Influencers Add Another Layer of Channel Complexity
Influence peddling is generally considered to be a bad thing—especially when it comes to elected officials. But when it comes to software-as-a-service (SaaS) applications, IT vendors are willing to compensate partners for influencing customers to look in their direction.
One of latest vendors to launch a partner program intended to reward partners for exercising their influence is New Relic, a provider of IT monitoring software. Robson Grieve, the firm's chief marketing officer, said the company created the program because IT services firms don't typically resell SaaS applications. Most of the transactions are subscriptions that occur between the end customer and the application provider.
The New Relic Navigators Partner Program is intended to provide partners with an incentive to push their clients toward New Relic, Grieve said. The company then rewards partners with what amounts to a fee for acting as an agent.
Agent programs are not a new idea, but they are starting to gain more traction in the age of the cloud. Oracle, for example, has revealed that more than 2,600 unique partners have joined the Open PartnerNetwork Cloud Program since it was launched in 2016.
Camillo Speroni, vice president of worldwide strategic alliances for Oracle, said that when it comes to cloud application services, most of the partners participating in that Oracle program act as an agent that influences the end customer rather than as a reseller of a classic IT solution. As an agent, the channel partner doesn't own a transaction. Instead, it is facilitating a subscription in much the same way as an agent sells life insurance.
In general, Speroni said, the channel is splitting into two paths. The first is an agent model, in which a partner gets rewarded for exercising influence. The second is a managed services provider (MSP) model, in which the partner owns the ongoing management of the IT environment.
Obviously, MSPs will generate more revenue. But given the higher cost structure associated with delivering managed services, it's not always clear whether being an agent or an MSP is more profitable.
Of course, not every technology has been turned into a cloud service. Many partners still resell hardware and software that gets deployed on premises, in addition to engaging in systems integration work. It's not all that uncommon for the same partner to be a reseller, MSP, integrator and agent. It all depends on the nature of the transaction and the relationship with the customer.
In effect, most partners don't fall neatly into one specific business model. The issue each channel partner is now having is that they are being asked to navigate programs targeted for specific business models from the same vendor. Multiply all those channel programs across all the vendors they have a relationship with, and it becomes clear why there is so much confusion in and around the channel.
Finding ways to reward partners for exercising their influence is not a bad thing. But trying to keep track of all the ways a partner can have a relationship with a vendor is becoming increasingly complex for all concerned.