier Partnership Assessment
Model

Forrester Research, Inc., 60 Acorn Park Drive, Cambridge, MA 02140 USA


+1 617-613-6000 | Fax: +1 617-613-5000 | forrester.com
2016 Forrester Research, Inc. Opinions reflect judgment at the time and are subject to change. Forrester,
Technographics, Forrester Wave, RoleView, TechRadar, and Total Economic Impact are trademarks of Forrester
Research, Inc. All other trademarks are the property of their respective companies. Unauthorized copying or
distributing is a violation of copyright law. Citations@forrester.com or +1 866-367-7378

For Application Development & Delivery Professionals

July 18, 2016

How To Pick Strategic Partners For Your Digital Transformation


Use A Forward-Looking Assessment Of Your Key Technology Providers To Identify
Potential Partners For Your Transformation Journey

Picking The Right Transformation Partners Is Difficult, But Vital


Few AD&D leaders have the strong relationships with their key technology providers that they need
to help them build solid foundations for digital transformation. Forrester has previously explained why
AD&D leaders should build strategic partnerships with key technology providers.1 Such partnerships
are crucial for the shift to a customer-obsessed operating model (see Figure 1).2 Recent Forrester
surveys confirm that you still need partners to help you make better use of innovative technologies,
improve project delivery, and augment internal skills (see Figure 2). Such partnerships are particularly
important for digital transformation, because it requires:
Less formal, more flexible commercial arrangements than standard outsourcing.
Techniques such as design thinking and Agile development are incompatible with fixed
specifications and rigid change control processes. To drive transformation, you need
partners that are willing to challenge your teams assumptions and push back on misguided
requirements. You also need them to help you initiate projects to test ideas without knowing
precisely what those projects will deliver or how much they will cost.
Long-term strategic bets on a few technology platforms. It will be very difficult to replatform
your systems of customer insight at a later date, so you need to make the right choices now.
Whichever cloud vendors you pick, you need to be certain that they will invest heavily and wisely
in ongoing development, because you will fall behind your competitors if your chosen vendors lag
behind theirs. You also need confidence that no vendor will take commercial advantage of your
dependence on it when your initial contract expires.

2016 Forrester Research, Inc. Unauthorized copying or distributing is a violation of copyright law.
Citations@forrester.com or +1 866-367-7378

For Application Development & Delivery Professionals

July 18, 2016

How To Pick Strategic Partners For Your Digital Transformation


Use A Forward-Looking Assessment Of Your Key Technology Providers To Identify
Potential Partners For Your Transformation Journey

FIGURE 1 Strategic Partners Are Crucial To The Shift To Customer-Obsessed Operating Principles

Customeraware

Fresh external ideas; a vision of what


is possible with technology; crossfertilization from other industries

Customerled

Datarich

Confidence to make long-term


strategic bets on systems of
insight technology platforms

Insightdriven

Perfect

Flexible commercial
arrangements for co-creation
and Agile development

Fast

Siloed

Cross-functional teams that can


drive organizationwide operational
transformation

Connected

2016 Forrester Research, Inc. Unauthorized copying or distributing is a violation of copyright law.
Citations@forrester.com or +1 866-367-7378

For Application Development & Delivery Professionals

July 18, 2016

How To Pick Strategic Partners For Your Digital Transformation


Use A Forward-Looking Assessment Of Your Key Technology Providers To Identify
Potential Partners For Your Transformation Journey

FIGURE 2 Strategic Partners Help With AD&D Leaders Priorities

Which of the following technology initiatives is your IT organization


prioritizing over the next 12 months?
Moderate

High

Critical

Increase the use of


innovative technologies

33%

42%

Improve IT project
delivery

34%

41% 12%

Develop or acquire
new skills in IT

36%

Improve the management


of external service
providers

37%

13%

35% 11%

32% 8%

Find firms with knowledge


of and experience with
new technologies
Co-create with partners
that understand Agile
methods
Easier to source these
from partners than hire
and retain them
Learn how to partner
better with key service
providers

Base: 7,817 business and technology decision-makers and influencers


at firms with 1,000 or more employees
Note: Not all responses are shown.
Source: Forresters Global Business Technographics Priorities And Journey Survey, 2016

Its Hard To Find Good Partners In The Diverse, Crowded Digital Transformation Market
AD&D leaders face a bewildering choice of firms offering digital transformation services, including
advertising firms, general consultancies, software publishers, technology outsourcers, even printer
manufacturers.3 Its very difficult for an AD&D leader to navigate the market and find the best suppliers
with whom to partner because:
Youre looking for a rare combination of knowledge, skills, and delivery excellence. You
need a special firm that can help you leap ahead of your competition; that firm must possess an
exceptional blend of technical knowledge, creativity, design processes, and development talent.4
Not only is it hard to find firms possessing all these qualities, but youll also need to persuade them
to allocate their scarce resources to your program.
Few firms can field the cross-functional team that holistic transformation requires. You
need partners who will help your organization reshape itself around its customers. Specialists
that grew up supporting a specific stakeholder, such as marketing or finance, usually struggle
to overcome departmental silos. Many struggle to get their own various teams working together
across regional, vertical, and functional boundaries, especially if they have relied on acquisitions
to expand their reach.

