Why Don’t IT Alliances Work Out?

by drjim on April 20, 2009

IT Department Alliances Can Make Everyone Stronger - If They Are Done Correctly

IT Department Alliances Can Make Everyone Stronger – If They Are Done Correctly

You would think that the more alliances that your company / IT department makes with other firms, then the better that they would become at making them. After all, practice makes perfect – doesn’t it? It turns out that this is not always the case.

Koen Heimeriks has spent time studying 200 firms that had formed more than 3,400 alliances. What he has found just might surprise you.

He found that those firms that had the most experience striking up alliances actually had worse results when compared to those firms who had moderate experience.

Why the difference? It turns out that there are two problems that develop in firms that already have  a number of alliances:

  1. they have a tendency to become overconfident in their alliance building skills, and
  2. they can develop learnings about alliances that are in actuality based on unsupported ideas about cause and effect.

So what can make an IT department’s alliance with another firm actually work out well? It turns out that it’s the methods and procedures that the firm uses to create alliances that will determine their eventual success. Established firms that already have many alliances will probably have rigid and inflexible business processes for making decisions and selecting partners.

However, IT departments with fewer existing alliances will have more flexibility built into their processes. An example of this would be where employees who have worked on previous alliances share information with the employees who are trying to create a new alliance. This type of discussion can lead to experimentation and allows novel approaches to each alliance opportunity.

So in the end, what does all of this lead to? Heimeriks reports that the larger firms who had many alliances and a more rigid alliance creation process had an alliance success rate of around 50%. Those firms that had fewer alliances and a more flexible alliance creation process had an alliance success rate of around 71%. Sure looks like flexible processes are the key to successful IT alliances!

Does your IT department have any alliances with outside firms? Would you say that you have a lot or a few of these alliances? Are they generally successful or not so successful? Do you feel that your alliance creation processes are fixed or flexible? Leave me a comment and let me know what you are thinking.

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{ 2 comments… read them below or add one }

Simon Stapleton April 20, 2009 at 8:13 am

This is great research. What a surprise! But maybe not when I look at the organizations I’ve worked in. I’ve worked for some of the largest IT companies, and some small ones, and to be frank I have seen the small companies outperform their larger competitors because…..

….. they’re more flexible, just as you say. Flexibility generally means adaptability, and recent months have shown that adaptability is something that should be treasured when best laid plans collapse.

The worst situation (and have observed as such) when a small organization tries to play like their big-brother, that is, establish rigid processes through alliances without having the economy of scale to make them work in the long-run. It can (and does) totally kill an IT organization to constrain itself whilst it is growing, or adapting to an economic downturn.

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Dr. Jim Anderson April 20, 2009 at 9:33 pm

Simon: … and all small organizations eventually end up trying to look like their big brothers. I’ve seen small shops actually go out and hire folks who have worked in the big shops just to set up processes that end up killing the company.

Sometimes it’s better to stay small (at least in your thinking)…

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