Specializations: Getting to Value, Quality

By Beth Vanni  |  Posted 2011-12-21 Email Print this article Print
 
 
 
 
 
 
 

Specializations can make the difference in a vendors or IT solution providers business in today's more competitive environment. But that doesn't mean there aren't issues to overcome. Here's a deeper dive into the world of specializations.

Having base-level product skills isn’t cutting it any longer. Not for vendors. Not for end-users. So what do you need to go beyond these base-level technical skills to differentiate yourself and continue to grow in today’s market? The prescription: specialize.

As the IT market continues to mature, access to highly focused technology "specialists" is becoming a more attractive concept for both vendors and their channel partners. In Amazon Consulting’s recent channel study, "How Special are Specializations?," 400 solution providers and 40 IT vendors were surveyed to gain insight into why channel specialization programs matter, which type of specializations vendors and solution providers should invest in for the future, and how to get the most out of these specialization programs. The study indicated

most solution providers are looking for revenue impact, higher profitability, new customers and better market differentiation, in that order, when investing in specialization programs.

Despite their immaturity, these programs have proven so far to help make these goals a reality. The challenges for solution providers of varying sizes has been the time, money and number of staff members these specialization programs require, along with the timing required to realize an ROI.

Given the current economic environment, all parties involved in the IT food chain are thinking hard about where to invest to drive growth and market differentiation. Specializations are the new "vogue" of value-based channel programs. But are they really driving incremental results for channel partners and their suppliers?

Cynthia Borland manages the professional services organization for XTG Global, an international company based in Canada that owns value-added reseller BlueRange Technology, Inc. "Specializations are absolutely a top priority for us. The only reason we would engage in any sort of specialization program is to gain market share and align with our clients’ long-term plans for their business growth, no question. At the end of the day, you need to put numbers on the board. Having a specialization that doesn’t grow market share means nothing 12 to 24 months later."

VMWare is a good example of a vendor that is using specializations to advance the role and credibility of partners in the hot cloud and virtualization markets. Many partners are either selling or enabling customers to move towards virtualization and cloud solutions. So how does a VMware partner then differentiate itself in the marketplace? Is it through desktop virtualization, or one of their new vertical market specializations? To figure out the best way to make an impact in the market, organizations such as XTG Global are currently assessing these options.

Ultimately, a well-designed specialization program should benefit all tiers in the channel with a focus on the end-user. If the end-user receives better architected IT solutions with higher quality surrounding services, they will drive the value back to the vendor through the right quality and quantity of partners into that track. More IT vendors are now formally tracking end-user satisfaction and/or services delivery effectiveness as a measure of partner value in their specialization programs

Solution providers are challenged by the rigorous requirements involved with these advanced programs. However, wMs. Borland believes that with some key adjustments, vendors can make a world of difference for partners who have an international focus, claims Borland.

"Eliminating geographical restrictions or lifting specialization limits in certain borders would change the landscape for a company like BlueRange. This is the single most negative impact for the specialization business. Making specialization assets transferable across borders would be huge for our business as we address the growing global market place." Borland also suggests vendors limit the number of partners within a specialization to make it easier for end-users to seek out specialized partners over their competitors.

Partner expectations for ROI are also becoming more defined in our current economic environment. Most partners rank revenue and profitability impact nearly equal as their top two ROI measures. Nearly half of the solution provider respondents from the study said they want ROI within 6 to 11 months – though for most, that may be just a line-of-site to an initial sales pipeline. For others, it might be profit on initial deals and a few new customers. Larger providers were willing to wait for 18 months.

However, for some companies, the ROI may have to build over time. Greg Magee worked for various Value-Added Reseller companies for 13 years and is now the Director of Business Development for System Design Advantage, a $35 million  third party supplier of parts, repair and logistics services to major IT equipment service providers, small and medium businesses and Fortune 500 corporations.

Magee suggests, "What makes specializations worth the investment is their rarity. With product lifecycles compressing so rapidly, to become trained as an expert on a specific technology before it has been replaced is extremely difficult. And that’s the problem that most service providers and even OEMs face. A benefit of becoming an expert, however, is that those technologies typically dovetail. The next or subsequent technology is based on the prior one. So even with some change, it’s not so significant that all of your floor knowledge is obsolete. Investing in the short-term may not achieve significant ROI, but over time, it will help you become one of a very few experts in that technology genre. That’s where I think the payoff is."

