Register that deal!

Good deals are a precious commodity in the channel so it’s no surprise that many companies baulk at the idea of disclosing the details before closing the sale.

But proponents of deal registration maintain that it’s the next logical step in improving vendor/partner relationship. Vendors say they now have more scope to monitor and respond to market trends while partners in well run registration programs report better pre- and after sales support with sometimes vastly improved margins.

Many programs are not so well run, however, and there’s no shortage of tales of underhanded tactics and heartbreak throughout the channel, often with the vendor’s knowledge.

As anyone in the channel knows, pitching a solution to a client can involve a lot of time and money, so that suddenly losing a prospect can cost more than the lost opportunity.

Ask Daryl Chambers, director of Integrated Wireless how he feels about deal registration and he gives a heavy sigh.

“The deal thing is quite ugly,” he laments. “It’s too easy for the company to sack you and not pay commission.”

Specialists in advanced communications systems, Integrated Wireless has only recently had to contend with the registration issue as some of its suppliers move to keep step with the wider industry. With the drift towards open standards such as IP communications in Chamber’s world, solutions have become less proprietary and therefore available from a larger number of suppliers.

While registration programs can offer important protection if properly run, suppliers of more commodity-based products often view them as an invitation asking to be elbowed out of the way because of the focus on price.

“Component distributors have this [registration] as a way of business now and they don’t like it,” Chambers says.

His philosophy is that before a partner even considers deal registration, it should negotiate a contract that mitigates against the worst-case scenario.

“You need to make your sure you have a commission contract behind any deal registration in case the vendor tries to deal directly with that customer at a later date.”

Either that or try to gain some sort of exclusivity rights with the vendor.

“If there was a product or a vendor that we were interested in said ‘You can have the product on a non-exclusive basis and we want deal registration’ then I would think that our shareholders would sit up and say ‘There are better things to look at and spend time and money on’.”

Chambers awaits with some trepidation the details of Wavecom’s new registration program in the wake of its acquisition of Sony Ericsson’s M2M business earlier this year, one of his biggest clients. He’s hoping that it won’t be cause for consternation but he hasn’t got his hopes up.

“You should never take a big company for granted – we took Sony Ericsson for granted and overnight they left the market.”

Getting burned

IDC’s Tim Sheedy says that there has been a lot of activity around deal registration in Australia over the last 6 months especially as vendors and the channel recognise its value in managing a market with one of the highest concentrations of small to medium businesses.

“Your ability to react to your pipeline is how you live and die in any sales role,

“If this is giving people a better ability to forecast then it is all hunky-dory for everyone.”

However it’s not to say that he is unaware of the flip side.

“That said I’m aware of a number of software resellers that have had their vendor go after the deal they have initiated.”

One integrator representing one of the bigger multinationals and who asked not to be named bristles at the mention of registration.

“I have registered many times and have been burned,” says its director. He explains that while most programs start out with all the best intentions the ‘human factor’ is often what lets them down.

“We’re talking about real people with real relationships – if you hear about an opportunity you’re going to tell your buddy,”

“There’s too much discretion involved which can work for or against certain parties.” The upshot is that registration systems must be designed to ensure that partners aren’t robbed of opportunities.

Frank Colli of Leading Solutions agrees and warns that it is often too easy for a rival company to come in and commit what he calls a “drive-by-shooting”.

“It’s good if everyone plays fair, the problem is people don’t always play fair: It’s a very sneaky world out there.”

A key reason why partners view registration as so risky is because for unscrupulous rivals, they’ve absolutely nothing to lose by going in hard as they’ve spent no money on the prospect.

“Dealers can listen out for deals that are going down,” Colli says.

“Because it cost them nothing to get the business they can go in at 1 percent margin.”

Veteran communications specialist now national sales manager of distributor TR Telecom, Ross Chiswell recognises the pitfalls but says that registration delivers mainly on the upside for his business.

“We definitely do it – because we’re an organisation involved in design we get involved with partners quite early in the piece.”

With more complex technologies and deployments it is not unusual for resellers to invest hundreds of hours in a client and the way the registration usually works for him has been to protect that effort.

“If they really have been working with the customer and have put a lot of time into it – we then register to the manufacturer.” This is especially important in cases where there are multiple distributors circling a deal when it pays to be a little forceful.

“If there are multiple disties for the project we seek to register the deal with the vendor to say ‘We as your distie are flagging that this as a significant project and it’s our channel that has brought it’. We then insist that we get the special pricing.”

Nevertheless, Chiswell relates a recent situation whereby one of his dealers had done all the leg work for a project only to be gazumped at the final hour.

