In "Sleeping with the Enemy", an article in the May issue of Industry Week, Doug Bartholomew refers to manufacturers in the auto industry who team up with competitors to cut costs and increase market share. The auto industry is finding that “sleeping with the enemy” offers pros that far outweigh the cons. According to the article, President of Timkin Corp.'s Industrial Group, Tom Arnold sees competitors who share costs on projects they could not handle on their own in the current environment, by collaborating we are able to increase our capability, while sharing the cost and the risk.
Sharing costs is the biggest reason companies may get together. Katie Lam, a spokesperson for Northrup Grumman says "There are a lot of different aerospace companies that we team with and that we also compete with." By sharing costs and pooling brain power companies can achieve even greater capabilities that benefit the customer at an affordable cost. More companies and vendors need to take this approach when looking to cut costs and creating efficiencies. The benefactors are both the companies and their customers.
In an industry where IT markets are relatively small, collaboration can play and even greater role in the profitability of those competing. For the same functionality there may be as many as six or more vendors competing for the same business with little, if any, differentiation. Collaboration can facilitate the development and use of state-of-the-art technologies to achieve even better solutions and enhance competitive advantage.
The role of a vendor or services provider is to assist the customer in increasing productivity, efficiency and achieving competitive advantage. Affordable and custom business solutions are essential to achieving this objective. Much of the core functionality required to achieve a business solution is generic. The technology costs for this core functionality can be shared by competitors reducing the costs of the solution to the customer and creating a healthier environment.
