Cover story: 'til death do us part

You hire a new channel manager and he thinks, “We need more partners”. Then, three years later you hire a different channel manager and he says: “We have too many partners,” quips Dave D’Aprano, national solutions and services director, Dimension Data.

By then the company has an oversaturated partner market suffering from margin compression and a bunch of unhappy customers who bought cheap products but can’t get support because the resellers are unqualified and can’t afford to do support with the margin they make.

It’s a familiar scenario. Over the years we have watched vendors expand and contract their channel depending on prevailing market conditions or their current marketshare ambitions. It’s a practice nobody in the channel likes, but it’s one resellers get themselves into, he argues. Resellers need to be clear in their own strategy and not take on the wrong vendors in the first place.

“Compared to a lot of partners we actually do a very small number of vendors. We won’t sell just anybody’s product,” he said. Dimension Data does take on two or three new vendors a year but that’s only after detailed analysis. Before signing a new vendor it uses a matrix of about 10 headline factors to analyse whether the relationship is viable. Is it a solution customers are looking for and one Dimension Data wants to deliver? To find out, it does a structured analysis of the vendor’s program and channel philosophy in terms of support, strategy, commercial relationships and so on before getting a team of engineers to pull apart the product to check it delivers on the promise.

“We ask ourselves: ‘if we are going to invest in the vendor, how does the vendor protect that investment? If we do all the certification and do all the work, what is the vendor going to do in return?” asked D’Aprano.

Pushkar Taneja, managing director at GlobalConnect takes a similar approach. “A lot of vendors approach me every month and I have to look at their offering in terms of how it will impact my business. Will it add value to existing or new customers? Is the organisation positioned to support us? Even if the solution might advantage us we won’t engage if they are not able to support us,” he said.

It’s a matter of co-dependency points out Paul Robson, sales director for HP’s Solution Partner Organisation. One of HP’s mantras is co-dependency and the company will certainly favour you if you show a commitment to it. “We are investing heavily in channel partners that are building their HP business,” said Robson, “trying to create co-dependent relationships where our mutual success is dependent on each other.” If that’s the case there’s almost no end to what an organisation such as HP can do to help you sell its product.

At other times a vendor will decide to trim its channel. Attachmate did that after a detailed analysis three years ago. “Like a lot of vendors we were trying to be a lot of things to all people,” said Graham Hawkins, the company’s Asia Pacific channel director. But when it acquired NETiQ it found itself with complex products and a long sales cycle. “One of my big mandates over the past few years is to simplify. To be honest with you it came as no surprise to some of the partners we decided to part company with, because they were completely reactive and would only sell our product when they got an enquiry. They weren’t trying to build a business in conjunction with us.” He now works with less, but more committed and sophisticated partners. In return he can put more effort into supporting them. “The idea of maximising coverage by having as many partners as you can doesn’t always bear fruit,” he said.

A vendor the size of HP can do both. Robson said the company’s channel program is set up for diversity. “It is a mix. Everything needs to come together into an environment so there is a benefit for the channel to sell HP product into the marketplace. “On our part we need to be very fluid and flexible. Our partners are selling handhelds to high-end servers, from PCs and printers to storage, so HP runs a lot of specific programs around specific product groups.”

Over-the-top HP has an umbrella program it applies to all channel partners but beneath that partners are sliced and diced, segmented by vertical solution area and by product and supported with all manner of support and training, pull-and-push demand programs such as incremental rewards and margins to boost attach rates. There’s a whole portfolio of programs for co-op marketing, certification and so on, while customer demand activities such as marketing and a direct field salesforce all orchestrated by an army of more than 50 channel staff in Australia alone.

Large vendors by necessity have more complex channel programs. Sam Srinivasan, director of partner sales at Sun has a huge global community of partners from large integrators, to small resale partners, Solaris ISVs and a literal army of Java developers.

It has been trying to bring them all under one umbrella program that is taking years to develop and roll-out. Australian ISVs were brought into it last year and this year 250 resellers will become part of Sun Partner Advantage. Although all partners will be under one consistent framework, said Srinivasan, it still provides different engagement types. “It is all about flexibility. You can go as wide or as narrow as you want depending on your business.