2016 Forrester Research, Inc. Unauthorized copying or distributing is a violation of copyright law.
Citations@forrester.com or +1 866-367-7378

For Application Development & Delivery Professionals

July 18, 2016

How To Pick Strategic Partners For Your Digital Transformation


Use A Forward-Looking Assessment Of Your Key Technology Providers To Identify
Potential Partners For Your Transformation Journey

Current assessment processes arent appropriate for a forward-looking assessment. Youve


got too many suppliers already, so you dont want to have to go looking for new ones. This isnt
something that you can specify precisely and put out for bid. Most supplier management focuses
on the delivery of contractual service-level agreements, which are not the criteria you need to
consider when evaluating potential partners.

Assess The Three Qualities That Underpin All Strong Partnerships


From Forresters studies of successful partnerships between technology companies and their top
customers, we have identified three qualities that are usually evident (see Figure 3). By assessing
your current business relationships against these qualities, you can identify which are already at the
partnership level and which could get there with some extra work. Forresters downloadable tool can
serve as the basis for this assessment (see Figure 4). Use it to survey stakeholders to determine their
current experience of working with candidate suppliers. Our assessment tool also focuses you on
structures and processes that will ensure consistent excellence, not merely occasional bright spots. The
best partners for your organization will be the ones for whom this assessment provides evidence of:
Mutual trust, to support short projects within long-term relationships. Firstly, trust enables
a flexible commercial model, which is a prerequisite for Agile development.5 Secondly, you need
to trust a supplier deeply if you are to base key elements of your business on its technology
platform. Look for long-standing business relationships between your two organizations, with
consistently fair treatment of each other. Look also for a formal partnership agreement and
effective escalation procedures.
For instance, a global food manufacturers IT director told Forrester about how working with SAPs
product development and service arms had reinforced the relationships trust foundation. He
partnered with SAP to co-create a margin management application as part of a project to transform
product pricing.6 He told us that SAP was honest enough to admit that it didnt have an existing
solution. We trusted its team to question users so-called requirements and find better ways to
meet their needs, if they could.
Innovation, applied to your business priorities. Youre relying on these firms to help you leap
ahead of your competition, so they need to bring you new ideas of how technology can better
support your customers journeys. Assess not only their technical expertise, but also their ability
to apply it to your context. That will require familiarity with your vertical industry, cross-fertilized by
innovation from other markets. Your partner must be able to provide a cross-functional team, or
collaborate with other specialist firms, to drive enterprisewide operational transformation. Look also
for formal processes for capturing new ideas and nurturing them into usable products.
For instance, a global insurance company devotes one-third of its biannual partnership review
meetings to innovation, giving partners a chance to pitch new ideas to executives. This has not
only led to several successful initiatives, it has also strengthened the underlying relationships.

2016 Forrester Research, Inc. Unauthorized copying or distributing is a violation of copyright law.
Citations@forrester.com or +1 866-367-7378

For Application Development & Delivery Professionals

July 18, 2016

How To Pick Strategic Partners For Your Digital Transformation


Use A Forward-Looking Assessment Of Your Key Technology Providers To Identify
Potential Partners For Your Transformation Journey

A focus on your success, to drive collaborative problem resolution. You need to unite your
extended team behind the same shared goals so they resolve issues by deciding how best to
achieve those goals. You need partners that will allocate scarce resources to your project and
always go the extra mile to ensure that a project succeeds. An underlying customer-first culture is
a prerequisite, but it also requires you to earn preferential status by being a good customer. Check
how well you and your partners align on how to measure success and how that flows through to
individuals incentives.
An example of the benefit of such alignment is a large UK banks partnership with SapientNitro to
transform its onboarding of commercial customers. The two parties based individuals goals and
project governance on a Balanced Scorecard of key performance indicators from the projects
business case, such as the average time to onboard a new customer. This enabled an agile project
that challenged preconceptions and delivered measurable improvements in every phase.

FIGURE 3 Good Strategic Partnerships Demonstrate Three Key Qualities

Mutual trust to support open


collaboration and agile projects

Innovation applied to your


business priorities

A focus on your success

2016 Forrester Research, Inc. Unauthorized copying or distributing is a violation of copyright law.
Citations@forrester.com or +1 866-367-7378

For Application Development & Delivery Professionals

July 18, 2016

How To Pick Strategic Partners For Your Digital Transformation


Use A Forward-Looking Assessment Of Your Key Technology Providers To Identify
Potential Partners For Your Transformation Journey

FIGURE 4 Forresters Partner Assessment Tool: An Excerpt

Criterion
Trust

Detail
Have we built our commercial relationship on strong foundations,
including high levels of trust?

