Strategic alliances are challenging the dominance of acquisitions as primary drivers of growth, and CFOs are steering those coalitions toward impressive returns.

Although his company was created only recently, through a major alliance among the Big Three automakers, Covisint LLC CFO Paul Kothari spends little time looking in his rearview mirror. His sights are set on the road ahead; Kothari plays a leading role in propelling Covisint's growth by managing new alliances.

Formed in early 2000 when the Big Three combined their e-business initiatives to form a single supplier exchange, Covisint has steadily increased its product and service offerings, focusing on connecting the global automotive industry. "As a finance organization, we'll evaluate whether we can launch into new markets through an alliance," Kothari explains. "For example, we found that doing business in Asia with one of our partners is much more cost-effective than setting up an entire operation there. We did all kinds of modeling up front to make sure that it's the right type of relationship structure." Now Covisint finance people carefully watch the numbers coming out of that alliance and annually conduct a thorough cost/benefit analysis of the relationship.

Few CFOs spend as much time steering alliances as Kothari does, yet major management consultancies suggest that more CFOs should. Alliances are zipping past acquisitions as a primary growth strategy. They range from so-called "Barney alliances" -- the "I love you, you love me" variety that generated buzz but little value during the dot-com era -- to best-in-class partnerships, which enable companies to increase market share, boost revenue and gain access to new markets.

"The ROI for alliances is at least 50 percent higher than the average ROI for a company's total business," reports Peter Pekár Jr., Ph.D., national director of corporate alliances for investment banking firm Houlihan Lokey Howard & Zukin in Los Angeles and co-author of "Smart Alliances: A Practical Guide to Repeatable Success" (Jossey-Bass, 1998). "Among Fortune 500 companies, overall business ROI was a little less than 11 percent about 18 months ago, coming into the downturn. ROI from alliances among the Fortune 500 during that time was almost 17 percent."

But most alliances fail to survive long enough to reap those returns. Those that succeed are developed and executed through a disciplined process woven into the companies' day-to-day operations. And finance organizations play a pivotal role in those activities. They help convertalliances from fuzzy ideas to powerful and efficient engines of growth.