Strategic Alliance Magazine Q3 2020 - 31

ECOSYSTEMS NOW

spots in COVID-like automation, cloud acceleration, some
areas of security, customer experience, employee experience,
e-commerce, marketplaces-will be doubly hurt, given that
their core business is declining and they don't have access to
areas of opportunity within customers. It's definitely going
to accelerate the decline of those partners that have not
transformed themselves. So given the capital constraints and
the general economic climate, which we [estimate as] a 60
percent probability of recovery happening in mid-2021, with
more of a U-shaped recovery, this is a significant impact to
the channel. However, it is of benefit to ecosystems."

of innovation. Again, it's the 1 + 1 =3, but the idea is you can
create new products.

"For those [channel partners] that
don't make money in the best of times,
we're now in the worst of times."

"It doesn't matter what industry
you're in, where you're headquartered,
what kind of buyer you go
after-the entire world is getting
disrupted by ecosystems."

How is it that what hurts the channel may help ecosystems?
"Ecosystems differ from channel partnerships in a number of
different ways," McBain explained. "One is they're built on 1 +
1 = 3: the value is pulled from intrafirm value, as opposed to
the transaction. They're not reliant on resale revenue or resell
margins. They're really about two firms coming together and
creating a positive business outcome with additional value for
the customer that isn't directly linked or anchored to some
financial transaction. Number two is that these partners-
this goes right into the benefit and the history of alliances-
get to take advantage of each other's network. So if you join
Microsoft in an ecosystem you get access to their 355,000
partners and the 7,500 new partners joining each month to
further solidify your market play. It can get you access to new
target-addressable markets, new industries, geographies,
buyers, new sector, size, and segment of customers, it can
give you access to other parts of the solution area. So this
drives this network effect which you don't normally get out
of a straight one-to-one partnership. Third, it drives this level

"I would anchor this on the Accenture research that said
76 percent of the world's CEOs right now think that their
current business model will be unrecognizable in five years.
The number one reason is ecosystems. It doesn't matter what
industry you're in, where you're headquartered, what kind of
buyer you go after-the entire world is getting disrupted by
ecosystems, which is another way to say that every company
in every industry is becoming a tech company."

"I'm the Big Gorilla and You've Got
to Prove Yourself in My Ecosystem"
The Microsoft example, however, comes with another caveat-
which isn't just about Microsoft per se, but about any large,
mature ecosystem. "Mature" sounds good, like a fine wine or a
sensible adult, but there can be issues when it's an ecosystem,
according to Drew Quinlan.
"Ecosystems, and mature ecosystems, provide that highquality access, so I think they're going to become even more
valuable, more competitive, and more effective over the next
couple years," he said. "But one of the biggest pitfalls the larger
software companies are going to have is that there's an overriding mentality in a lot of these ecosystems where they've had
an influx of partners fighting to get in. They have dozens of
new partners coming in every quarter that are building integrations and getting nothing in exchange. That's going to stop,
or really slow down.
"Companies that get it are going to start to provide much
higher-quality, highly targeted access. Specific verticals, geos,
company size, etc. 'I'm going to focus on you in this segment
of my business really heavily, not broad.' Smart [companies]
will get that and start to provide it. The ones that are not smart
will just say, 'I'm the big gorilla in the room, you've got to
come in and prove yourself in my ecosystem.' All of a sudden
their ecosystem growth is just going to stop, and those are the
ones that are going to end up losing because they won't have
the integrations and the breadth of partnerships."

Q3 2020 |

Strategic Alliance QUARTERLY

Strategic Alliance Magazine Q3 2020

Table of Contents for the Digital Edition of Strategic Alliance Magazine Q3 2020