'Collaboration is not a panacea, but a catalyst for helping companies to work more effectively by recognizing the full potential of their most important asset.' This is the simple theme on which the consortium or collaborative business model is based. And the channel community is picking up this trend and implementing it to avail of its benefits.

Consortium, by definition, is an association of independent organizations usually formed to undertake a specific project that requires skill and resources. These might be possessed by some of the participants individually.

This is not a very new concept. In fact, the earlier trade practice of barter was the most simplistic form. Under the barter trading system, a farmer could exchange his foodgrains for a hen from a poultry farm owner. Later, these farmers would form groups and be in a better position to buy more products in exchange for their crops.

The same principle can be used in modern-day business environment. A consortium can be formed among vendors or vendors can forge it with distributors. Alternately they could have an alliance with channel partners in different permutations and combinations.

No other business model comes close to leveraging on the knowledge of so many individuals with useful information, as quickly and economically. Collaborations are just not moving the processes faster but provide better consensus among the participants in the market place.

A consortium is designed to provide members a place where activities can be undertaken more efficiently and more cost-effectively than individual members can do independently. The model emphasizes on collaboration and shared responsibility. The structure and agreed-upon functions directly influence the type and level of service the consortium provides its members and customers.

Why a consortium is needed?
The evolution of a consortium is most often need-based. In today's business environment, resources are scarce and business risks are high. This is why organizations are feeling the need for collaboration.

Given the element of focus on core-competency, and in some case lack of scale, most organizations realize that they can no longer service the entire spectrum of customer requirements on their own. Hence the need for a consortium or a partnership-based approach arises. Collaborations are happening amongst companies with interdependence or complementary skill sets.

"The collaboration between technical and business people is essential for the success of a business. Normally, it is rare to find any individual with both business and technical skills. It is far more likely and practical for people with business skills to collaborate with those having technical skills to form a successful business," said G Ramanan, Director, App Soft Consulting. In all, effective collaboration means jointly working out the critical and larger issues, but independently working out the multitude of smaller issues.

"The consortium model is here to stay. It helps bring together best-of-breed solutions and services for a client at competitive costs with clear accountabilities and deliverables. It is relevant in today's IT world as a single vendor cannot bring everything," said Prateek Garh, Partner, Progressive Infotech.

Pros and cons of the model
Organizations today are looking at doing what they are best at - channelizing their core competencies. They are looking at augmenting their technologies by getting the best-of-breed applications from diverse application providers and then implementing those using the best-of-breed integrators. They don't want to spend time, effort and money on developing something on their own that does not contribute directly to their core business.

"The consortium concept is very important to our business as we are able to offer many value-adds to our customers. We can earn higher margins, expand our business boundaries and generally work as IT consultants to our customers" Chetan Shah Director, Xpress Computers	The consortium model can be worked out both through an unwritten understanding between partners and also by entering into an official agreement such as signing a memorandum of understanding" Rajesh Goenka Divisional Head, Rashi Peripherals	"The consortium model brings together the best-of-breed solutions and services for a client at competitive costs with clear accountabilities and deliverables. It is relevant in today's IT world, as a single vendor cannot bring everything" Prateek Garg Partner, Progressive Infotech

As this vision spreads in the marketplace, vendors are learning to come together to offer these best-of-breed packages to customers. The advantage of a consortium or collaborative approach is, of course, of being able to leverage the best of each vendor, thereby providing the end-user with what he needs.

"When organizations are in the scale-up mode, to augment unavailable skill sets and geographical reach, the collaborative model is the best option. It helps in solving most current needs, only when organizations of complementary skill sets come together," said VM Muralidharan, Director, Precision Techserve. But he cautioned that injudicious choice of partners could also bring on the risk of losing accounts.

Like any other business model, this model has its own pluses and minuses. The advantages typically outweigh the cons. On the positive side, a collaborative effort entails cost savings and optimization of resources. Besides, it allows companies to put their best foot forward as this is a relationship based on respective strength areas. This also helps achieve economy of scale.

On the flip side, a consortium can easily fall apart in absence of mutual trust and respect amongst partners. If members do not share the same objectives or vision and have discordant views with a radically different mindset, then the functioning of a consortium is always affected.

"Normally, collaborative model is pushed by the vendors since they want to reach the vast market through VARs and SIs, as everyone holds a certain set of exclusive clients with them. Consortium helps them (vendors) to get access to new clients through their partners. But, it becomes a threat for the partner in some cases where the vendor/customer breaches the agreement and try to have direct business relationship, in future, with each other," pointed out S Senthil Kumar, Director, Mukesh Infoserve.

Consortiums in IT
In the IT industry, the consortium or collaborative model is getting popular because many organizations have developed products or solutions and generally carved a niche in specific markets and verticals. Hence, SIs or ISVs have realized that it makes business sense to work with those partners, who are ready-to-go in the market.

Operating in a niche or having an expertise in specific segments allows partners to offer end-to-end solution in that space to their customers. So, the partner becomes a one-stop solution provider for their customers and are also able to earn more margins in the business.

"The consortium concept is very important to our business as we are able to offer many value-adds to our customers, earn higher margins, expand our business boundaries and generally work as IT consultants to our customers," said Chetan Shah, Director, Xpress Computers Ltd.

He talked about pioneering the concept of solutions providers working together by establishing the Premier Solutions Providers Association of India in 2002. A few Intel Premier Providers (IPPs) worked together on multi-location orders and provided the last mile deployment and after-sales support to customers. This allowed the IPPs to sell across the country without investing in costly resources and manpower outside their respective cities.

