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4 principles for selecting the right principals

Shantheri Mallaya | May 23, 2013
Three years ago,Sudarsan Ranganathan made a decision that some would have called, let's say, far out.

Chain-Sys Systems, says Mekalai, sees itself competing with the likes of PwC and KPMG, and wants to emerge as a key consultant for Oracle implementations. Through Oracle, the company has white labeled SCM (eChain) and e-business (appLoad) suites, and has made inroads into multiple verticals. Chain-Sys Systems believes that the 50-60 percent year-on-year growth of its bottomline is proof that its philosophy works.

Manish Tandon, director of Questa Software in Mumbai, is vociferously against dependence on a single vendor. Questa Software, which used to sell a lot of Sun, realized how dicey it was to adopt a single-vendor policy when Sun was acquired by Oracle. Questa Software, says Tandon, saw uncertainty and continuity issues loom large and quickly changed tracks.

Currently, Questa Software works with other vendors such as IBM, HP, and Symantec, among others. The solution provider is also keen to revamp its Xerox MPS portfolio and might phase out a couple of other vendors from its portfolio, for profitability reasons, reports Tandon. These alliances form part of a strategy, says Tandon, that will protect the company when the cloud kicks off in a big way and software is ousted.

At the other end of the number spectrum, there's Bangalore-based Dhanush Infosol, which works in the networking space. CEO Anil Kumar T.V. says that the company has 25 active vendor relationships and as many as 60 inactive ones.

"We never kill relationships. There are so many opportunistic, once-in-a-while kind of transactions that we retain the inactive ones as well," says Kumar.

One of challenges of having too many vendor relationships is managing them. It's similar to the question of how many direct reports a CEO should have before the strategy of delegation become counter-productive. The number, called span of control, depends on the kind of business you run and the type people reporting to you. Research into span numbers indicate that between five and seven is the sweet spot.

How then does Dhanush manage 25 vendor relationships? "It's simple," says Kumar. The idea is to have between two and four working, active, and profitable vendor alliances in each domain. It's a compartmentalization strategy that seems to work if Dhanush's 30 percent year-on-year profitability is any indicator.

Choose Vendors with Vision
Being in the vendor-sign-up race has more downsides than just mere management. Some partners, in their fervor to dabble in multiple relationships in the hope of seeing big money, overlook the fact that a vendor with an unclear roadmap or a fuzzy vision could hurt a partner's business.

"We can't encourage fly-by-night operators," says Vishal Bindra, CEO of ACPL, headquartered inNew Delhi. "If a vendor isn't clear about its commitment to theIndiamarket, then it is a firm no."

 

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