“We do very little recruitment during a year unless they are going to fulfil a specific hole. We don’t believe in signing up heaps of partners. We try to address the market demand with the partners we already have”.

The courtship
Signing up as many partners as possible and then getting them to remember your name can be the most important success factor. Zoe Nicholson, channel manager Sophos finds that isn’t always so easy. Breaking in as a third partner in a committed relationship can be a tough job she said. “If they’ve had a relationship for years they are not going to leave them for you easily.”

When it does get easier is when you have an entirely new product category because they don’t have to put the other relationship at risk to take on your product. But then sales managers are usually resistant to giving access to their reps, she notes. That separation between vendor and feet on the ground means channel managers have a challenge to get sales reps engaged. As Nicholson said; “The rep in a reseller is not going to have Sophos top of mind when he sits at the desk first thing in the morning.”

So in competitive market segments vendors need to work doubly hard to keep their brand “top of mind”. “We all put such a lot of concentration and time into our partner program. You strive to get more and more accounts to the level where they actually think of you when they walk in the door and where they pass on your sales message to their customers,” she said.

Carmel Mosser, general manager for SMB and channel at Lexmark agrees it’s a challenge for vendors to keep their products top of mind. “It would be rare to have a partner that dealt exclusively in your product,” she said. “We have some that lead with Lexmark, but most try to remain vendor agnostic. We can understand that, because when they go to a customer they can offer them the best solution to meet their needs.

“The challenge is to make sure they are aware of the key differences (between competing products) and that they are comfortable putting up Lexmark as the right thing for their customer,” she said.

Graham Hawkins, Asia Pacific channel director at Attachmate calls it ‘consideration rate’ and explains how he is trying to track whether partners even suggest his products in sales situations. “When they are out there we want to make sure our product is being considered,” he said. “You have to make sure you have partner mindshare. There are a million and one competing products out there and getting mindshare is the first step.”

And the modern channel manager doesn’t just think cash when they think ‘top of mind’ either. Channel programs are increasingly well thought out and complicated, because the organisations behind them are trying to control complex market dynamics. As a result vendors constantly tweak their program to get the most out of the market.

As Mathew Dickerson, managing director at Axxis points out: “If the program works for the reseller they will have a lot of resellers out there doing a good job for them.” It is critical to a lot of vendors because “no matter how good the vendor staff are, they cannot do as good as a reseller. We have the relationship and we have to be more focused,” he said. Most resellers are small businesses so there’s a level of focus that internal reps just can’t match, he argues. The reseller has to “put bread on the table whereas the vendor rep is still going to get their salary” if they don’t make the sale.

Ménage à trois
Conflict over direct sales has eased in a robust market and as vendor organisations have learned to be more transparent about how they intend to handle the issue, points out Attachmate’s Hawkins. “Vendors have gotten better at communicating their rules or engagement and resellers know where they stand. If everybody knows where they stand there is a lot less conflict.”

But Dickerson speaks of the frustration with vendors suddenly changing direction and going more direct. “Some vendors are out there competing with you. You can’t have it both ways. The most successful vendors are those that see it as a true partnership and really want to go to market hand-in-hand. Others who either keep swapping or show indecision promote a lack of confidence.”

They go out to the channel and everything is good, but once they get “a bit of marketshare they jump back to the direct model. The ones we have most confidence in are the ones that have a clear model and you trust they are going to stick to it. There needs to be long-term obvious model. If you don’t have a reseller aligned model, fine, let it be known,” he said.

Philip Parton and Robert Silver, joint managing directors at Oracle partner Attain IT agree. After 10 years together they describe Oracle as “a little fickle” until recently when the company’s new product mix is “pushing them to the channel”.

It’s translated in some significant changes at Oracle, they said. “In the past they have been a bit of a product shop and focused that way, now they are more aware of the solution sell it has changed the way they interact with us”. For example is the type of people hired. In the past Oracle hired sales people rather than product or technical specialists. Now they hire people with particular areas of expertise — people with security skills manage security products.

Attain IT seems comfortable with Oracle’s named-account list, so long as it sticks to the rules. To help promote that, Oracle reps are remunerated so they earn commission even if the sale goes through a partner — leading the “smart reps” to use the channel “as their own private salesforce”.

