Vendor Loyalty in the Cloud Up for Grabs
The cloud is about to seriously test the loyalty of IT vendors’ channel partners. In a cloud-centric world, brand has far less cachet than the sum of the aggregate parts that make up a solution provider’s cloud offerings.
So, vendors beware. If your technology falls short, your communication is poor or your channel program is more trouble than it’s worth, your partners will drop you. And as solution providers get more entrenched in the cloud, they will have less patience for relationships that don’t deliver.
Evidence gathered in a recent study by the Computing Technology Industry Association bears out these dangers. CompTIA found in its "State of IT Channel Programs" study that solution providers are in no mood to hang on to bad, or costly, partnerships and they are happy to keep switching partners to find the right ones.
While in the past two years 80 percent of the solution providers participating in the study added one to nine vendor partnerships, 61 percent said they dropped as many as nine vendors.
Over the next 12 months, this fluid situation appears likely to persist. CompTIA found that 40 percent of channel companies with $20 million or more in revenue are planning to add new vendors.
CompTIA also found that smaller and younger channel companies are more likely to change vendors. This finding adds weight to the conclusion the cloud is starting to have an impact on vendor/partner relationships. These younger solution providers in many cases are leading the way to the cloud. Their business models are more flexible and adaptable than those of more established channel companies, which means they have far less baggage to prevent them from embracing cloud-based models.
Chief among the priorities that determine whether a partner keeps or drops a vendor is the quality of the vendor’s technology and services. Almost 60 percent of participants in the CompTIA survey cited product superiority as a major factor in their vendor partner selections. This makes eminent sense because partners don’t want to be mucking around with technology that doesn’t work, frustrating their customers and jeopardizing their own profitability.
Just about as important as technology quality is the vendor’s interaction with partners. Fifty-three percent of study participants cited ease of doing business as a major factor in partnering decisions. This should surprise no one. A vendor with overly complicated channel program rules and poor communication is hardly worth doing business with, even if the technology is top-notch.
Partners by and large are running lean operations, and they have no resources to waste on figuring out how to reach the right contact within the vendor’s organization for technical, sales or marketing support. Or, in some cases, how to get paid. Wasted resources amount to extra costs, which solution providers cannot afford. When vendor partnerships incur too many unnecessary costs, partners tend to drop out.
So the pressure is on. Vendors in the process of retooling their partner programs to accommodate the shift to cloud computing must take into account their partners’ needs and requirements as they do so. Missteps are bound to prove costly.
Vendors should learn from the lessons of managed services. Not long ago, solution providers were known to change vendor partners multiple times until settling on a managed services platform that worked for them. Partners would get frustrated when they discovered the platforms didn’t quite work as promised, so they switched at the first chance.
History could repeat itself unless vendors make sure their technology is truly ready for consumption as they introduce cloud offerings. They also must make the necessary structural changes to refine their partner programs, put the affordable training resources in place, and communicate clearly and honestly with partners.
If they get these things right, vendors stand to benefit handsomely from the shift to the cloud.
Pedro Pereira is a columnist for Channel Insider and a freelance writer. He can be reached at email@example.com.