By Michael Terner, Executive Vice President
Through the lens of having three kids who have been in high school, I’ve heard about “getting dumped by text message” and how that can complicate and deepen the confusion of what is an inherently difficult situation. Well, earlier this year our company went through the business equivalent of such a break up.
In May, after almost 20 years as an Esri Business Partner we were informed that Esri would like to “let our formal partnership retire.” We weren’t informed by text message, but rather we first heard the news from one of our big city customers who apparently was told by Esri before we were. About a week later, on May 12, we received a formal letter from Esri signed by our “Manager of the Regional Partner Team”. Our Regional Manager for the Northeast and Jack Dangermond were CC’ed. The “Manager of the Regional Partner Team”, who we’ve known for over a decade, gave us another name to contact “if you have any questions.” So as of June 25th, 2014, we were out of the club.
But, as with high school romance, sometimes break-ups are necessary, and while they can hurt, they can also lead to new growth and opportunity. Three months after receiving the news I think our team has processed the “message” and has some perspective on what happened as well as a really optimistic outlook on AppGeo’s future. Ultimately, while we’ve broken up, we do want to “remain friends” which Esri also relayed in their letter to us. Indeed, upon reflection, we think this episode says a lot about where our company and our industry are heading, and we believe others may be interested in our assessment.
We weren’t surprised
While we weren’t expecting this break-up at this time, we weren’t surprised either. There had definitely been some stresses over the years, and we both knew that AppGeo was somewhat of an atypical partner insofar as we openly touted our broad geospatial capabilities across multiple platforms, including Esri’s. In our history, we had also simultaneously partnered with various other geospatial firms, including joining Google’s Authorized Partner program in late 2013.
In fact, in 2012, we had considered leaving the partner program on our own accord. That spring, we had traveled to Palm Springs for the Business Partner Conference and in the lead-up we were informed that “Jack wants to talk with you, one-on-one”. Two of our principals traveled to the conference and had the one-on-one meeting with Jack. Suffice to say, most of what was relayed was displeasure. When our team returned, our President, Rich Grady, asked the rhetorical question of “would we be better off being customers and not partners?” As partners we felt there were limited benefits beyond the ability to “say” you’re a partner, we faced regular competition from Esri for services work, and our rare communication with Esri was mostly about missing their expectations. Basically, we got almost no attention from Esri unless they felt something was going wrong.
At the same time, we were, and remain strong customers of Esri with our annual maintenance numbering in the tens-of-thousands of dollars for our commercial licenses. So as both a customer and a partner, it seemed fair to ask “where is the customer service?”
Soon after our team returned from the 2012 Business Partner Conference, the newly seated Esri Regional Manager for the Northeast, reached out to set up a meeting with us at our Boston headquarters. We wondered if this meeting was for him to further relay some of the concerns Jack had expressed to us. In kicking off the meeting, Rich also asked our Regional Manager the question: “would we be better off as customers and not partners?” We really didn’t know the answer we’d get, and we were quite surprised when the Regional Manager and another Esri staffer said loudly, and in unison: “No! You need to be a partner.”
We will remain strong users of Esri technology
In spite of our change in partnership status we are not abandoning Esri technology, and our annual maintenance remains at the same level it was last year. Indeed, we greatly appreciate and admire Esri’s professional grade products and use them extensively on a daily basis as they are definitely the best of breed in many areas. And, losing our partnership does not diminish our expertise in their tools and we look forward to supporting our existing and new customers on the Esri stack. Our strong staff and 20+ years of experience and our portfolio of successful and award winning projects with Esri tools speaks much more loudly to our capabilities than does the “partner” appellation.
The reason our partnership was retired was because we use competing technologies
There are two phrases from our “goodbye letter” that seem an attempt to explain Esri’s “decision to end our formal business partner relationship”. The first states:
“…the purpose of the…partner program is to acknowledge and support those organizations that wish to work closely with Esri. While I recognize that our business and technology are not appropriate for every situation, we have over the years aspired to create a network of partners that built applications on our platform.”
The second states:
“It has been apparent…you have clearly made a decision to position your company to build solutions with our competitors. ”
The reality is that both of these statements are only partially true. However, the partial caveats are very important, especially given today’s geospatial landscape. First and foremost, we are not changing our behavior. We have always been customer focused and have chosen what we believe are the best technologies for a given problem. Indeed, we have built solutions on Esri’s competitors’ software since the 1990’s (from Bentley Microstation to Intergraph GeoMedia to Boundless/Open Source and Google). And we are not alone, and could recite a list of current Esri partners who both build solutions and maintain partnerships on a variety of platforms besides Esri.
