VARs and system integrators are of the highest strategic importance to their vendor partners—much more so than distributors, direct market retailers and especially traditional retailers like Best Buy. In fact, traditional VARs, also known as resellers, are considered by vendors to be the most important and strategic type of partners they have.
That’s according to a new study by Amazon Consulting of 55 responding vendors that rated VARs first in terms of strategic importance on a list of 13 partner categories. Immediately following were regional system integrators and global system integrators.
Amazon Consulting separated the categories into three tiers in terms of how vendors ranked them in strategic importance.
The middle tier included traditional alliance partners such as ISVs, OEMs, MSPs (managed services providers) and consultants. Direct market retailers also got a spot in the middle tier, according to the consulting firm, but received a “completely bifurcated response,” with nearly half the respondents rating them as No. 1 in strategic importance on a scale of 1 to 5, and the other half giving them a 4 or 5.
Distributors, businesses with SAAS (software as a service) models, e-tailers and retailers fit into the bottom tier in terms of strategic importance. Amazon Consulting noted that 40 of the 55 respondents rated retailers the lowest in terms of strategic importance and e-tailers didn’t do much better.
While most respondents said they have fewer than 500 partners in the United States and fewer than 5,000 partners worldwide, acquiring new partners was rated a top initiative by 85 percent of partners for 2007. And partner ranks had remained pretty stable, with most vendors saying they lost only 5 to 10 percent of their partner community to attrition or acquisition in the past year.
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“We expect the overall number of partners to increase in the next year because attrition is reported as low and recruiting partners is high on the program objectives list,” Diane Krakora, president and CEO of Amazon Consulting, in Mountain View, Calif., said in the study released the week of May 7. “The survey results reveal [that] partners are contributing a significant percentage of their vendors’ overall revenue and that dollar amount is growing.”
In order to expand their businesses in 2007, vendors said they were focused on three key areas of opportunity for the partner community. The first includes new business models such as MSP and SAAS as a potential growth area for partners. The second comes in the form of SMB (small and midsize business) market growth and general growth of the overall IT market, according to Amazon Consulting. The firm noted that many respondents cited “our market growth” as the biggest opportunity for the partner community, and said the third opportunity identified by vendors was increased engagement with partners through program enhancements and field-level relationships.
“When it comes to market growth, many vendors are developing programs and adding resources to specifically target the SMB market,” Krakora said. “Many of the vendors are creating Web-based tools designed to provide the information necessary to help SMB solution providers enhance their service offerings and work closely with customers.”
Further, nearly a fifth of the respondents to the survey said they would announce new program enhancements to help partners increase their engagement with vendors and their success in the marketplace. Some of the vendors also said those enhancements would include increased discounts or margin, additional training activities, and smoother deal registration and customer renewal management practices.
“Increased engagement and activity at the field level was often cited as a big opportunity for the partners in 2007, as it is the relationship at the field [level] for sales and marketing activities to customers that actually drive[s] success for both the partners and the vendors,” Krakora said.