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Partner models in the software industry

The partner ecosystem is vital for each software company. This site explains which types of partnerships exists and how they work.

Ecosystems and partner models in the software industry

Today there are only a few sources in the literature on the forms of cooperation between software companies and on the objectives, structure and forms of cooperation in so-called ecosystems (like resell, revenue share or referral.). For software companies, this is a crucial problem, since the decision to join or to create an ecosystem or to partner is not easy. Here are a few examples of partner models, you will find the full list and full description with examples in one of my books listed at the bottom of this page.

Forms of cooperation in the software industry

The forms of cooperation between software companies still cannot be found in the literature. From a pragmatic point of view, following forms can be found:Resell, Revenue Share, Referral Program, OEM, Certified Solution, Development Cooperation.

Referral

Referral means that the software vendor has outsourced lead generation to a partner company. The partner company creates the lead, passes it back to the software vendor. The software vendor pays a referral fee to the partner for a qualified lead and/or a closed deal with the lead.

Referrals are very popular and can be used as a one-time or repetitive form of cooperation between two companies. Advantages of referral are easy creation, low impact on both organizations, partner and software vendor, and limited risk.

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Revenue share

The software vendor endorses the product of the revenue share partner. if the customer buys the partner´s product, the software vendor gets a share of the partner´s revenue.

Revenue share partnerships are also popular in the software industry and are usually used as door opener into other companies´ customers. Revenue share makes sense if the product offerings of the partner and software vendor are not competitive, but complementing.

Advantages of Revenue share are: software vendor participates in revenue that is generated by other companies, limited cost for software vendor for endorsing other vendor since cost of sales stays with the revenue share partner.

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Resell

Products of the software vendor are supplied to a resell partner. The partner sells the software vendor´s products to the customer.

This is a close relationship between a software vendor and a resell partner.

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OEM

in an OEM scenario the software vendor provides software to the software partner. The software partner sells the OEM software as part of his solution. Usually, the software partner charges no price for the OEM software, but for his own solution. This is the key difference to a resell.

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Certified solutions

Customers are looking for minimizing their integration cost in a heterogeneous landscape of software solutions. To proof that the integration between two software solution exists and has some level of quality, software vendors are offering certification programs. Certification allows competition between software partners to keep prices low while certification increases integration quality.

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Find further information in the book Profit from software ecosystems listed below.