The fact remains that to this day, the large majority of solutions we build, and projects we conduct utilize Esri technology. In short, this is not new behavior by us (or others), it appears there’s less tolerance for this behavior within Esri. And this intolerance is a little confusing with Esri itself touting “mixed source environment(s)” in material such as Victoria Kouyoumjian’s blog piece from October, 2011, where she stated:
“It should not be a choice of ‘closed’ or ‘open’ taken in isolation—it’s based on the best business model for you and your organization, and the most appropriate tool that provides Fitness of Purpose…”
So why was our partnership retired now?
If we’ve always done the things that Esri says is the basis of removing us from the program, what are the real reasons, and why now? In addition to our new partnership with Google, one of our guesses is that we were successful in winning work that Esri coveted. This was evidenced by one specific phrase in their letter notifying us of the end our formal business partner relationship: “you call yourself a partner but sell against us with competitive technology.” While Esri’s letter didn’t cite specific examples, there were two recent deals that illustrate this potential scenario. We disagree with the assessment that we “sell against Esri” in a way that’s any different than them “selling against their partners” for services. In looking at these two situations, it is clear that perspective matters and that the view from Redlands can be very different than from where a partner sits.
In the first situation, we won a competitive procurement to build the Crucial Habitat Assessment Tool (CHAT) for the Western Governors’ Association (WGA) in late 2012. The WGA issued the RFP and did not specify a particular technology and did not maintain its own internal geospatial operations. Through several contacts, we were aware that Esri was tracking the WGA work closely and was planning to bid on the work directly. Ultimately, their bid did not include any business partners, although they did partner with a non-profit organization. So what’s a small company like ours to do? Just pass on opportunities like this? Wait for Esri to call us? Bid an Esri solution knowing that Esri itself is bidding? Or, bid a requirements and design process that led to an innovative solution involving Google, Open Source and Esri technology. We weren’t “selling against Esri” we were competing for work, just as they were. The market spoke and we were thrilled to win and deliver a successful project. Is there a little irony that Esri itself has no qualms competing against its partners for services work?
Second, we were recently involved in a project that replaced an Esri-powered traveler information system for a large southern state department of transportation (DOT) with a Google-powered solution. The DOT had deployed its Esri based site and was concerned when there were scalability issues over the winter. It was reported that the site was crashing under the load of several hundred simultaneous users accessing the site in response to snow and ice storms. Given the possibility of hurricanes in the Gulf of Mexico, and the potential need to evacuate large populations, the DOT needed their site to be reliable and resilient under a much, much larger load numbering in the tens, or hundreds-of-thousands of concurrent users.
The team that built the Esri site was asked to fix these issues. For a variety of reasons, the DOT then began looking at Google technology, which is well known for being highly scalable. We had become Google business partners late in 2013 and knowing our experience with state DOTs, where we had built several Esri powered solutions, Google reached out to us to see if we would be available to perform the services of re-architecting the site on their stack. And, once again we worked hard and delivered a very successful project that delivered a highly scalable Google-powered web-site while retaining and integrating with the DOT’s Esri-powered data management backend. So, were we “selling against Esri?” Did Esri, or the customer ask us for help in making the Esri solution more scalable? If they had, I can report we would have been extremely interested and equally receptive to helping. But they didn’t. So again, what’s a small company like ours to do? Just sit this opportunity out? Stay out of accounts that are using Esri technology unless Esri asks us in? Rather, we responded to the DOTs queries and provided the services that enabled their success once the decision to switch to Google was made.
There are other kinds of partner programs
As described earlier, Esri’s partner program poses unique challenges. We know and regularly communicate with enough other Esri partners to understand that our struggles and challenges with Esri are not limited to us. Like AppGeo, some other services partners will privately acknowledge that Esri is one of their biggest competitors, and others also chafe at the limited benefits of the partner program and Esri’s sometimes “strong hand” in urging particular partner behaviors.
Through the lens of joining other partner programs we’ve seen that there are different partner models with different levels of collaboration and tolerance for maintaining multiple partnerships as well as different approaches to avoiding channel conflict (i.e., competing against your partner).
We ultimately concur with Esri’s decision
Sometimes when you’re in a bad relationship it’s hard to see the dysfunction and to find a way out. And, in spite of what might be painful, time does heal wounds and three months later we are at complete peace with the decision and see a very bright future ahead with all the technologies we work with, including Esri’s. We have had a long history with Esri and we have many friends within the organization, several of whom have gone out of their way to reach out to us in friendly and positive ways since they learned the news. And, we’ve had the same reaction from our friends, customers and other partners in the industry. In referring to our use of other technologies, Esri acknowledged to us: “you have every right to do this.” We would share those sentiments in understanding its business decision regarding our partnership. It is not an outcome we were seeking, but it is Esri’s right, and it’s a decision that we accept.
While our partner status has changed, we have not changed. We remain passionate about working with our customers to solve their business problems using the best and most cost effective technologies, regardless of the supplier.
A Message from AppGeo President, Rich Grady:
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