"This business model has been very successful as it has increased business revenues and boundaries for us, while allowing us to provide multi-location support. We have also tied up with partners and ISVs with expertise in areas like ERP and fiber cabling solutions," he
recounted.

With the advent of value-added business, distributors have seen the importance of the consortium or collaborative working model in business. They follow this model to sell high-end software, servers and storage systems to enterprises. In this model, five entities form and account for the success of the project, such as end-customer, vendor, ISV, value-added reseller and value-added distributor. A solution sale involves a synergy of all these five entities in understanding the expectations of one another.

"The consortium model of working is feasible and recommended for solution business. It can be worked out both through an unwritten understanding between the partners and also by entering into an official agreement such as signing a memorandum of understanding," said Rajesh Goenka, Divisional Head, Rashi Peripherals.

Vendors like IBM have always believed in the collaborative model of working with business partners. "IBM exited the applications market in 1999 with a very clear view that we will partner with best-of-breed application providers to target the solutions space. We will not compete with the partners and we have maintained that positioning. Given that perspective, it is critical for IBM to develop an effective ecosystem of partners that collaborate with each other on IBM technologies thereby penetrating the market further and strengthening IBM's market share," said MK Bharatee, Country Eco Systems Leader (Software Group), IBM India.

"A consortium can work well only when it is initiated and driven by a vendor since it calls for a commitment of resources in the form of time, effort and money. However, the value-added distributor has to perform the role of the coordinator in the project. The model can be worked for any project or service or product, which involves concept selling," said Sasikanth R, GM and Head-Enterprise, Redington India Ltd.

However he added that the consortium model would not work through remote control. It requires the presence of all the five entities (such as end-customer, vendor, ISV, value-added reseller and value-added distributor) to be present in the region for better cooperation and delivery of the project.

"A consortium can be worked out even within a small group. For this, up-and-coming system integrators should highlight their strengths and capabilities well through a medium like channel newspapers, so that when a partner looks for complementary skill sets, he can align himself with the right player. It can open new vistas even for a small system integrator," said Pradeep Jhawar, Director of Kolkata-based Roy Infotech.

Making the model work for you
A collaborative framework can be a driver for cultural change, encouraging knowledge sharing between internal and external personnel and improving innovation and productivity throughout the enterprise.

"Looking closely at the issues being addressed by the industry, it becomes clear that even incremental gains in efficiency can result in cycle time compression in development and market lifespan of a product or services," said Ramanan.

This explains why App Soft Consulting is putting in place initiatives to improve collaboration across the extended enterprise. Although the definition of collaboration varies from person to person, department-to-department, and company-to-company, the factors compelling these organizations to enhance and support collaboration typically exist both internally and externally.

Rashi Peripherals too has started putting this model into practice and is focusing on collaborative working for Netgear and Compex, both networking brands. "Here, we have an understanding with select regional partners who in turn take up the projects and execute them for the clients. For bigger projects there is a clear-cut understanding between the vendor-distributor and the system integrator," Goenka added.

The success of the collaborative model depends clearly upon the understanding of business needs. Any collaboration alliance must be closely aligned with business objectives because significant gains in efficiency will only result if the end users adopt the product and use
it consistently throughout the organization.

This will happen only if the end-user feels comfortable with the solution provided, an assessment of the current collaboration process-both internal and external-is required. This includes identifying critical areas for improvement and understanding the characteristics embodied by a best-fit solution.

Prashanth LJ, Global Head of Marketing, Infinite Computer Solutions pointed out that consortiums have to be governed by clauses, guidelines and regulations to ensure smooth functioning of the same. Since in any consortium, the parties have diverse business interest, it is important that an operating guideline, with detailed roles, responsibility and performance clause has to be prepared.

Profit and risk sharing agreement along with exit clauses have to be framed. There should be penalty clauses for non-conformance with the directives and non-performance. "In a consortium-based dealing, all customer-centric aspects such as warranty, price commitment, implementation procedures are assumed by a consortium, which is a legal entity in itself. Irrespective of non-performance or non-conformance, the consortium has to honor all its commitments to the clients," he added.

The first step is to create a core team, led by a business manager, responsible for aligning and applying functionality and use to meet specific business objectives including managing the creation, membership, initial training and standardization across the collaborative environment. This team should also include a technical support specialist responsible for daily troubleshooting and system maintenance activities.

Finally, a content manager is needed to direct the use and continuous optimization of the team's collaborative workspace (including ultimate disposition of workspace information), and to assume responsibility for managing team membership and training.

Collaboration has become increasingly important to facilities management and IT services companies. Web-based technologies encourage and facilitate interaction, enhance innovation and accelerate the decision-making process, especially when collaborators are located in different regions. The foundation of general collaboration throughout the extended enterprise continues to evolve through deeper integration with core business processes.

As end-user familiarity with collaborative solutions and processes matures, so too will the sophistication of the collaborative environment. This subsequent circle of innovation inevitably leads to a gradual reengineering of how individuals, teams, departments, and companies work.

So if you have not already thought about adopting this model, you might want to reconsider. After all, your company can not be every where. By getting into non-threatening partnerships, you can reach out to more customers and also enjoy the economies of scale. Think about it.

S Gopikrishna (gopiks@cybermedia.co.in) in Chennai with inputs from BM Subbalakshmi in Bangalore, Piyali Guha in Kolkata,
Anjali Gupta in New Delhi and Nelson Johny in Mumbai

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