T.C. Doyle has spent the last 20 years of his career studying IT business models, go-to-market strategies and the relationship between the vendor community and the channel.
At a recent gathering of some of Canada’s top solution providers, Doyle, director of intelligence at Silicon Valley-based Amazon Consulting, shared some of the shifts in partner programs currently in development.
Doyle, who recently helped Veritas and Symantec put together a partner strategy, said when advising vendor organizations on building programs, it is critical to keep both the customers and the VARs’ business in mind.
“What we see happening in the programs that I’m helping vendor companies devise and build today is more focus on value offers,” said Doyle.
“Vendors are looking deep down into their organizations and saying, ‘We’ve got a handful of top partners that we’re rewarding with benefits and rebates and the rest are starving. Can’t we think of a better way to recognize and reward our better partners, even though they may be small?’”
Doyle said that some vendors are beginning to get this. “Cisco comes to mind,” he added, “some of the changes it’s making now allows silver partners to compete at the level that gold and other global partners have had in terms of discounts.”
For smaller VARs and solution providers this is an important step, Doyle added.
“You need to be able to compete with some of the largest organizations in the world, particularly the U.S.-based telcos which are trying to penetrate various markets.”
Value-based models
Partner programs are beginning to take a more value-based approach, according to Doyle.
“Vendors are starting to look at rewarding somebody other than just top line revenue,” he said. “What comes to mind? How about unrivaled technical excellence. Maybe your organization can do a certain set of things that nobody else in the marketplace can do. Shouldn’t that enjoy you the highest level of participation in a vendor’s program?”
Doyle said he is currently advising key clients like Microsoft, Cisco and Apple to take this route.
Geographic reach is another key area of recognition, he added. “Some VARs and solution providers are uniquely positioned in select geographies, that should benefit them in some fashion either through rebate, discount, better technical support and sales leads.”
Dave Martin, senior analyst at IDC Canada, agreed with Doyle that geography is a great selling point for smaller VARs that can connect with those end users that are out of reach for larger, national channel organizations.
Martin also added that simple resale is no longer good enough for resellers that are looking to improve margin potential.
“VARs need to focus on specific competencies” in order to be recognized and rewarded by the vendor community, he said.
According to Doyle, the movement towards a value-based system is going to require a greater emphasis on rewarding partners through points.
“VARs and solution providers are going to get a numeric score for very specific activities that they do with a vendor, whether it’s a certain number of people that are trained and certified to sell their products or whether the partner cracks certain accounts,” said Doyle.
So as vendors are maturing their partner programs, said Doyle, VARs need to start considering which organizations best align with their own business models.
“Who are the vendors that are most aligned to help you in the long run? They’re not the same set we’ve been operating with for the last decade or more.”
For Paul Kerr, president of Toronto-based solution provider Scalar Decisions, the key is looking for niche, high value-add opportunities and partnering with vendors that can support that.
“It’s important to us because not every one can be a volume player,” said Kerr. “As vendors and VARs want to grow, we have to drive new opportunities and new opportunities require new solutions which requires technical skill sets which leads to vendors developing programs that not only support volume but value.”
Kerr added that Scalar looks for areas of specialty and solution sets that vendors need help with and that requires technical competencies.
“Vendors need to make sure that partner programs encompass the value side as well, otherwise they’re just going to continue selling to an installed base and not get net new growth,” said Kerr.
Peer ecosystems
“Vendor companies are dumping huge sums of money on programs that VARs are supposed to sign up and participate in, lavishly support with time, effort and energy only to find that they’re not working optimally,” said Doyle.
In order to better operate partner programs, many vendors are looking to create peer ecosystems, said Doyle.
“Microsoft is embarking on this ambitious plan to build out a partner ecosystem because partners are finding it easier to find one another using Google than they are on the Microsoft partner search engine.”
According to Kerr, pairing partners requires a lot of management. Scalar will often partner with its competitors, he said, to bring in specific skill sets, “but it’s a tenuous line we always lock, everyone is always a little skeptical but we all know we have to solve the customer’s problem.”
As former executive editor of VARBusiness magazine, Doyle said he conducted studies that found 40 per cent of a VAR’s typical revenue came from partnering activity and that revenue was increasing 25 per cent year over year.
“Your companies should be partnering or affiliating with other (VAR) organizations, it’s a tremendous opportunity to find business that way.”