“The price was shot because it was a quantity deal, it was a box drop then.” While it’s unfortunately inevitable that deals often pivot on price, Chiswell stresses that for the benefit of the client, money is the thing that should only come into play “eventually”.

Again this is one of the ideals of registration programs. How they are handled on the ground determines the actual outcome.

“Relationships are personal.”

“Some people haven’t got the necessary ethics involved to hold to the values of what the organisation is trying to do.”

Approaching registration carefully

That’s not something you need to tell Mathew Hatzitavlis, marketing unit manager with communications component distributor Soanar, based in Melbourne.

The company is one of the main distributors for Integrated Wireless and like Chambers, he is far from a convert to registration.

Soanar deals with around 80 different manufacturers from across Europe, Asia and the US all which maintain differing standards for registration. For instance while U.S companies usually make an effort to recognise things like first dealer status and design input, he says, Asian, especially Japanese, companies tend not to be so good.

“Business is tough and people get very creative with what they tell the vendors.”

“At the end of the day you just hope for morals and ethics - it’s a real curly one.”

It’s now policy at Soanar that reps request some sort of official recognition for the company’s design input in the manufacturer’s system. That way there is less room for confusion.

“From the outset it comes down to the part – if it’s not a commodity part we ask for an acknowledgement from the vendor such as a number or code added to their product.”

Only a few weeks ago Soanar was faced with yet another rival attempting to steal the business.

“We designed a part and another distie went in and quoted the business at a lower price.” Luckily because of the way in Soanar approaches its registration it maintained its position.

Philip Parton, CEO of Oracle partner Attain IT says generally those dealers who register prospects with the software vendor receive valuable support that they wouldn’t otherwise receive.

“The system works smoother if we register the deal.” Rather than telling stories of dealers that have had lost prospects that they have registered, he is more likely to relate cases whereby those that haven’t registered wished that they had.

“We warn resellers about the dangers of not registering: If there’s an offer already it gets declined – it’s first in best dressed.”

“In all my experiences from using this system not once have we had an Oracle rep’ dealing directly with the client once a deal has been registered.”Where Attain would like to see Oracle’s registration system improve however is in the margin department. Better margins “aren’t necessarily” part of the registration process with Oracle, Parton admits.

“We would like to see Oracle provide greater margins for dealers that are prepared to register.”

The software industry has been generally slower to adopt deal registration. A spokesperson for Microsoft said that they were unaware of any such programs in place at the company.

Citrix has, however, run deal registration for several years now and reports that the program has been a great success. Unlike many other vendors, the company’s program was first developed in Australia before being rolled out to other regions and therefore is slightly slanted to the local market. For one thing it’s about the fairest program out there, says Phil Dean-Jones, Citrix ANZ director of Channel sales.

“The difference between ours is it rewards the partner even if they’re not successful in winning the sales.”

The reason, he explains, is to maintain partner loyalty to the products and the brand.

The company views this as especially important with new products. While Citrix’s Australian customers can earn up to 8 points additional margin with existing products, new products can attract up to 15 points.

The result has been greater channel satisfaction: “We’ve had remarkably few contentious situations.”

“What were trying to do is get partners to latch onto the opportunity as early as possible in the sales process,”

“If they get involved early then it opens up a greater likelihood that they’re going to be successful.” It really hinges on partners buying into the programs which they usually only do once they recognise the returns.

For instance, on the services side, Dean-Jones ads, partners can make up to five times that which they take for selling the license through registration.

At IBM, partners that don’t complete the deal still get 10 percent for identifying the deals and registering as part of the company’s Software Value Incentive program - just announced in Australia - according to channels manager Scott Kardash.

It’s not viewed as a high price for the market intelligence that results.

“These guys obviously have lots of eyes and ears in the market that we don’t have,”

“It [ registration ] allows us to forecast more accurately and understand which deals need the technical and pricing support.”

Avoiding disputes is a big priority.

“It’s a natural thing for any partner out there to be concerned. We go to great lengths to ensure that when a partner comes to us that we protect that,” Kardash says.

“I personally get involved when there’s potential for conflict in that area.” Software is the main driver focus for IBM’s registration plans at the moment although hardware partners are starting to receive more support for registering prospects.

Kardash sees registration as deserving of more industry attention moving forward as it is something which clearly can be harnessed for competitive advantage, by both vendors and the channel.

“Partners able to provide good hunting skills in the market will be attracted to those vendors that are offering the best margin for that service,” he says.

“It reinforces and underlines the reason we have business partners in the first place.”

Essential part of business

Symantec is about 18 months into its registration program in Australia and says that it has now become an essential part of doing business and interacting with the channel.

“I think it’s just about companies getting a lot smarter about their financial relationship with the partner community,” says John Donnovan, VP channels Symantec Asia Pacific and Japan.

