Meeting the Challenge of a Changing Channel Marketplace

By Howard M. Cohen
Challenging marketplace

"Never say 'no' to a customer" is advice that many sales managers have shared with their salespeople over the years. In the IT channel, however, this advice is often misconstrued, with challenging results.

Dating back to the earliest days of the channel, when the key words were "value-add," everybody wanted to do everything they could for their customers to show how much value they were adding. The answer to every "Can you do this?" question was "Yes!"

The one thing most channel players learned from this was just how true the warning "you can't be all things to all people" really is. They found themselves scrambling—and spending significant dollars—to fulfill all the obligations they had made. Back then, the value was something you added to justify the higher price you charged for the hardware, software and other products.

Eventually, the channel began charging for services. Margins on products evaporated, but at least there were funds to pay for the promises everyone was making.

IT General Contractors Versus Specialists

Some resellers realized that they didn't have the organization or the infrastructure to compete in this new services economy. Instead, they borrowed a page from the general contractor's handbook. Most GCs have little or no craftsmen on their payroll—no plumbers, carpenters, electricians or any of the other crafts required to build buildings. Instead, they subcontract those skills as needed. That's much more cost-effective.

By learning how to do this with technicians, engineers, consultants, and security, storage and server specialists, some channel partners became IT general contractors (ITGC). They extended the oft-quoted warning to this: "You can't be all things to all people, but you can provide all things."

Soon they added project managers and other professionals to help streamline their processes, and many continue to serve customers very capably to this day.

Many in the channel community—especially those who entered the channel because of their love of the technology and what it can do—didn't want to become ITGCs. They just wanted to deliver services to customers. In essence, many became the subcontractors the ITGCs turn to for skills.

The magic in these channel partners comes from their focus, their dogged determination to be the very best at what they do. Some focus on network routing and switching. Others focus on the TCP/IP stack, with an even finer point for some on data and network security. Others are mobility experts that enable their customers' employees to work from anywhere.

Any of these specialists will tell you that focus is a gift. They don't create large complex matrices that detail which of their technical people have particular skills. They don't worry about fulfilling the training and certification requirements of dozens of manufacturers.

These specialists stick to their knitting. They just do what they know how to do. They don't let themselves get distracted by the lure of easy money. They know there's no such thing.


Getting Value From Intellectual Property

For many channel specialists, the next step is to create products that they or other channel partners can sell and resell repeatedly to many customers. The primary advantage is that each successful product becomes a revenue center of its own, without any additional corresponding costs.

With growing pressure from cloud providers to identify more workloads to put on their services, many former solution providers are becoming independent software vendors that work to produce products from their own intellectual property. Many of these new ISVs build their own sub-networks of channel partners that are happy to sell the ISVs' products to their own customers.

Choosing the Right Vendor Partners

Many major vendor partner programs have been redesigned over the past decade to encourage channel partners to "declare their specialty." At its introduction in 2009, the Microsoft Partner Network changed the rules for certification testing, stipulating that anyone who tested for a particular Gold Competency could not test for any others.

Since the program required four people per competency, this meant that the channel partner who held 29 competencies and was the number-one partner in the program would have to have 116 technical people. At that time, the partner had only 17 people in the company.

Vendors want to have their products represented and serviced by experts that know their products intimately. So, unless your company can afford the payroll, you have to choose which vendors you want to partner with. To find out, ask yourself these questions:

Which vendors' products offer me the widest opportunity to create services around them, such as design, deployment, migration, integration, customization, training and support?

Which vendors bring me into the most qualified opportunities (not just leads, opportunities)?

Which vendors work most closely to help me market our solutions around their products?

Which vendors are willing to invest in marketing our joint solutions?

In this growing world of specialization, vendors become far more than companies whose products you sell. They become companies whose technologies you represent, service and support. This is a far more meaningful relationship—one that requires far more dedication and focus.

The market is continuing to shift, and you can't afford to sit still. It's time to have meaningful discussions with your technical staff and your vendor partners. Who's going to the dance?




This article was originally published on 2017-05-25