Focus on the future

It’s all pretty familiar stuff, admittedly. But the point about Bova’s research is that there is a discernible shift in power away from vendors dictating what attributes a channel program should have, or how a particular aspect of the program should be implemented. Increasingly, she argued, the channel has more power and influence over the vendors, and is able to demand more.

From opportune to strategic

To protect their investment in the channel, vendors will increasingly choose partners on a strategic rather than opportunistic basis, she said. This will play out in not only the selection of partners, but in the nature of the relationship. Vendors are bringing partners into their strategic planning processes, letting them take part in sales meetings and revealing their most hidden plans.

Rather than simply lobbing kit over the wall for the channel to sell, they want their partners to understand their brand, buy into their best practices and conduct themselves as though they were one of their own employees, Baty said. In return, he said, the vendor is showing a willingness to help the partner grow their business. It’s in their best interest to ensure profitability and reliable business practices in the channel.

This shift from “opportunistic” to “strategic” partnering is mirrored in a channel program shift from volume to value. In the past vendors have focused their efforts on partners that could deliver volume throughput and while that is still relevant, channel programs increasingly place more emphasis on the value a partner can bring to the table.

The new channel programs reward loyalty and skills in a way they haven’t before. This can be a huge advantage to smaller channel players, said Gartner if they have specialities in skills or in vertical market knowledge. While their lower volumes may have disadvantaged them in the past, their specialisation will become their asset as vendors enable them to compete on price with larger volume players.

“Some areas that have proved to be the most successful value attributes include: training, specialisation, competencies, business planning, marketing activities, joint sales efforts, competitive displacement and new targeted account acquisition,” said Bova.

Some of this is being driven by vendors wanting to ensure their channel relationships are truly profitable, other aspects are to ensure customer satisfaction, but it is also to encourage investment in the much-needed skills that will deliver sophisticated solutions the vendor wishes to offer. Reseller training will become an even more important aspect of partner programs over the next 12 months.

“If a vendor is moving away from selling simple point products to selling more complex solutions, then the training curriculum should follow accordingly. Training a channel partner on the speeds and feeds of a product without any context around what business pain the product will solve, and how this solution fits in the overall customer environment, lacks any real substance,” said Bova. This addresses what Baty sees as another major industry trend that will accelerate in 2008 – the move up the value chain.

Most vendors begin selling product and then added services to support that product. Ultimately, in an effort to differentiate, they added ever more services until the organisation became service-driven, explained Baty citing the sale of IBM’s PC division as the perfect example.

Most channel organisations are still at the lower end of this value chain. Vendors who are looking for partners that are higher up the chain are willing to selectively invest in organisations to help them get there.

Vendors are realising there is value in having partners become experts in a particular (technology) solution
and are building the curriculum to support this.

In this way vendors will be endeavouring to provide training in more complex solutions. As their own offering expands they will be looking to channel partners who are able to put together solutions, so we can expect to see vertical market training or specialist training in selling to small businesses.

“Another area where vendors have begun to increase the amount of courses offered is specific to business training on topics such as sales, marketing, managed services, employee recruitment and competitive insights. Some vendors are further along in this process and have dozens of specialisations and competencies in place, while others are just starting,” suggested Bova.

For the channel, training will remain one of the biggest expenses it makes each year, specialising and then co-operatively working with other channel partners to deliver a solution can help reduce that cost rather than attempting to cover all bases. In this way they fit in
with the ecosystem vendors are trying to build around their offering.

It may seem daunting to some, but when you consider Gartner’s prediction that based on lack of engagement and strategic relevance, IT vendors will reduce their current partner populations by 25 per cent by year-end 2009, it could be the only way forward.