He stresses that Symantec does not make registration mandatory, nor is it available to everyone at this stage, only its 30 or so gold and platinum partners. One of its more compelling features is the emphasis on protecting the status of dealers as having initiated an ‘incremental opportunity’. Closure of these deals can result in up to 9 points additional margin. Unsuccessful registrations get a modest 3 percent consolation prize.

In a broader business sense Symantec sees the program as leading to better quality channel partnerships and is also expected to help with the integration of new products such as those resulting from last year’s acquisition of Veritas.

“It obviously builds a much closer financial relationships between larger trading partners,” Donnovan says adding: “Additional margin tends to get used for business development and market development activities.”

And, in common with most other major vendors, Symantec has also been able to garner valuable new market data through deal registration.

“We are now forecasting ‘incremental contribution’ through the channel.”

As for the dishonest downside of registration: “The question has been asked but the issue has not come up,” Donnovan says.

“It’s not in our interests to have channel players in conflict.”

Gavin Jarvis, GM channels Australia and New Zealand with security specialists RSA says that the company’s registration program started just over a year ago and has delivered good results.

“The flow of information has improved.” he says, adding that some 3,500 deals have been registered since its inception.

Once a partner does register a deal they then have 30 to 120 days to close the opportunity. The rebates arising from registered deals can range from six percent for a license upgrade to 12 percent for a new sign-on manager licence.

“It [ registration ] has allowed us to provide our partners with additional recognition for bringing the deals to us.”

Where it goes wrong

David Stevens, managing director of Sydney integrator SecureTel and Brennan IT Systems like many in the channel has seen registration go wrong. But because his companies’ solutions tend to be more specialised, there is less risk of the rug being pulled out from under them.

“It’s about the final configuration rather than the box at the end,”

“It’s a really differentiated solution from our perspective and no one can resell what we do: Any box we buy would only be 10 percent of the solution anyway.”

Rather than cause fear and suspicion Stevens has found that registration makes it easier and more profitable to do business.

“We’ve used it on a number of occasions and it’s smoothed out the sales process.”

But it wasn’t always that way, Stevens says as he recalls a time three years ago of having worked on a deal only to find a major PC vendor slip in direct.

“We were most upset: we recommended that the client buy Dell.”

“But their behaviour is much more appropriate now: there’s been a really defined change.” Registration is now an important tool for business.

“Our cost of sales is lower because our sales cycle is smoother and ultimately shorter.”

Cisco Systems offers two separate registration programs. The first is the Opportunity Incentive Program (OIP). Known internally as ‘the hunting program’, OIP only started locally in October last year and is designed to encourage particularly Cisco’s tier 2 partners to register no-name, or new SMB business in return for additional support and rebates.

Unlike almost every other vendor though, Cisco does not discuss rebates, explaining that they are negotiated case-by-case between its resellers and distributors.

Some in the channel have been critical of how Cisco runs registration but Australian channels manager Suzy Mellor maintains that things appears to be working so far.

“In terms of bringing us new customers I’d say it has been very successful.”

She believes that it has also levelled the playing field somewhat within Cisco’s channel making it “easier for little partners to compete with bigger partners.”

The other registration program Cisco runs in Australia is the Solutions Incentive Program (SIP) designed to reward partners that market reengineered Cisco products into specific verticals such as education with rebates of around 4 percent from list. Gold partners can earn rebates of up to 52 percent.

Given that it is still early days Mellor anticipates a fair mount of tweaking before being completely satisfied with Cisco’s registration programs.

“Part of next year’s planning will look at areas where we need partners to bring in new business,” she says, adding that “selling new technology or new products is a possible focus for future dealer registration offerings.”

But the company says that it realises the importance of ensuring that such programs are accessible and easy to understand if they are to gain broad appeal.

“It’s all around being really clear but not being so complicated you just put people off.”

Lawyers at Lexmark are currently poring over a blue print for its imminent registration program, which is under very close wraps.

“We want to get it right before we go ahead,” says Tim Champion, channels director with Lexmark Australia.

The fact that Lexmark’s products lean towards the commodity side explains why registration has appeared on its radar later than others. Still Champion believes that it will provide an important new level of interaction for the company and its channel.

“The important thing is that partners that invest in your brand receive some sort of handshake for doing that,” he says.

“How you deliver that is bound by all sorts of legal and loyalty issues.”

And if anything is likely to be a true test of vendor and channel trust and loyalty at the moment it is deal registration.

As SecureTel and Brennan IT Systems’ David Stevens says: “If you can’t trust them [vendors] that much you probably shouldn’t be doing business with them.”