News Article
Collaborate to survive
PricewaterhouseCoopers (PwC) releases report stating that companies must belt up before taking the road to collaboration but questions whethertechnology companies afford not to?
Technology companies must collaborate to navigate through the economic storm and guarantee profit, a new survey issued by PricewaterhouseCoopers LLP in the UK revealed.
But, although the way is littered with risks, only 35% of the companies polled are aware or proactively manage the risks inherent in external collaboration and partnerships. In fact less than half (47%) perform thorough due diligence before entering into formal relationships.
The PwC report, Technology Executive Connections: Managing the risks and rewards of collaboration, polled senior executives on the benefits and risks of collaboration and how vital they believe it to be ahead of a Global downturn.
Kenny Fraser, partner, PricewaterhouseCoopers said: “In times of economic hardship, technology companies are searching for cheap ways to stay ahead in the development race. External collaboration, in an increasingly complex and interconnected world, can be a silver bullet.”
“In fact, those who bite the bullet and select partners wisely stand to outperform in the coming years,” he added.
Over 80% of respondents believe collaboration will be vital to their business within the next three years - based on the underlying perception that collaboration pays and creates significant advantages for the companies involved. In fact two-thirds of the executive group confirmed their companies are actively pursuing more collaborative partnerships with third parties than ever before. Despite this need to share information only 16% of survey respondents actually collaborate with competitors.
“This is actually highly advantageous due to the common, technical language shared and a real understanding of the value both parties bring to the table. While this flies in the face of conventional thinking it can result in the best outcome for the customer and must be considered with some urgency,” Kenny explained.
For technology companies, their products and IT solutions are becoming extraordinarily complex, building the case for collaboration in this industry. This enables these businesses to access a broader range of technologies, resources and skills, and allows them to keep up with the current rate of research and development. In addition it aides speed to market, and gives the company a much larger footprint.
A problem shared is a problem halved
External collaboration introduces significant risks. 75% of respondents agreed that external collaborations are more complex than internal initiatives, and over half highlighted the risks around intellectual property as the most prevalent, followed by data security/integrity (28%).
However, some companies openly share data when collaborating, following the philosophy that this improves the product, or allows the company to make something new and get it to market much faster than either business could by working solo. In addition, especially when entering emerging markets, the risks can be halved by sharing them with a local partner.
Kenny said: “There is a tendency to overstate the need to control competitive data and in a collaborative environment, information such as knowing who the customer is gaming with, talking to online and via which social networking site when playing on their Xbox, is vital to a Microsoft.”
However, when sharing intellectual property smaller developers must be more careful and set definitive boundaries to protect their unique selling point.
“It’s all about branding and presentation. The key to success, even if a small developer has collaborated with a big name, is to ensure the customers recognise who their favourite product is made by,” he added.
More than 75% respondents to the survey said that relative to developed economies, the business risks of collaboration in emerging markets are much greater. While just under two-thirds highlighted cultural issues as problematic when working with partners in such regions.
The top four risks identified as requiring greater management efforts in the emerging markets were: the leakage of intellectual property; the cultural fit between collaborating organisations; human resources and talent management; and reputational risk arising from being linked with, for example, a polluter or an employer of child labour.
Alec Jones, emerging markets leader, PricewaterhouseCoopers LLP, commented: "Despite the risks being greater in emerging markets, companies are still very keen to pursue partnerships, joint ventures or similar arrangements in these countries. This is partly because the risks are offset by the operating advantages of having a partner that understands local business and economic issues. The more capable companies become of identifying and managing these risks, the more successful they will be in emerging markets."
The real risk: no collaboration
Unquestionably, collaboration with external organisations entails risk. But rather than focus only on the pitfalls, those senior executives interviewed suggest considering the risks of not collaborating.
“The world is far to complex today for any one company to have all the answers or achieve the geographical reach needed to access the global consumer world. Collaboration is a much less risky strategy than trying to do everything on your own,” said Kenny.
It is not merely an exercise for smaller companies in search of broader market access or expanded capabilities. He continued to say that the largest companies often believe they can do anything. In the end that’s a losing orientation. If they were more open to partnership and collaboration, and more adept, they would be even more successful than ever.
