CHECKLIST: OEM PARTNERSHIP AGREEMENTS.

Earlier this year, SPSS set up a new "enabling technologies" division to offer statistical and analytical solutions to large OEM partners like Unisys, Lucent, NetGenesis, and Hyperion. David Blyer, who heads the new division, sees these OEM deals as a way "to reach customers who've probably never heard of SPSS." In some cases, he says, OEM partners may simply sell private-label versions of SPSS software; in others, partners actually embed SPSS technology in their own products.

The upside for strategic partnerships is often huge, both in absolute dollars and in expanded market share, Blyer notes. "But the failure rate is also high in this business, because all kinds of things can go wrong." The deals that are most likely to fail, he says, are "golf course alliances"--high-level handshake arrangements where there's little follow-on support at the implementation level. "Executive leadership is critical, but very formal processes need to be in place to keep these alliances focused and healthy."

Blyer also believes in putting these processes in writing, in a detailed "governing document" that spells out how key issues will be handled on both sides. Although the partnership document is a contract, says Blyer, it covers much more than legal matters. "Before we finalize a contract with a new partner, we make sure everybody in our organization--including sales, support, and development--signs off. And with every contract we've ever done, we've made sure the business people were in the room to handle the details. If instead it's just a handoff to the lawyers, you'll have problems. I guarantee it."

What are the key questions that an OEM partnership contract should cover? Here's Blyer's list:

* How much money is at stake? "We won't do a deal without money up front from our partner," says Blyer. "They have to have skin in the game or we walk." By defining financial commitments, he adds, both parties are forced to come up with realistic revenue projections. "The revenue stream must be worth all that's being put into it."

* What are the manpower commitments? "We always dedicate an exclusive SPSS sales force, marketing staff, and service organization to each of our partnerships," says Blyer, "and we expect our partners to make an equal level of commitment. If you don't commit people to the project, you could end up competing for skilled resources at a critical time."

* Who owns the intellectual property? "Of course, SPSS owns any technology we provide," Blyer notes. "But what about any industry knowledge that we incorporate into a product? That's something we want settled clearly in advance."

* What about marketing? "You don't want to be vague here, because it's a big cost element. We usually drill all the way down to issues like the events we'll take part in, the sales literature we'll provide, and the number of salespeople we'll train."

* What are the metrics and milestones? In addition to the usual sales commitments, Blyer says he likes to establish detailed project timelines and acceptance criteria. "Even more importantly, we try to spell out what happens if our partner misses a target. We don't want to kill the whole partnership just because their sales are below quota for one quarter."

* Is there a process for making changes? "Sometimes major costs go up, especially for people," says Blyer. "And what happens if customers push back on pricing? These are some areas where you need to build in more flexibility."

David Blyer, president, SPSS Enabling Technologies Division, 1111 Park Center Blvd., Miami, Fla. 33169; 305/627-5700. E-mail: dblyer@spss.com.

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