Focus on the future

Get that SMB

There are still of course traditional opportunities in the market and vendors seeking to add more small and medium enterprises to their client lists, will continue to target them. Baty suggested spending on security and mobility solutions will continue to be in high demand as will PC and server upgrades throughout the new year. Smaller organisations refresh less often and with Vista migrations on the horizon there will be a continuing market for PC upgrades. Server and network upgrades (LAN/WAN) along with demand for new sophisticated storage solutions will all be driven by the virtualisation trend. Many smaller organisations are not using their existing storage effectively and have spare capacity on servers which could be addressed by virtualisation. They will seek to bring these idle resources into play as cost constraints prompt them to maximise their investment in existing equipment.

Baty suggested SMBs are being “attacked by vendors”. With large contracts only coming up for tender every five or so years, large venders are looking at smaller targets in the interim and it is well established that they see SMB as both saviour and tormentor. SMBs have different buying processes, different needs. They are looking for solutions that are industry specific and they don’t want to pay for them, said Baty. They don’t want to pay for large monolithic solutions which are heavy with redundant and irrelevant features, they want to keep their initial investment low and then pay incrementally to grow a solution with the business.

“They are not as worried about getting it all to work together now, so long as it can all be integrated at some time in the future,” he said.

This is leading to changes in the type of solution they are looking for and, again, the industry is preparing to deliver those solutions with answers such as what Ovum analyst Steve Hodgkinson likes to call ‘SOA in the Wild’ – the new era of web services, mashups and social computing.

Hodgkinson sees the rise of SOA in the Wild as a potential threat to traditional vendors, but still sees a place for value-adding solution builders to stitch together the useful point solutions and disparate services being driven out of social computing and Web 2.0.

In response, traditional IT vendors will not give up their potential markets and will concentrate their energies on delivering highly targeted solutions in an increasingly vertical manner by teaming with and cultivating an increasingly select group of channel partners.

Evolving programs

Gartner’s Bova said the days where channel managers were tasked with signing as many partners as possible will begin to recede, replaced with a more select and strategic approach to partnering that will see vendors build even closer ties with enthusiastic and committed resellers.

“IT vendors are demanding more of their channel partners today than ever before,” said Bova. “The current trend is to evolve established programs to improve partner loyalty, profitability, and solution, product and support capabilities within a select group of partners”.

Though it may not always run true, generally vendors are realising that quantity does not always equal quality – a realisation which could lead to significant opportunities for some channel partners or even the end of relationships for those not willing to play ball.

Bova advises vendors that reducing the number of partners in a program does not necessarily mean revenue decline as it focuses the available channel resources on profitable partners and stimulates mutual growth.

In turn channel players may need to be selective of their customers. As solutions become services and the cost of entry to those solutions shifts from a capital purchase to a cost, the buying power within the organisation is being dispersed away from the IT department to other business or finance managers, or even to individuals who are now able to easily download software or sign up to services without buy-in from the CIO. Increasingly, suggested Baty, the channel must focus on the the service providers and business unit managers as well as the CIO and may find themselves stretched thin.

This will put more pressure on vendors and their channel to drive solutions deep into the enterprise prompting vendors to ask resellers to put “more skin in the game”, said Baty.

Simply fulfilling transactional orders is no longer enough. Vendors expect their key partners to play a more significant role and in return are becoming more willing to step up and support, reward and engage with partners that show the most interest and loyalty in driving mutual business growth.

This brand loyalty and commitment to the vendor is becoming even more important to vendors who want to be the primary supplier for a particular solution or solutions. They seek resellers who are willing to continuously invest in training and certification and can provide value-added, integrated solutions with implementation and on-going support for the customers, producing high customer satisfaction scores while giving the vendor access to new accounts and new markets.

They expect resellers to have expertise in a particular segment, vertical industry, geography or perhaps even a complementary product line that brings value to the vendor. And they must have strong sales and marketing capabilities of their own. They must also be based on an economically viable business model, explained Bova.

It’s not all one-sided though. The channel is increasingly able to push back and successful resellers are looking for the same level of commitment from their vendor partners or they are unwilling to make big up-front investments in programs and training the vendors request.
The channel is looking to recuperate the costs associated with maintaining such a close personal relationship with the vendors it deals with. They are – or at least should be – looking for organisations that have a real commitment to the channel at the most senior levels of vendor management. They are looking for skin in the game from vendors who must provide dedicated channel resources for pre- and post-sales engineering and support. They are looking for ease of engagement with proactive communications, partner portals, conflict resolution mechanisms and lead generation, market development funds along with consistent, transparent and beneficial margins, rebates and incentives, suggested Bova.