Kenny concluded:“The demand for companies to collaborate has never been greater. It is becoming increasingly difficult for any single company to be able to deliver the complete customer experience.”
But, although the way is littered with risks, only 35% of the companies polled are aware or proactively manage the risks inherent in external collaboration and partnerships. In fact less than half (47%) perform thorough due diligence before entering into formal relationships.
The PwC report, Technology Executive Connections: Managing the risks and rewards of collaboration, polled senior executives on the benefits and risks of collaboration and how vital they believe it to be ahead of a Global downturn.
Kenny Fraser, partner, PricewaterhouseCoopers said: “In times of economic hardship, technology companies are searching for cheap ways to stay ahead in the development race. External collaboration, in an increasingly complex and interconnected world, can be a silver bullet.”
“In fact, those who bite the bullet and select partners wisely stand to outperform in the coming years,” he added.
Over 80% of respondents believe collaboration will be vital to their business within the next three years - based on the underlying perception that collaboration pays and creates significant advantages for the companies involved. In fact two-thirds of the executive group confirmed their companies are actively pursuing more collaborative partnerships with third parties than ever before. Despite this need to share information only 16% of survey respondents actually collaborate with competitors.
“This is actually highly advantageous due to the common, technical language shared and a real understanding of the value both parties bring to the table. While this flies in the face of conventional thinking it can result in the best outcome for the customer and must be considered with some urgency,” Kenny explained.
For technology companies, their products and IT solutions are becoming extraordinarily complex, building the case for collaboration in this industry. This enables these businesses to access a broader range of technologies, resources and skills, and allows them to keep up with the current rate of research and development. In addition it aides speed to market, and gives the company a much larger footprint.
A problem shared is a problem halved
External collaboration introduces significant risks. 75% of respondents agreed that external collaborations are more complex than internal initiatives, and over half highlighted the risks around intellectual property as the most prevalent, followed by data security/integrity (28%).
However, some companies openly share data when collaborating, following the philosophy that this improves the product, or allows the company to make something new and get it to market much faster than either business could by working solo. In addition, especially when entering emerging markets, the risks can be halved by sharing them with a local partner.
Kenny said: “There is a tendency to overstate the need to control competitive data and in a collaborative environment, information such as knowing who the customer is gaming with, talking to online and via which social networking site when playing on their Xbox, is vital to a Microsoft.”
However, when sharing intellectual property smaller developers must be more careful and set definitive boundaries to protect their unique selling point.
“It’s all about branding and presentation. The key to success, even if a small developer has collaborated with a big name, is to ensure the customers recognise who their favourite product is made by,” he added.
More than 75% respondents to the survey said that relative to developed economies, the business risks of collaboration in emerging markets are much greater. While just under two-thirds highlighted cultural issues as problematic when working with partners in such regions.
The top four risks identified as requiring greater management efforts in the emerging markets were: the leakage of intellectual property; the cultural fit between collaborating organisations; human resources and talent management; and reputational risk arising from being linked with, for example, a polluter or an employer of child labour.
Alec Jones, emerging markets leader, PricewaterhouseCoopers LLP, commented: "Despite the risks being greater in emerging markets, companies are still very keen to pursue partnerships, joint ventures or similar arrangements in these countries. This is partly because the risks are offset by the operating advantages of having a partner that understands local business and economic issues. The more capable companies become of identifying and managing these risks, the more successful they will be in emerging markets."
The real risk: no collaboration
Unquestionably, collaboration with external organisations entails risk. But rather than focus only on the pitfalls, those senior executives interviewed suggest considering the risks of not collaborating.
“The world is far to complex today for any one company to have all the answers or achieve the geographical reach needed to access the global consumer world. Collaboration is a much less risky strategy than trying to do everything on your own,” said Kenny.
It is not merely an exercise for smaller companies in search of broader market access or expanded capabilities. He continued to say that the largest companies often believe they can do anything. In the end that’s a losing orientation. If they were more open to partnership and collaboration, and more adept, they would be even more successful than ever.
Kenny concluded:“The demand for companies to collaborate has never been greater. It is becoming increasingly difficult for any single company to be able to deliver the complete customer experience.”
