Craig Somerville, managing director of Somerville Group in Roseville, Sydney, concurs that clients come first. “We have always been focused on selecting the right products to fit our target markets. Frankly, if a product is complex and difficult we don’t want to take it to market even if the vendors discount the crap out of it.”
More to the point, says Somerville, “a program that a vendor puts in place won’t entice me to sell it if I think it’s the wrong product for the customer”.
Indeed, as someone who has been in the IT game for more than 35 years, he says the current state of flux that the market finds itself in is leading to significant conflict.
“Ten years ago you had Cisco for networking, HP for services, EMC for storage and VMware for virtualisation, but now everyone does everything. We often find companies we have traditionally worked with competing with us. We see that all the time. Or they will position a friendly partner against us where they see we are in the account.”
Somerville speaks for many resellers when he says: “Some significant vendors, as much as they say they support the channel publicly, they are doing everything they can to get rid of their channel and go direct.”
While the criticisms of vendors going direct are never far from the channel conversation, the reality is that for many vendors the channel remains part of the bedrock of their success.
HP is a case in point. The mega-vendor does the vast majority of its business via the channel. Last year, HP overhauled its partner program, an initiative driven by chief executive Meg Whitman.
Margrith Appleby, director, commercial channel sales, printing and personal systems, HP Australia, says: “We’ve worked with our partners to identify their issues and specific pain points, and soaked up all of their insights to improve our HP PartnerOne program.”
Ease and predictability were HP’s watchwords, she adds. “In October 2013, we announced enhancements to our global PartnerOne program, making it easier and more predictable for partners to do business with HP. The HP PartnerOne program enables partners to access all of HP’s offerings through one central program, instead of working with many different programs and vendors.”
The changes to PartnerOne also reflect the role of programs as ammunition in the battle between vendors. For instance, the generous rebates for partners selling HP converged infrastructure with HP networking seems intended to grab networking market share from rival Cisco, whose Value Incentive Program (VIP) is often held up as channel’s best practice.
Cloud services
Cloud computing is disrupting everything – including industry incentives. Among the resellersCRN spoke to for this feature was an abiding cynicism and that vendors are trying to program around cloud as if it were a mature market, instead of accepting the reality: that cloud is an emerging and uncertain market.
This is compounded by the fact that the cloud has made direct sales much easier. Many vendors are still working out where they fit as the market shifts to as-a-service model, says Somerville. “I don’t think a lot of the vendors have answered that question yet in their own mind. They all have personality disorders and they don’t know whether they want to be direct or channel-driven.
“What comes first, the rebate or the value that the reseller or the distie provides? What is happening with the cloud is that people have got it around the wrong way.”
But despite the teething problems, it is also clear that some of the largest vendors are genuinely trying to accommodate as-a-service business models.
HP’s Appleby tells CRN, “We understand that the cloud enables partners to not only sell cloud solutions, but also to deliver cloud services and we provide a number of resources that enable partners to benefit and capitalise on cloud and services opportunities.”
For example, HP CloudAgile enables partners to deliver a wide range of services including: dedicated hosting, hybrid cloud hosting, managed hosting, application specific hosting for mission-critical applications, and compliant services targeted at vertical industries.
The company has also introduced the Cloud Partner Solution Navigator as part of its PartnerOne enhancements. This is an online resource designed to help customers locate HP partners with the specialties they need for their IT solutions.
Playing the game
The biggest gripes from resellers about the programs often relate to a lack of transparency, or worse consistency, as and when the rules change mid-game.
Rasmussen recounts a recent conversation. “One thing the big guys really hate is what they call drive-bys. That’s when you sit with the customer, figure out a solution, you bond, you quote, you get the vendor onboard then all of a sudden it goes to the finance director who insists on getting 15 quotes and we are going to go with the cheapest.”
Suddenly, says Rasmussen, a reseller who wasn’t involved sneaks in and gets the same rebate and benefits from all your work.
Somerville also has fairly strong views on the whole idea of rebates. “I have always been a vocal anti-rebate campaigner – my view is that rebates are the biggest risk we have. While it’s great when you get big chunks of rebate money, I still think that it would be better as front-end gross profit rather than a back-end rebate.”
The problem he says is that rebates change the behaviour of the sales person, the business and the vendor – and not necessarily for the better.
The best programs are those that provide a win for everyone, says Rasmussen. As an example, he mentions schemes where the reseller gets a bigger rebate because they have achieved an accreditation. It is especially valuable for companies that are trying to build their business. Stepping away from straight rebates or discount driven programs, there are plenty of other creative approaches to drive business through the channel.
Quantum’s new managed service provider program, which launched in October, is just one example. According to Anne Collins, director of channel sales, Asia Pacific at Quantum, “Alliance members can apply for extra certification to be a Quantum MSP. Once approved and trained, Quantum MSPs can make tremendous margins selling backup and disaster recovery as a service to their customers.”
Greg Beale, Fusion-io South Australia regional manager tells CRN his company has implemented just such a program for proof of concept projects.
“Local and regional OEM programs have been very successful for us in ANZ. We have run very successful proof of concept programs with our local server vendor partners. Through these programs, Fusion-io hardware is provided to the end user customer for a proof of concept evaluation,” says Beale.
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