This is a Case Study featuring the improvement in the relationship and business outcomes for IBM and a large partner.

1. Partnering RelationshipsCase Study 10 January 2011

2. Table of Contents Background and context Diagnosis The Partnering Journey Follow up health check Realising the value References 2 19/01/2011

4. Turnover of IBM leader and management team – few with any length of experience

5. Contract was coming up for renewal

6. Client satisfaction was low

7. Operational performance was poor, with SLAs routinely missed

8. Disruptions caused business losses and customer service issues for partner

9. Contract was financially poor for IBM

10. IBM staff satisfaction was very low, with issues of health and retention

11. A large IT transformation program was underway with business-critical deadlines19/01/2011

13. Prepare plan

14. Define measuresPulse Survey Analyse data 19/01/2011

16. There was provision for free text comments in each section

17. The response design was forced choice, i.e. there was no neutral option19/01/2011

19. About half of those who responded also provided comments

20. People had something to say and wanted to say it !

21. The detailed report ran to 55 pages

22. An Executive Summary was used to brief the leadership team

23. Other versions were prepared for specific audiences19/01/2011

24. 7 Overall Partner and IBM staff have a consistent negative perception of the relationship health 1. Mutual Benefits 2. Commitment 3. Mindset 4. Shared Knowledge 5. Complementary Competencies 6. Linkage n = 122 Responses of 1, 2 or 3 were negative. Responses of 4, 5 or 6 were positive. The neutral point is 3.5. 19/01/2011

25. 8 Things senior managers are most negative about… - ’ve + ’ve 1 2 3 4 5 6 1.61 Q3.1 The term “trust” characterises this relationship well. 1.79 Q 1.2 Both Partner and IBM share fairly the risks and rewards. 1.94 Q 4.4 Partner and IBM management and operating styles are widely compatible. Q 6.3 1.94 Both orgs are linked through effective and efficient processes that support the relationship purpose and… Q 1.1 1.95 The business relationship is creating the value expected by both Partner and IBM. Q 2.5 2.00 Changes to the business agreement (contract) are routinely and fairly implemented without undue stress. 2.06 Q4.7 Communication between both organisations is open and effective. n = 19 19/01/2011

27. “IBM are doing the basic tasks to deliver the contract. IBM should be trusted partners / advisors but are performing like paid suppliers with a basic low cost contract.” Partner Senior Mgr

28. “IBM acts to demonstrate that IBM success is more important than, and separate from, Partner’s expectations from the business relationship.” Partner Manager

29. “A 'Partnership' requires trust and a mindset/attitude/behaviour which supports the 'Partnership' model. The current mindset/attitude on the Partner/IBM relationship is one of Master/Slave.” IBM Mgr

30. “Individuals from both organisations have grown into an us and them mentality which is difficult to break down. The ongoing lack of an effective working relationship has eroded what trust has existed in the past to the point that many people are planning for failure of the relationship.” Partner Senior Mgrn = 19 n = 7 - ’ve + ’ve 19/01/2011

31. 10 The key points arising from the survey can be summarised as: There is an overwhelmingly negative perception of the health of the relationship in all dimensions except “Complementary Competencies”. Results are very consistent between the organisations and role groups, with variation mainly in the degree of negative perception. IBM team members are the only role group with more than half the group having positive perceptions. Partner are most negative about the lack of equity they are getting in the relationship. IBM are most negative about poor financial outcomes from the relationship. Both Partner and IBM think the other is benefiting disproportionately. Senior managers are virtually unanimous in having a very negative perception of the current health of the relationship. The very negative disposition toward “Mutual Benefits” and “Commitment” indicate a belief that neither Partner nor IBM is committed to a long-term partnering style relationship. Trust and mutual respect are lacking – more so at senior manager level. The intensity of negative perceptions will make it difficult for senior managers to “talk up” the relationship with any conviction or credibility. Managers and team members from both Partner and IBM are much less negative than senior managers. There is some variation in scores between the Partner business units, but only one is consistently positive. 19/01/2011

