Five Steps to Successful Technology Partnerships

Five Steps to Successful Technology Partnerships

More companies are turning to outsiders for help with innovation. Learn how three organizations got the most from a partnership with an industry peer

Erin Griffin, vice president of IT at Loyola Marymount University (LMU) and Mitch Davis, CIO of Bowdoin College, met three summers ago at Snowmass, near Aspen, Colorado, during a conference on academic computing. They shared experiences about their respective IT challenges and traded some ideas. But it didn't occur to either Griffin or Davis that they could join forces until they met up again in 2005 at the same conference.

A global study by IBM of 765 CEOs last year revealed that more than 75 percent of them place a high priority on partnering outside of their organizations to create innovation. But there remains a "collaboration gap"

The two walked together out of a session about disaster recovery, reflecting, Griffin remembers, that they were both were both in a jam. Disaster recovery solutions from vendors were expensive — especially for small colleges with limited budgets. She and Davis joked about how easy it would be for people to replicate each other's data centres, if only they were willing to work together. Then came the epiphany. "We said: What if we actually did it?" Davis recalls. Half a year later, Griffin, who is based in Los Angeles, and Davis, in Brunswick, Maine, began development of a solution that allows them to host each other's disaster recovery sites. It has cost a mere fraction of what it would have to hire a vendor.

Samuel Gaer, executive VP and CIO of the New York Mercantile Exchange (Nymex), faced a different conundrum. A major competitor was encroaching on Nymex's market share by offering competing energy futures contracts on a "side by side" system for trading both securities and their options, while Nymex was still executing them manually from its trading floor during the day. Gaer needed to get Nymex's contracts online in a hurry. Nymex had a system ready, called ClearPort that it had upgraded, but Gaer knew that the Chicago Mercantile Exchange (CME), which specializes in financial futures, had a well-established electronic trading platform called Globex. "From a technical standpoint, our system was robust, but CME [and Globex] still had some distinct advantages," he says. For instance, Globex, which had been around since 1992, had been more heavily tested, and as a result it was more scalable. So Gaer called CME COO Phupinder Gill and proposed a partnership.

"I essentially said: Why should Nymex reinvent the wheel when we can collaborate?" Gaer recounts. Working together over the next year, Nymex and CME came to an agreement that enabled Nymex to list its futures contracts on Globex. As one result, the trading volume in crude oil futures offered by Nymex grew from 220,000 to more than 500,000 per day in 6 to 8 months.

The collaborative efforts by Loyola Marymount and Nymex, which each received a 2007 US CIO 100 award for partnering successfully with an industry peer, represent a growing trend among companies (CME is also a 2007 CIO 100 honouree, for a business intelligence project involving dashboards for managers). A global study by IBM of 765 CEOs last year revealed that more than 75 percent of them place a high priority on partnering outside of their organizations to create innovation. But there remains a "collaboration gap", with only 50 percent of companies actually reaching beyond the enterprise to partner with another organization. That gap, the study concluded, represents an opportunity for CIOs to lead the way as facilitators of intercompany collaboration.

But assuming this role is a challenge for IT departments, which typically take pride from invention. "The role of the inventor is disappearing," says Navi Radjou, VP at Forrester Research. "They need to stop inventing and take on the role of a transformer: transforming raw technologies into a meaningful application for [the] business."

From their experiences, LMU and Nymex are helping to define best practices for successful partnerships in business innovation. Griffin and Gaer reveal how they made it work, from selling their ideas to business leaders to executing their winning projects.

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