Channel spend drives software sales

Researchers at IDC have revealed that two-thirds of all software sales worldwide are generated or influenced by partnerships and that this will climb to 70% by 2010.

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By  Stuart Wilson Published  September 21, 2004

Researchers at IDC have revealed that two-thirds of all software sales worldwide are generated or influenced by partnerships and that this will climb to 70% by 2010. In total software vendors spent US$5bn on partner programmes in 2003 generating more than US$100bn in revenue from their efforts. Breaking down the global numbers, IDC’s analysts found that of the US$10bn in software sales made in central Europe, Middle East and Africa (CEMA), 61% of this was influenced by channel or alliance programmes. Alliance activities accounted for US$1.6bn in revenues — 16% of the influenced software sales total. Cushing Anderson, research director at IDC’s Software Strategic Alliance division, stated: “Companies in CEMA typically return 28 times their investment in alliances in revenue. For every dollar they invest in alliances, they receive US$28 in revenue — the highest return of all regions tracked.” IDC expects increased expenditure on channel programmes in the next five years. Increased focus on the small and medium-sized business (SMB) market — typically ‘owned’ by partners according to IDC — is just one trend driving increased investment. The research also found that software vendors were moving away from old static partner classification systems towards more modular schemes tailored to the specific business requirements of each individual partner. Software vendors are also becoming much less focused on volume resellers according to IDC and are increasingly directing channel investment into specific solutions driven to market by independent software vendors (ISVs), value added resellers (VARs) and IT services specialists such as systems integrators and consultants. With high margin incentives on offer from vendors, IDC also claims that VARs are increasingly becoming one-stop-shop solution providers for customers, able to deliver guidance, sale, implementation and support services.

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