In an economic environment that requires solution providers as well as vendors to scrutinize their investments, it’s more important than ever for vendors to organically integrate specialized partners into their corporate sales and marketing models. If these programs simply act as a new way for vendors to leverage increased technical training without holistically looking at partners’ skill sets and readiness to effectively penetrate a market, partners won’t invest in these programs, and they will fade and remain unleveraged. Solution providers interviewed by Amazon Consulting for this study echoed their expectation from vendors for strong end-user marketing visibility to make their specialization investment have real teeth with customers.

"If the specialization aligns with our type of customers, whether it’s the right size of customers (an example being mid-market for us), and addresses our vertical market space, then we take a look at if that program might benefit us," adds Borland. "We evaluate when we can correlate the increased skills sets we build from the specialization program to when we can charge a premium for those services."

But specializations can often have drawbacks of rigid entry requirements and sometimes incoherent program details that the average partner can not make sense of alone. In their haste to announce a new program to the market, some vendors do not have their backend programs ready to drive easy adoption.

"Some specialization programs are really difficult to interpret, digest and execute. So by the time a VAR has investigated the program, made the decision to move forward, and actually invested, they are often faced with changes within six months of beginning the initiative. And they are under the gun to produce immediate results in what is an emerging market," notes Borland.

Solution providers have an opportunity to help their leading suppliers get the most out of specializations, both by investing in the general program and more importantly, leveraging that skill set and credential with not just their target end-users, but also locally with the vendors’ own sales, technical and marketing teams. Rather than sitting back and waiting for vendor support to drop in their laps after the training is complete, we recommend solution providers consider the following tactics to get the most from their specialization investment:

  1. Track the Money – Before investing in the specialization, you should have a thorough projection of what the investment would be and how long it might take you to recoup. But, as you go to market using your new credentials, you should be tracking the revenue, profit and customer satisfaction impact of these new skills (or vendor endorsement) to give you leverage with the vendor on an ongoing basis about ROI. These programs are new and the vendors are as interested as you are about how (or if) they are adding value for everyone in the food chain. Keep those stats visible, both internally and with your primary channel sales manager.
  2. Drive a focused and collaborative marketing plan – Partners need to demand marketing support and expect to be integrated into the vendor’s go-to-market approach, especially after a significant commitment of time, training and staffing. Talk with the vendor field team to ensure you are going to be "special" in the program and the field.
  3. Make local reps work for you – Corporate-based channel programs can sometimes get lost in translation as they make their way to the field teams. Go out of your way to build local relationships at the sales, technical, services and marketing levels to make sure the field teams know of your investment and profile. Be intrusive in their quarterly planning meetings and their local events. Ask for preferential placement or leads or support by virtue of your investment. Use it as an opportunity to understand their local challenges and goals and figure out how you can help them.
  4. Leverage local events and field-driven activities —Do a bit of shameless self-promotion with the specialization credential. Don’t just slap it on your business cards, but use it to leverage your status and inclusion in local events, activities sponsored by the vendors’ product groups, and media coverage. Channel reporters are always looking to talk to highly specialized solution providers for a "real world" view of channel programs.

Borland adds, "I would challenge solution providers to take a look at what they are selling successfully today and know their market share. The key thing is to make sure you are partnering with an organization that is committing to some long-term plan associated with that specific specialization."

If you’re already heavily vertically oriented, vendor-sponsored specializations may or may not add value to your sales and marketing process. It doesn’t matter how enticing the corporate specialization programs promise to be if the vendors’ field teams do not readily embrace the partner and provide local deal-level support where required. Many vendors are attempting to make field teaming with partners less subjective and more in-line with partner investment.

If you choose not to invest in these next-generation competency programs, many solution providers around you likely will. Then you’ll have to reinvent yourself in other ways. Either way, make sure you’ve established very tight customer relationships based on deep and consistent business process insights with your customers – or others will attempt to use the vendor badge of competency to create their own "special" relationships with those very customers.

To learn more about Amazon Consulting’s "How Special are Specializations?" research study, click here.

 
 
 
 
 
 
 
 
 
 
























 
 
 
 
 
 

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