Over riding the program

Vendors are reconsidering whether channel programmes put in place before the financial crisis are sufficient to answer the needs of their channel today

Tags: United Arab Emirates
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By  Julian Pletts Published  April 12, 2009

Vendors are reconsidering the inner workings of channel mechanisms and whether systems and programmes put in place before the financial crisis are sufficient to answer the needs of their channel today and indeed that of their own desire for growth.

On a recent business trip I was at dinner with a mixture of vendor representatives and partners from various markets. As is par for the course, the food was sumptuous, but it was hard to concentrate on what was being served when a pair of gents on a table close by became engaged in a heated argument. And although it was a one-on-one vendor and partner discussion, they seemed rather indifferent as to who heard them.

Without wanting to pry, it was clear the vendor country rep was having to justify his bread and butter with regards to why the potential partner should choose to work with them. The channel player —who was demanding an explanation of what support the vendor could offer on a local and personal basis and challenging the representative to prove why the margins with a large vendor were sustainable — seemed to be empowered in his position, something that might be a positive side effect of the financial crisis.

Whereas before, large vendors could dip into the channel and take their pick of partners, channel players are now a lot more unyielding in their assessment of what vendors really bring to their business, the support they offer and the cold, hard, bottom line of the margins they will get.

This tide-change can however, be a challenge for the large multinational vendor that has thousands of partners in many different countries and markets around the world, especially so if it has had to make cutbacks when it comes to regional channel management. One major mechanism vendors have always relied on to interact with their partner-base on a grand scale has been the partner programme, backed up today by partner portals.

There has, indeed, been a great deal of noise on this front as vendors have been adding to, redesigning and boosting their various partner portals and programmes, in what one would hope is a response to the current uncertainty of business for the IT channel. The activity that has been happening around partner programmes of late seems to have been as concentrated as I have ever seen.

Many a vendor has conceded that their current programme has insufficiencies, areas of need, and have been busy shoring them up. Sun Microsystems recently came out with a serious addition to its long-standing SPA partner programme in the form of Specialties, which it hopes will allow channel partners to develop highly specific skillsets around its software and hardware solutions. In addition to that, Sun has also been setting up a new ERP-style system which partners across the Middle East will have access to, and which, if the vendor is to be believed, will supercharge the efficiency of its partner interlocutions.

It must also be noted that Specialties offer what can almost be viewed as an ‘entry loophole’, as although it is primarily intended for pre-existing SPA programme members, it also opens the door to non-Sun partners to work with the vendor on these specialisations, but with the view to earning classifications needed to join the partner programme at a later date.

Sun is not the only vendor to pave the way, via their partner programme, for players not yet affiliated with it to begin offering its solutions. Citrix also made such a concession recently when it relaxed certain aspects of entry to its Solutions Advisors Programme in the firm of its CSA Authorised initiative, allowing non-Citrix partners to gain full margins from the vendor’s virtualisation and application products immediately after enrolling. This is a move the CEO of the firm resolutely told me would not undermine the investment already made by pre-existing channel partners and that harks back to a simpler time when the vendor would work with some partners on a project by project basis.

Actions like these are interesting developments as it is a subtle shift to grow a vendor’s channel coverage without committing too much upfront. The channel that takes advantage of these entry points shouldn’t be fooled that they will not be expected to invest more in the partnership in the future and that they may not get the full commitment of the vendor that is enjoyed by pre-existing partners.

Also, among the list of vendors to re-tool their partner programme is Juniper Networks, which has massively overhauled its J-Partner Programme. Without wishing to go into too much detail, it has expanded the product specialisation opportunities available through the programme, due largely to a need to keep up with its growing hardware portfolio. The vendor confidently asserted that this will drive its channel to build service-rich margins.

I could list many more examples of manufacturers that have taken a look at their partner programme and decided now is the time to make amendments. These are positive steps and will no doubt lead to greater channel coverage and a clearer demarcation of what channel partners can offer end-users, but as the overheated conversation I mentioned earlier testifies, vendors have to apportion greater support within these rehashed partner programmes. They could also make greater concessions to the pressures that the channel is under at the moment.

There have been great signs to this effect — for instance HP’s departure from target-based rebates — but there has to be more, and it is clear that as the Middle East grows as a market and attempts to ride out the financial storm with not too many tears in the sails, channel partner programmes will become more complex and hopefully offer the new breed of partners they are attempting to foster relations with a greater deal of financial support and personal feedback.

Vendors must take note of the fact that although they still have a strong position, channel partners hold the key to the market and are being hard-nosed in the dealings they have with manufacturers. Vendors are always claiming a channel-centricity to their work and that they rely on the channel for survival. Well this just might now be the case and for channel partners such as the vociferous one in the dining room, it solely boils down to, “what margin will I get with this vendor and what support will I get after I leave this meeting?”

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