Opinion

The shifting channel landscape

This comment piece, by Alan Hartwell, UK vice president of technology solutions and channels, will examine how the changing economic landscape is affecting vendor and partner relationships.

With the ever changing technology and economic landscape, can a technology vendor ever have too many partners or is consolidation the way to survive the current market?  The answer is both yes and no. 

Vendors and partners alike need to remember that it is a two way street and you can only expect to get out of the relationship what you put in.  This needs to be at the forefront with any partner ecosystem.

With the breadth of products and services now available in the technology market it is easy to keep adding partners to the ecosystem in order to increase reach, but without a specialised approach this can just lead to inefficiencies. 

There are costs associated with a large ecosystem and so having partners that aren't driving revenues is costly for the vendor and even the partner themselves.

Because of this many vendors are consolidating their partner pools and making the necessary cuts in order to succeed in an ever increasing competitive marketplace.

At the same time, partners need to look carefully at which vendors they want to work with.  Who will make themselves useful to partners with marketing and skills and ultimately help to increase revenues. 

Gone are the days where a vendor logo on a partner website is enough.

When both vendors and partners show commitment to the relationship, business growth will happen the fastest for all those involved.  They need to be an integral part of each others business in order to truly understand the markets they are trying to address.

If vendors want to encourage this relationship they need to demonstrate to partners how best to commit.  It is critical to create a marketplace where partners are welcomed and preferred, the right commercial model is in place for both companies and that the model is broad enough to encompass all aspects of a vendor's offering.

Focus on incremental opportunities
If a partner isn't delivering value and creating new opportunities for a vendor then a reduction in margins can be expected and similarly, the relationship works the other way round.  Vendors tend to forget that they also need to deliver value and opportunities to partners beyond simply allowing them to sell its products. 

There is a big difference between creating incremental opportunities that are mutually beneficial to vendors and partners, and simply taking orders and fulfilling them. Both vendors and partners need to invest in their relationship in order to focus on the more financially advantageous incremental opportunities.

The rise of Software-as-a-Service (SaaS) and cloud computing has also changed the dynamic in channel relationships and so has the role of the System Integrator (SI). 

SIs influence customer decisions, they always have, and therefore they are another party that both vendors and resellers need to integrate into the relationship.  It is a fine balancing act but when the correct commercial agreements are put in place there are margins to be had for all parties, while also delivering on the customer requirement.


Systems integrators as customers
SIs are also becoming customers, as well as hosting service providers.  They want to deliver cloud environments and therefore need the infrastructure to deliver it.  But then how does a vendor manage this relationship as they are now both customers and partners? 

The most important element of these relationships is that the customer doesn't get lost.  At the end of the day, whether it is the vendor, the partner or the SI dealing directly with the customer, all parties need to work together to deliver a solution that solves the customer's pain points. 

In many cases, partners become the customer rep but vendors need to give these reps all the tools they need to deliver for everyone involved in the deal.  Vendors need to work closely with partners to give them the necessary skills and qualifications to represent them both when talking to customers.

Vendors have to accept that if they want greater coverage that have to put trust in their partners and form a mutually beneficial relationship where all involved invest in it. 

This was first published in January 2012

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