Partnership agreement

Have the both sides documented the relationship in a concise, noncontractual


format? Does it include the key requirements for a strong partnership?

Fair treatment

Does it deal fairly with us when disputes or disagreements occur, as opposed to


strictly enforcing its unfair policies? Do we treat it fairly in commercial dealings?

Executive access

Do we have optimized processes to resolve issues at the appropriate level? How


easy is it to escalate problems to someone who can fix them? Does such
escalation usually produce the desired results?

Depth and breadth

Do we have good working relationships throughout the two organizations? Have


we been collaborating for a long time with the same individuals?

Quality and reliability

Can we trust the supplier to do a good job every time? Does it warn us promptly
when it has a problem? Do its employees give us honest feedback, even if that
feedback is negative?

Innovation

How effectively does this supplier apply innovation to help us achieve our
business goals?

Technology expertise

Is the company a leader and innovator? For instance, does it consistently lead
Forrester Wave evaluations? How well does it harness others innovation, e.g.,
from ecosystem partners and open source communities?

Business context

How well does it apply its technical expertise in the business context to solve our
real business issues? How effectively does it combine knowledge of our industry
with ideas from other clients?

Idea capture and


development

How good is its process for capturing its and our employees ideas, funding
further investigation, and turning them into usable software?

Co-innovation

Has it worked well with us to deliver co-innovation projects? Does it demonstrate


expertise in design thinking and Agile development? Do we regularly freely share
our business and domain knowledge with each other?

Cross-functional
collaboration

Does it provide multidisciplinary teams that drive organizationwide operational


transformation? How effectively can it work across its own organizational silos?
Does it collaborate well with other specialist suppliers?

Our success

How frequently does this supplier deliver us real business value?

Client-first culture

Does the supplier have a client-first culture throughout its organization? How
effectively does it establish and reinforce this?

Defining success

Are we aligned on program objectives and how we will measure them? Have we
agreed upon and documented which business outcomes will represent success?

Performance
incentives and
measurement

Do we regularly measure key performance indicators (KPIs) that directly support


business outcomes? How closely do sales and delivery teams performance
incentives align with our teams KPIs? Do we reward the supplier when it
overachieves, e.g., with performance bonuses or follow-on projects?

Staff assignment

Does the supplier assign its best people to our projects and issues? Can we
easily access subject-matter experts?

Note: This is only an excerpt from the downloadable associated interactive assessment tool.

2016 Forrester Research, Inc. Unauthorized copying or distributing is a violation of copyright law.
Citations@forrester.com or +1 866-367-7378

For Application Development & Delivery Professionals

July 18, 2016

How To Pick Strategic Partners For Your Digital Transformation


Use A Forward-Looking Assessment Of Your Key Technology Providers To Identify
Potential Partners For Your Transformation Journey

Recommendations

If You Have Found Good Partners, Ensure That You Keep Them
The formal assessment that we have described above will help AD&D leaders identify the true
partners among their most important suppliers. This may force a radical rethink of some longstanding relationships and you may need to admit that some of the technology providers that you
have for years called a strategic partner do not in fact merit that title. Paying it a lot of money every
year and depending on its products in the short to medium term are insufficient if the trust, applied
innovation, and focus on your success arent there. Therefore, you should use the evaluations
results to:
Guide determined efforts to fix flawed relationships before you downgrade them. Maintain an
open, honest dialogue in which both sides feel free to make suggestions. Focus on your specific
relationship, not the suppliers wider reputation, because bad scores may be as much your fault as
theirs. For instance, when Forrester advises clients on how to improve their strategic relationships,
we often find a tactical sourcing approach that fails to reward great performance on one project
with preferred bidder status on others.
Find new potential partners within your existing supplier base. Avoid typecasting a
supplier based on the services it currently provides you. Overperformance in operational
services or in a specific part of the organization can alert you to trustworthy, innovative,
customer-focused suppliers that deserve a broader, more strategic role. For instance, a
Japanese auto manufacturer recently partnered with Infosys on the digital transformation of
some in-car safety systems. It had previously only used Infosys for outsourced IT services but
recognized that the strong relationship that had developed over time could be the basis for
product-related co-creation.