The channel understands direct sales are sometimes unavoidable for the vendor. Taneja said Avaya is in a situation where large global accounts insist on dealing direct, but the company has a clear set of rules. “It’s not about trying to restrict the opportunity for people to trade, but you don’t want to create confusion and you don’t want to disadvantage the customer,” said Taneja. That said, because the local market requires a level of local telco knowledge Taneja said they do bring partners into deals to help them understand how to deal with Optus and Telstra.

Michael May, enterprise director for Trend Micro said it has launched a new model to fix what wasn’t “the most effective partner model. While sometimes getting it right means making the product easy to get at the enterprise level we have had a fractured engagement. We are trying to work more with partners in these large accounts, but we need to be the voice of Trend Micro working with the reseller in the face of a customer, so we can help address any issues in conjunction with the integrator,” he said.

Getting to know you
Vendors feel they have to get involved if the channel doesn’t have the skills to do the job, said Craig Tamlin, Quantum’s country manager. It is really good at selling volume products with low complexity, but when it comes to new or more complex products “we find a lot of channel partners don’t have the capabilities to do that independently of us, the vendors”.

He said Quantum modified the channel program to accommodate this and although it doesn’t do any deals direct, it has appointed sales reps and an engineer to takes its own products to market. It then pushes the sales through a partner. On a selective basis Quantum might “invest some time with the little guys” but they are pretty much “left to their own devices selling entry-level solutions”. When it comes to complex or new products Tamlin has decided the pull model is the only way they will ever get sold.

One example is the rich media area where it has new solutions acquired from Intraware. Quantum is busily “establishing a route to market” he said. If it makes a sale it brings in a channel partner or tries to work with the prospect’s existing reseller.

In most cases though, partner arrangements are expressly designed to avoid the vendor doing the sale or deployment. Even low-volume, high-value companies look for partnerships at a local level because they don’t have specific geographic skills or presence. That makes training critical for both parties. As Taneja describes it: we are making the investment, we want to be able to go out into the marketplace such as Avaya would go out. The customer shouldn’t get the feeling we are not experienced and that comes from the accreditation and the information we can access.

Integrators such as Dimension Data and GlobalConnect stressed the need for early and easy access to product and a chance to be involved in the development and Beta programs so they can gear up their company to sell new products once it becomes available. “If they announced a product we didn’t know about it would take me about six months to get my organisation geared up to sell it,” said Taneja.

Companies such as Oracle and Sun put resellers through the same training as their own staff and set up mechanisms where partners can give input into future product development. Sun’s new program puts a lot more emphasis on collaborating and social networking style interactions between its own staff and the wider community. “We have a web portal called the Sharespace where partners can participate directly with our business units and have a direct interface into those unit and contribute to the development cycle and problem complex solving,” said Srinivasan.

Getting access to pre-sales engineers and product specialists is something the system integrators showed a lot of interest in and while Silver said “it is up to us to work the relationship,” he notes Oracle is “actively trying to establish a matrix of relationships” between its own staff and partners.

The last word
Training can be problematic for smaller resellers. “Everybody is time-poor and sending somebody to a formal training course is hard for a small organisation. It is good when vendors provide web-based training you can do in your own time, but the best way to learn a product is to use it,” said Dickerson.

You hear about demo gear from the resellers, but there’s no mention at all in talks with channel managers. Resellers really want it, but only at a good price. It is important to “practice what you preach” he said.

“Some vendors are great. They deliver demo-priced product that’s easy to display and they make it easy to get. With others you have to jump through hoops then they give you five percent off something that is redundant in six months.”

It’s pretty hard to sell a Holden if you are driving a Ford, he said. “People are always asking what sort of notebook and mobile phone I use because they figure I know what is best. If they see demo gear from vendors they have faith in that because I have made the commitment. It’s one way that a vendor can make a significant difference,” he said.

“A partner program has to be a win-win. It’s no good saying ‘join the program’, but you have to have x number of engineers and do this and that training. If you do all that there has to be a sweetener. It might be demo equipment, co-op, or pricing, or something you can advertise that is exclusive in your area”.

Adam Gosling