Speaking Out The Channels Take on Latest Vendor Program Trends

Can I Be Direct With You?In 2009, the channel was already growing wary that major technology vendors were funneling more of their business through their direct sales forces. 38 percent of those surveyed cited this back-to-the-future move to direct sales as the leading trend they saw among vendors last year. 40 percent expect the direct sales shift to continue in 2010.

Can I Be Direct With You?Takeaway: Vendors, as a result of the tough economy, seem to be pulling things in-house. Case in point: In January, Oracle’s top brass made it clear that they will be taking more Sun business direct, including the top 4,000 customer accounts off the bat.

Pre- and Post-Sales SupportLast year, 35 percent of respondents saw a decrease in the availability of technical and sales support from vendors.In 2010, the view gets less pessimistic. Those expecting a decrease in technical and sales support shrank to 26 percent of respondents.

Pre- and Post-Sales SupportTakeaway: Talk to any solution provider and they will emphasize the importance of having strong pre- and post-sales support from their vendors. They’ll give up in other program and support areas, but this one can often be the difference between winning a deal or not winning.

MDF RestrictionsIn 2009, the channel saw vendors tighten their market development fund (MDF) belts. 35 percent of respondents experienced a decrease.Looking ahead, solution providers expect the thrift to continue with 38 percent saying they expect less MDF in 2010.

MDF RestrictionsTakeaway: It’s time to get smarter about marketing. In many cases, the MDF pie isn’t actually a shrinking line item. The money’s there but vendors have raised the bar much higher on what is required to receive it. Increasingly, vendors want to see formal marketing campaign plans from their partners before they will release funds. They also are pulling back from front-end payments and only paying on the back-end if the campaign accomplishes what the partner said it would.

Raising the Bar – Take 2MDF isn’t the only area where the channel is seeing vendors raise the requirement bar. A third of respondents experienced an increase in partner program requirements in 2009.They expect more of the same in 2010, with 36 percent now saying they will face stiffer requirements in all facets of program participation.

Raising the Bar – Take 2In addition to taking more business direct, vendors today are also taking a hard look at their existing channels and expecting a lot more – especially from its highest-level partners. Take Microsoft and Cisco, for example. Both vendors last year instituted changes to their programs that both require and reward their partners for achieving specializations in different technology and combination of technology areas.

Loosening the LendingSolution providers are encouraged that this year will see more financing from their vendors, but at the same time they expect the terms and conditions for those payments to be more rigid. In 2009, 38 percent of respondents said their vendors and/or distributors tightened the availability of credit. This year, that percentage has gone to a third.On the flip side, 30 percent of respondents said they felt tighter payment terms last year. In 2010, 36 percent of them expect even more stringent lending terms.

Loosening the LendingFinancing options is going to be one way for vendors to help jumpstart channel partner businesses that have been hurt – especially on the cash flow side – by the recession and inability to borrow. Cisco and HP each recently instituted aggressive financing incentive programs, with Cisco offering zero percent for three years terms on all of its products.