Across many sectors New Zealand’s business culture has bred companies that offer a broader range of products and services than their typical overseas counterparts.
From the local post shop that doubles as a baby wear retailer, to the reseller that offers hardware and services packages in everything from accounting to graphic design, the size of the New Zealand’s business community has meant that in order to stay alive SMEs have had to try to be all things to all people.
However the tide is changing and this is particularly apparent in New Zealand’s IT industry where the market is fragmenting with vendors, distributors and resellers gravitating more and more towards specific specialisations rather than broad product and service provision.
With the IT boom of the 90s on a downward slide, businesses are realising that unlike the past, survival today means being able to offer something nobody else can, it means being a specialist.
This change is being driven by an increasingly crowded and competitive marketplace, and growing sophistication and demand for excellence among end users, says Andrew Gurr, CEO of distributor Connector Systems.
“Customers have turned upside down the kind of supply agreements they had in the 1990s and early 2000s”, says Gurr. “New kinds of relationships are forming that are shorter and more niche.”
This change has driven another interesting trend – increased partnership and collaboration between different niche players in the market, who get together to offer tailored end to end solutions.
Shedding aside traditional worries about sharing intellectual property, getting into bed with the appropriate partners is fast-becoming accepted as a key growth driver for businesses in the IT sector, no matter what their size.
Software development vendor Greentree is one of many companies that has embraced the spirit of collaboration and is focused on building partnerships across all its work.
It has a strategy in place for forming vendor-to-vendor partnerships, particularly in the mobility and POS spaces, which it sees as being aligned to Greentree’s software solution. Major partnerships include point of sale specialist Infinity and document scanning specialist Ferrett.
“We’d like to think we are taking a proactive approach and that being able to offer the best solutions by using our partnerships is a key point of difference for us”, says Graham Hill, Greentree’s channel director.
While most partner agreements are currently struck up on a customer by customer basis Greentree is working to establish long-term relationships with other vendors so the joint solution interface is available to customers before going to market.
Although they can help to drum up new business partnerships can also bring risks, says Hill, and require high levels of trust.
However the small size of New Zealand IT companies compared to their multinational rivals, and the intimacy of the market, both lend themselves to the formation of strong business relationships within the IT sector, says Hill.
In a small community any business working collaboratively with another must trade in an open and honest way or face developing a quick-spreading bad reputation.
“A company like Greentree is relatively small and local, so if you partner with us you can deal directly with the decision-makers,” says Hill.
Once trust is established these partnerships can also offer a new source of advice and information.
Hill says Greentree’s policy is to build vendor-to-vendor relationships then pass them on to its channel partners.
“Many of our channel partners deal in products from our multinational competitors such as SAP, Microsoft and Sage,” says Hill “but Greentree can offer a better solution for customers thanks to our partnerships.”
Collaboration and information-sharing is also encouraged among the resellers who may traditionally have considered themselves rivals.
“We encourage our channel partners to work together and have set up a discussion forum to share the different ways they’ve developed or applied the Greentree product and to share general information.”
The tendency to remain guarded about sharing such information is unfounded according to Hill.
“It’s actually quite rare for two of our partners to be bidding for the same contract and only a few partners actually do development work around Greentree, so it’s important for us that they share what they know and it helps channel partners too.
“For example, if a partner is competing against a particular product the information they’ve gathered from other partners might tell them what that product’s weaknesses are,” he says.
Collaboration forces companies to look at what they are really good at to decide what niche skill they can offer the market, which often leads them to drop other peripheral work.
However narrowing focus on to one or two areas can leave a business vulnerable unless its collaborations in those areas, on which profitability depends, are strong and successful.
Despite the risks, however, strategic partnerships, customer-based partnerships and collaborations among IT businesses have become central to winning to complex tenders against multinational giants.
While most collaborations today involve IT niche players getting together to offer high-quality specialised end-to-end solutions the opportunities for collaboration for IT businesses are endless and aren’t restricted to the IT sector.
As the success of businesses from all sectors becomes increasingly dependent on technology, the new challenge for New Zealand’s IT players will be to think outside the box when it comes to who, when and how to collaborate.