33. Confirm planned approach

35. Schedule working sessions and reviews

37. Present results

38. Discuss and validate results

39. Commit to action

40. Identify and prioritise improvement initiatives

41. Allocate members of the joint leadership team to initiatives19/01/2011

43. Vision

44. Goals

45. Expectations

46. Roles and Responsibilities

48. Determine Partner & IBM requirements by role;

49. Provide access channels;

50. Provide minimum required content;

51. Alert existing staff to new capability through ‘Communication’ stream;

53. Sponsor improved methods of “virtual co-location”

55. Joint recognition / feedback on great performance19/01/2011

57. Relationship expectations developed (operational)

58. Joint communications strategy validated

60. Combined education in Incident Mgmt

61. Communication of successful teaming/collaboration

63. Joint executive podcast

64. Relationship gaps action plan (operational)

65. Relationship expectations developed (operational)

66. Key IBM staff provided with message bank

67. Key IBM staff desk phones diverted to mobiles

68. Co-location pilots conducted

69. Health Checks in place

70. Instant messaging pilot

71. Common “team room” trial

72. IBM contacts circulated within Partner

73. Virtual co-location and collaboration

74. Shared organisational chartsLinkage Pre-disposition 19/01/2011

76. Many prior attempts to stabilise performance have ultimately proven unsuccessful

77. Senior IBM manager brought into the role and given responsibility

78. Worked with Partner managers and staff to deeply understand issues, consequences and Partner priorities

79. Absolute and unequivocal support from leaders

80. By early 2010 had achieved a first ‘all green’ monthly performance report

82. Part of the program approach based on ‘right Vs right’, i.e. business scenario based narratives that contrast how two vastly different responses are each right in the context of ones company culture, but not in the partner’s culture

83. Both Partner and IBM were also running various other related initiatives, e.g. values, client orientation, talent development, leadership developmentRight vs. Right drawn from “Insights from IBM’s Tangible Culture Approach”, Sara J Moulton Reger (2006) http://www.tangibleculture.com/ 19/01/2011

85. Assess the current health of the relationship

87. Jointly determine 2010 priorities, within “horizontal consistency’ and vertical progression’ parameters

88. Validate 2009 intent to focus more on strategic / longer term dimensions in 2010/11

89. Vertical Progression

90. Horizontal Consistency19/01/2011

91. In a marked contrast to 2008, Partner and IBM staff have a consistent, positive perception of the relationship health 2010 n = 108 2010 – Both Partner and IBM have a positive perception across all six dimensions 1. Mutual Benefits 2. Commitment 3. Mindset 4. Shared Knowledge 5. Complementary Competencies 2008 6. Linkage 19/01/2011 16

92. The majority of people from both partners now have a positive perception of the relationship health 19/01/2011 The most frequent response to questions by the Partner’s people was a positive response 2010 Overall the perception has moved from negative to positive 2008 Nb. Numbers in red indicate a negative perception, i.e. below the neutral figure of 3.5 1, 2 or 3 is a negative perception 4, 5 or 6 is a positive perception 17

93. Areas of biggest improvement are... 19/01/2011 18 Partner

95. Partner and IBM senior managers share a relatively consistent view of all intent-related questions, be it negative or positive

96. In 2008 Partner’s most frequent response was strongly negative or negative for all these questions, whereas in 2010 none were worse than slightly negative

98. Partner and IBM managers share a relatively consistent view of all working together related questions, perhaps except for ‘shooting the messenger’ and ‘blame game’

99. “While the people we work with face-to-face appear to have our best interests at heart, getting actions done in the background is difficult.”Partner Senior Manager

100. “There has been a great deal of improvement over the last 12 months. There are ‘green shoots’ of trust and I expect this to accelerate over the next few months.” IBM Senior Manager19/01/2011 20 2010 - ‘ve + ‘ve - ‘ve + ‘ve

102. However, Partner senior managers and managers remain slightly negative about most aspects, probably reflecting both the lag in changes made translating into better outcomes and also a bit of ‘wait and see if it is sustained’ before confirming

103. IBM senior managers and managers are slightly positive about most aspects and positive about the skills and competence of people deployed to projects (where a difference of view has opened up)

104. “Often successful collaboration depends on the individuals involved and not the culture or processes of the two organisations.”Partner Manager19/01/2011 21 - ‘ve + ‘ve - ‘ve + ‘ve

106. Only one person rated trust as a strong negative compared with 22 people in 2008

107. However, trust remains an issue with the most frequent response “negative” by both groups, although the average rating did increase by 0.87 in the Partner group and by 0.82 in IBM

108. “I feel there is an increasing level of trust between the organisations. However, this trust seems to disperse quickly during major incidents.” IBM Manager19/01/2011 22

