Strategic Partnerships in the Cloud


The Cloud is all about flexibility, and so is partnering. Of the three ways to enter a new market, organic growth, acquisition and partnering, partnering has the advantages of being fastest to market and requiring the least capital. Assume, for example, that software Co. has big data technology that it wants to deploy as a Big Data Service. Software Co. has some critical decisions to make: What platform should they use to develop the Big Data Service? Should they market the Big Data Service to service providers or end users? And most importantly, how will Software Co. execute?

Software Co. could decide to do this organically and develop their own platform, or they could do it through acquisition by either licensing the technology from Platform Co., or even acquiring Platform Co. outright. The advantage would be that Software Co. would control the platform, but the disadvantages would be (i) Software Co. needs a significant amount of capital to do this, (ii) the increased time to market - Software Co. must develop or acquire a platform before they can start development, (iii) Software Co. must make a big capital bet on a single new service and (iv) Software Co. still has not solved the go-to-market problem.

Partnering with one or more platform companies solves these problems. But Software Co. must weigh the disadvantages of this strategy, namely (i) the loss of control of the platform, (ii) the additional management effort that Software Co. will expend to deal with partners and (iii) adding partner execution risk to the equation.

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