2016 Forrester Research, Inc. Unauthorized copying or distributing is a violation of copyright law.
Citations@forrester.com or +1 866-367-7378

For Application Development & Delivery Professionals

July 18, 2016

How To Pick Strategic Partners For Your Digital Transformation


Use A Forward-Looking Assessment Of Your Key Technology Providers To Identify
Potential Partners For Your Transformation Journey

Engage With An Analyst


Gain greater confidence in your decisions by working with Forrester thought leaders to apply our
research to your specific business and technology initiatives.
Analyst Inquiry

Analyst Advisory

Ask a question related to our research; a


Forrester analyst will help you put it into
practice and take the next step. Schedule
a 30-minute phone session with the analyst
or opt for a response via email.

Put research into practice with in-depth


analysis of your specific business and
technology challenges. Engagements
include custom advisory calls, strategy
days, workshops, speeches, and webinars.

Learn more about inquiry, including tips for


getting the most out of your discussion.

Learn about interactive advisory sessions


and how we can support your initiatives.

Supplemental Material
Survey Methodology
Forresters Global Business Technographics Priorities And Journey Survey, 2016, was fielded from
December 2015 to January 2016. This online survey included 18,610 respondents in Australia, Brazil,
Canada, China, France, Germany, India, New Zealand, the UK, and the US from companies with two or
more employees.
Forresters Business Technographics ensures that the final survey population contains only those with
significant involvement in the planning, funding, and purchasing of business and technology products
and services. ResearchNow fielded this survey on behalf of Forrester. Survey respondent incentives
include points redeemable for gift certificates.
Please note that the brand questions included in this survey should not be used to measure market
share. The purpose of Forresters Business Technographics brand questions is to show usage of a
brand by a specific target audience at one point in time.

2016 Forrester Research, Inc. Unauthorized copying or distributing is a violation of copyright law.
Citations@forrester.com or +1 866-367-7378

For Application Development & Delivery Professionals

July 18, 2016

How To Pick Strategic Partners For Your Digital Transformation


Use A Forward-Looking Assessment Of Your Key Technology Providers To Identify
Potential Partners For Your Transformation Journey

Endnotes
Strong partnerships are vital for delivering the BT agenda because software that propels you ahead requires external
ideas, perspective, and experience; modern application delivery makes you reliant on a few strategic providers; and
strategically important programs need team members who will go the extra mile. See the Best Practices: Strategic
Software Development Partnerships Forrester report.

In the age of the customer, the drivers of success change, requiring a fundamental reset of the principles on which
firms operate. For more on the four operating principles shifts that customer-obsessed organizations are making, see
the The Operating Model For Customer Obsession Forrester report.

For example, one manufacturer of printers and multifunction devices uses the D word to sell managed print services:
Managed print services is . . . a strategy to transform the flow of . . . digital information throughout your enterprise.

The new digital world requires the synchronization of everything from the multidimensional skills that must be
sourced for engagements, to the interdisciplinary stakeholders and decision-makers, to vendor and customer partner
ecosystems. For more information on the impact of digital on the technology service provider market, see the Digital
Turns Technology Services On Its Head Forrester report.

To download the assessment tool, see the Forresters Supplier Partnership Assessment Model Forrester report.

For more information on why and how to learn agile techniques from specialist development firms, see the The 2015
State Of Agile Development: Learn From Agile Expert Firms Forrester report.

This customer spent enough money with SAP to qualify for its strategic accounts program, and therefore had a
relationship manager without a sales quote who could help them navigate SAPs organization. For more information
on how to improve your relationship with SAP, see the Best Practices: Elevating Your SAP Relationship To Strategic
Supplier Level Forrester report.

2016 Forrester Research, Inc. Unauthorized copying or distributing is a violation of copyright law.
Citations@forrester.com or +1 866-367-7378

10

We work with business and technology leaders to develop


customer-obsessed strategies that drive growth.
Products and Services

Core research and tools


Data and analytics
Peer collaboration
Analyst engagement
Consulting
Events

Forresters research and insights are tailored to your role and


critical business initiatives.
Roles We Serve
Marketing & Strategy
Professionals
CMO
B2B Marketing
B2C Marketing
Customer Experience
Customer Insights
eBusiness & Channel
Strategy

Technology Management
Professionals
CIO
Application Development
& Delivery
Enterprise Architecture
Infrastructure & Operations
Security & Risk
Sourcing & Vendor
Management

Technology Industry
Professionals
Analyst Relations

Client support
For information on hard-copy or electronic reprints, please contact Client Support at
+1 866-367-7378, +1 617-613-5730, or clientsupport@forrester.com. We offer quantity
discounts and special pricing for academic and nonprofit institutions.

Forrester Research (Nasdaq: FORR) is one of the most influential research and advisory firms in the world. We work with
business and technology leaders to develop customer-obsessed strategies that drive growth. Through proprietary
research, data, custom consulting, exclusive executive peer groups, and events, the Forrester experience is about a
singular and powerful purpose: to challenge the thinking of our clients to help them lead change in their organizations.
99722
For more information, visit forrester.com.