109. The key points arising from the 2010 survey and associated comments can be summarised as: There has been a significant across the board improvement in the perception of the health of the relationship from both companies. Contributing factors are likely to be: Sustained improvement in operational performance, with many long-term performance issues addressed Wind down of IT Transformation Program Executive focus on improving the relationship Changes in the senior management team at both companies Senior Managers prepared to pick people up for behaviours inconsistent with relationship intent Execution of a program of work to address deficiencies Impact of internal change at Partner Partner saw improvements were across all dimensions reasonably equally, except “Complementary Competencies”. In particular Partner believes communications between the organisations and within Partner organisation has improved significantly and they are starting to see value being created. IBM improvement tended more to ‘governance’ related aspects and some early signs of culture change. The “Complementary Competencies” dimension has opened up as a new area of difference between the organisations, particularly in relation to the skills of resources. Trust improved across all role groups, but least for team members where the mode remained at “2”. The perception of intent and governance has increased , but effectiveness less so. This suggests there may be a lag while programs take effect AND that more work is needed in effectiveness related areas. The ‘contract’ remains as a significant negative for both organisations and needs to be neutralised as an issue and seemingly constant mismatch between intent and reality on the ground. Improvements in perception and the actual ‘climate’ are probably fragile. There is still work to do at the ‘basic expectations’ level, but both organisations are probably ready for work at the ‘value add’ level in parallel. 19/01/2011 23

110. The partners have made progress against their Partnering Roadmap 19/01/2011 24

111. The 2010/11 program aims to maintain the basics and cherry pick value adds to strengthen the strategic aspects Delighted Partners Value Realisation Program Model Partnering Team Innovation Program & funding Value add that builds commitment Continuous Improvement Program Skills Audit & Plan Satisfied Partners Reduce duplication of roles Must succeed to maintain viability Maintain operational performance Reduce mismatch between contract & intent Dissatisfied Partners 19/01/2011 25

113. Leaders have to be absolutely committed to the partnering vision and drive activity across all aspects of the relationship and operations

114. The people in the relationship improve the relationship – widespread involvement is critical and improves ownership and commitment

115. Use of a ‘Partnering Framework’ was important in gaining shared understanding of what partnering meant and a common language

116. The role for the consultant moves into the background as coach to leaders and key influencers

118. Developing trust in the team and opening up on sensitive issues takes time and the ‘right space’. Short workshops / meetings at the workplace are not conducive to that – work hard to get the time required off site

119. When people are brought into initiatives ensure they are well briefed and that there is agreed intent, e.g. a company Values Program is likely to be at odds with partnering values (refer Right Vs Right)

120. There is always turnover of people, but there is an assumption that the team has a common understanding and commitment to what was agreed. New people weren’t there and can’t have that – make the time to brief and coach them19/01/2011

121. References 27 19/01/2011

122. The method was drawn from IBM’s Partnering Framework and Relationship Alignment Method 28 http://slidesha.re/h3G6l1 Downloadable copy available at: 19/01/2011

123. IBM’s book on this new approach has just been published, and it contains a chapter devoted to outsourcing "This is an excellent book that provides a pragmatic approach to identifying and alleviating cultural issues created when two groups of people must work together. Effectively blending business cultures is a key requirement for successful outsourcing, and most companies lack the tools necessary to do this. Companies looking to reduce outsourcing risk should follow IBM's Tangible Culture approach.“ -Lance Travis, vice president, Outsourcing Strategies, AMR Research For more information about the book: http://www.tangibleculture.com/ For more information on Right vs. Right: http://www.research.ibm.com/thinkresearch/pages/2004/20040604_brain.shtml 19/01/2011 29

124. About the author... Alan Williamson Alan Williamson is a Senior Managing Consultant in the Strategy and Transformation practice of IBM Global Business Services. Alan has 15 years experience in partnering relationships, business transformation and organisation change across a range of industries and Government in Australia, Asia and Europe. Alan is IBM’s lead in partnering relationships and Relationship Alignment for Australia, New Zealand and Asia Pacific Alan authored a number of papers on inter-company relationships and was a speaker at an international conference on business collaboration. Alan has also facilitated a post-graduate program for RMIT University and has acted as a mentor and coach, both within IBM and his wider professional network. Alan has a Masters of Applied Science in Innovation and Service Management. His thesis, titled “Unlocking the Potential of Inter-Company Relationships” draws from hands on experience in helping companies establishing productive and healthy partnering relationships. Alan’s partnering clients include: Alan can be contacted at: alanwill@au1.ibm.com 30 19/01/2011