Vendors will take every opportunity to boast about their support programs for channel partners, but ask solution providers about these initiatives and they typically will say vendors should do more.
In a poll by Ziff Davis Enterprise Research and Crimson Consulting Group last August, only 14 percent of 273 solution providers rated support efforts of big IT vendors as "very good or excellent," while 73 percent deemed them "good or fair" and 13 percent rated them "poor or worse."
While not hopeless, the results indicate room for improvement. Vendors need to get better about recognizing solution providers’ influence in closing sales, share technical expertise with partners, and support new business models such as managed services and SAAS (software as a service), say solution providers and analysts. Channel partners also want help in entering new markets and programs that get them up to speed quickly on new technologies.
"We are interested in anything that drives margin," said Tim Tonges, president of solution provider FusionStorm. "The more profitable a line can be, the more attention it will get from us." Tonges said FusionStorm dropped one of its vendors after realizing that although the provider had increased its sales of the vendor’s products by 60 percent, the margins dropped by 40 percent. "They ruined a good thing," Tonges said.
As the FusionStorm experience indicates, solution providers will walk away from vendor programs that fail to help and reward partners that grow their businesses. Increasingly, those programs also have to address the ongoing shift among channel companies to service-focused business models, something critics say many vendors have failed to do.
But that is beginning to change, said Dylan Charles, a partner at Crimson Consulting Group. "We are starting to see shifts of solution providers start to affect business models and behaviors of vendors," said Charles, citing managed services and vertical-market specializations as examples.
"It comes down to providing flexibility," said Julie Parish, vice president of global channels for security vendor Symantec. "From a vendor perspective, you have to provide online, telephone, feet on the street—as many partner models as possible."
Ways of the Past
When it comes to vendor support, the ways of the past don’t necessarily work anymore. Some mainstay channel programs such as telemarketing have become irrelevant, at least to some providers.
"Telemarketing is a joke in the business," said Tonges, whose company partners with such vendors as IBM, Cisco Systems, Sun Microsystems, Hitachi Data Systems and VMware. "In this world of spam and voice mail, I don’t think it gets you to the right people in the right way anymore." In some cases, it’s not about relevance but the amount of attention that vendors pay to their partners.
"We started out as a small security company and handled a lot of other products, but we found out that most of the vendors we were working with just ignored us," said Gary Cannon, president and co-founder of Advanced Internet Security. As a result, Cannon said, AIS has decided to work primarily with Symantec because of its partner program and broad product portfolio. Symantec now accounts for 80 percent of AIS’ business.
As the AIS experience shows, paying attention to partner needs pays off. And increasingly, those needs revolve around a shift to a service-centric business model. "Selling services is a more and more significant part of the solution provider’s business," Crimson’s Charles said.
More than half of the solution providers participating in August’s Ziff Davis Enterprise-Crimson study on channel business practices said they are focusing on increasing the percentage of IT services revenues in their businesses. Ninety-seven percent said they offer one or more services in addition to reselling technology, while 74 percent said they see themselves as solution providers rather than resellers. Only 14 percent said they still classify themselves as resellers.
"We need our vendors to react to the evolving models," said Mike Fong, CEO of Calence.
For Calence, Cisco has made serious strides in this area. "They recognize that the route to market for their gear isn’t necessarily straight to the customer," said Fong, pointing to Cisco’s MSCP (Managed Services Channel Program).
"Cisco wants to make sure that the routes to market use and embed Cisco content," Fong said. "It’s just wonderful that Cisco is recognizing different business models and trying to figure out custom programs to reward different routes to market."
Under Cisco’s MSCP, solution providers undergo a rigorous qualification program and, once qualified, are guaranteed rebates, as well as certain discount levels so they can provide predictable pricing to customers over multiple years, Fong said. Cisco has also lifted geographic limits to allow MSPs (managed services providers) to sell products wherever the customer is. "Customers want to hire one partner to provide global managed services," he said.