Enterprise software wars

Ah, that old direct versus indirect argument has reared its ugly head again. For the second time, Adrian Di Marco, executive chairman at Aussie software developer Technology One, jumped up on his soapbox and slammed the channel model in the ERP software market, claiming it was ‘fundamentally flawed’.

These days, it seems the developer prefers to deal direct, claiming that it had won several contracts over the past . nancial year against its multinational rivals by focusing on a direct relationship with the customer (see story CRN, Issue 178 page 4).

Do Di Marco’s comments say something about the quality of existing resellers and integrators that are servicing customers in the mid-market and enterprise software market? Maybe he’s had some bad experiences with reseller partners.

After all, he did make a point of saying that using the traditional vendor-reseller model, implementation costs and risks were the responsibility of the reseller. I would argue that any reseller that is serious about succeeding in this business would get it right in the first place and be able to manage those risks. Di Marco, it seems, has different ideas (and good luck to him), but his decision to go direct goes against the plans of many of his competitors.

Companies like SAP for instance, are going the other way, signing more channel partners as they attack the SME market.

Last December SAP announced that its push into this market had paid off and it had signed 28 new channel partners to sell its Business One software.

Peter Dickinson, executive director at Technology One competitor Greentree International -- which recently signed its 500th customer worldwide -- wholeheartedly disagreed with Di Marco, telling CRN that "good, focused channel partners are actually better for the customer in that they are even more focused that the vendor".

Dickinson argues that Greentree is focused on having multiple highquality partners in all regions to provide customer choice, "which naturally drives better service".

It’s an interesting argument and sometimes you have to question whether in the mid- to high-end software market, customers prefer to deal direct with the vendor. In the end, I believe it comes down to the quality of the reseller/integrator and how serious they are about making sometimes complex software systems work for the customer, on time and on budget.

I could also argue that if I was a government or private sector customer that was spending a pretty reasonable amount of money on software that runs my business, I just may feel more comfortable dealing directly with the developer.

Email me your views. Who do you agree with? Does this market lend itself to a direct model or not?