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07/25/2006

Partner-to-Partner Networks Rush Into the Market with Vast Opportunity for Vendors, But New Management Skills Are Needed, IDC Finds

FRAMINGHAM, MA – JULY 25, 2006 – According to an IDC study, new vendor partner-to-partner (P2P) network initiatives are quickly entering the partner management market and will likely generate enormous impact. The study reveals that these new P2P networks help vendors move from a hub-and-spoke view of partner communities and partner management to a much more holistic model. In order to be effective, these new P2P initiatives will require a new set of management competencies, and IDC believes that embracing, encouraging, and proactively managing network behavior will be a critical source of value creation for technology vendors in the next decade.

"In the not-so-distant future, all partner programs will feature P2P network initiatives or will adopt characteristics of these initiatives into their core structure," said Stephen Graham, group vice president of Software Business Strategies at IDC. "The economics behind network management approaches and the developments being made in networking as a management science provide the backdrop for significant change from how companies have traditionally managed their partner relationships."

The study finds that through partner networks, vendors can assess and enhance their role in the partner networks most relevant to their target markets and leverage the network effects that result. The study cites that vendors have the opportunity to become central hubs in their partner networks, which will result in exponential gains in value as the network grows and matures.

Graham adds, "A true partner network strategy, executed well, can create a lasting competitive advantage in the face of shifting customer needs, leading to increased sales and market share."

IDC offers the following guidance for vendors deciding to develop a P2P network initiative:

— Understand the underlying principles of managing partner networks, such as the economic and social characteristics

— Internally explore the willingness to consider a P2P network initiative that offers a more decentralized management and governance approach

— Explore some of the emerging management science around networks, and monitor the potential for management scorecards

— Seek best practices from relevant P2P network initiatives

The IDC study, P2P Networks: Vendors Tackle an Emerging Shift in Partner Management (IDC #202264), introduces IDC's approach to understanding partner networks — the IDC P2P network initiative framework — and maps five industry partner-to-partner (P2P) initiatives using the framework: IBM's PartnerWorld Industry Networks, IBM-led Value Nets, SAP's Channel Partner Solution Network, SAP's Industry Value Networks, and Microsoft's Partner Channel Builder. The study examines the market drivers leading to partner networks, the science of networks, and the potential benefits of network-focused partner management. Also provided is a future outlook of the market and essential guidance for vendors.

About IDC

IDC is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. Over 850 IDC analysts in 50 countries provide global, regional, and local expertise on technology and industry opportunities and trends. For more than 42 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. You can learn more about IDC by visiting www.idc.com .

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