Partners' relationships with vendors are likely to undergo a transformation over the next year, but some of those changes are likely to enhance partner profitability.
That's according to a new report from channel partner consulting firm Amazon Consulting, which noted that partners make up a key component of sales for technology vendors today, both in terms of percentages of revenue and the actual dollar amounts they produce.
To recognize and enhance that contribution, vendors are making significant investments in partners and plan to continue to increase those investments, the Mountain View, Calif.-based company said in its study, based on a survey of 250 technology vendors.
Many of the respondents are likely to embark on channel partner profiling programs during the year, according to Amazon. The study showed that while partner expansion is last on the list of objectives for 2007 for many vendors, partner recruitment is significantly high on the list. That means vendors will be mapping partner capabilities and performance and then culling their partner ranks in 2007, according to Amazon. A wave of recruitment is likely to follow for partners that fit a specific profile, the firm said. Overall partner ranks are likely to stay the same or grow slightly.
Bearing that out, RSA's new channel chief, Chris Clinton, recently told Channel Insider that his company plans to embark on a worldwide channel partner profiling program this year.
At the same time, Amazon said it expects partner turnover percentages to increase in this year as vendors look to get rid of non-performing partners or partners with less focus and capabilities in specific verticals and technologies.
Click here to view exclusive channel research from Amazon Consulting.
Beyond that, the news is good for those partners who remain.
The Amazon study showed that 57 percent of vendors expect to reinvest 5 percent to 20 percent of partner revenues back into internal programs and people to support partners. And 25 percent said they expect that investment in partners, as a percentage of revenue, to increase by up to 50 percent in the coming year.
Amazon said it expects such investments to increase as an absolute dollar amount as well as a percentage. The consulting firm noted that even the 70 percent of vendors who said they expect their investment in partners to remain stable as a percentage of overall revenues still expect those revenues to increase through more partners and an increase in partner productivity.
Much of the investment in partners will come in the form of people to manage and support the relationships and programs. The study showed that vendors already typically employ large staffs to support partners. One-third of vendors surveyed have more than 100 people working to support their partners.
Half of the vendors surveyed said they are increasing their investment in people to support and manage partners. Nearly 30 percent said they would grow the investment by more than 20 percent, and 26 percent said they would grow the investment by less than 20 percent.
Amazon noted that less important this year were the vendor-centric activities of driving loyalty, cross-selling and technology enhancements to provide more self-service.
"This illustrates a shift in power from vendors dictating the terms of partnerships to the solution provider's strength with customer acquisition, service and satisfaction," the firm said in the study.
"The customers have driven this shift of power by requiring a full solution that addresses their business need rather than focusing on purchasing the hottest technology point solution," Amazon said. "This customer requirement for a full solution has given the partners that put software, hardware and services together an important place in both the enterprise and particularly the SMB market."
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