The 2013 Partner Program Guide: What Has Your IT Vendor Done For You Lately?4:05 PM EST Fri. Mar. 22, 2013
The IT industry is undergoing some major shifts. Businesses are adopting cloud-computing models while their employees are embracing mobile devices with a passion. Trends like "big data" and social networking offer opportunities and challenges for vendors and solution providers alike.
Solution providers are racing to keep up, transforming themselves by becoming more savvy in business processes, developing expertise in new technology areas like cloud computing and business analytics, and moving into managed services.
Amidst all this upheaval, what has your IT vendor done for you lately?
The 2013 Partner Program Guide offers solution providers the information they need to evaluate IT vendors they already work with or are considering working with. The guide is based on detailed applications vendors submitted outlining all aspects of their partner programs. All applicants are listed on the following pages.
UBM Tech Channel Research crunched the numbers and designated some programs as 5-Star Partner Programs.
The 5-Star Partner Program rating recognizes the elite subset of Partner Program Guide vendors that give solution providers the best partnering elements in their channel programs. The 5-Star rating is given to programs whose overall rating is among the elite segmented by company size--enterprise (annual revenue of more than $1 billion), midsize (revenue between $100 million and $1 billion), small (revenue less than $100 million) and emerging companies (founded in 2007 or later).
For many IT vendors, the channel is a critical aspect of their go-to-market strategy. And that means their channel program is equally critical.
Take Cisco Systems, for example. The Cisco Channel Partner Program, which earned a 5-Star rating in the Partner Program Guide, has more than 60,000 participants worldwide who account for 80 percent of the manufacturer's sales (and almost 100 percent of its SMB "commercial" business).
Like other vendors, Cisco in recent years has been stepping up its efforts to encourage partners to add value to Cisco products by becoming "specialized" in the company's technology and providing value-added services. Specializations, customer satisfaction and other criteria--but not sales volumes--are used to certify partners as "select," "premier," "silver" or "gold" in the partner program.
"That's a big deal. I think we're one of the few vendors that doesn't use sales volume as a criteria for certification," said Edison Peres, Cisco senior vice president, worldwide channels, in an interview.
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One fan of Cisco's partner training and certification programs is Trace3, an Irvine, Calif.-based solution provider that works with the manufacturer, as well as several other major IT vendors such as Symantec, EMC and NetApp.
"Cisco seems to be as concerned with their partners' growth as much as their own," said Hayes Drumwright, Trace3 CEO, pointing to Cisco's rigorous training and certification efforts. "The great thing about Cisco's partner organization is that it helps to mature your entire organization. That's what makes them stand apart."
To meet Cisco's standards, for example, Trace3 had to make some improvements to a number of internal business processes, including how it manages subcontractors and measures customer satisfaction. "It's almost like a mini-ISO [International Organization for Standardization] certification," Drumwright said.
Dell, once known for its direct-sales-only business model, is another 5-Star designee in the Partner Program Guide. To learn how far Dell has come, just talk to Nathan Austin, business development vice president at MyTech Partners, a Minneapolis-based solution provider.
MyTech once worked with Dell, but ended the relationship six or seven years ago before Dell became serious about the channel. The solution provider became a Dell Partner again one year ago when the computer manufacturer acquired SonicWall, the security software developer with which MyTech partnered.
Austin has been pleasantly surprised in how far Dell has come. "They've been doing a good job in aligning their goals and their comp plan for the company's inside salespeople with the channel," he said. "They're now incented to work with the channel, which is huge from my perspective. In the past, if direct came into conflict with the channel, direct always won."
As always, solution providers are grateful for market development funds, spiffs and other assistance they receive from their IT vendors.
Jim Bittle, CEO of Commputercations, a Frederick, Md.-based solution provider, recently got a call from a marketing firm working on behalf of Hewlett-Packard informing him that he was eligible for $5,000 in telemarketing assistance from the vendor.
"I'm definitely going to look into it," Bittle said in an interview. His wish is that vendors would do more of that kind of outreach given that time-crunched solution providers rarely have the resources to keep up with channel offerings. "Frankly, we don't have the time to research all the programs that vendors have to offer," he lamented.The Partner Program Guide is designed to help fill that gap.
The PPG applications from IT vendors also provide an interesting snapshot of the current state of vendor partner programs and offer some insights into channel trends.
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Certainly the channel is critical for many IT vendors. More than 34 percent of the vendors who submitted applications said indirect revenue accounted for between 91 and 100 percent of their total sales. On the flip side, only 23 percent of the vendors said the channel accounted for 50 percent or less of their sales.
IT vendors seem to be doing an adequate job of covering the basics. Nearly all said they offer presales (99.0 percent), post-sales (96.4 percent) and technical support (98.4 percent), according to the applications. Local account/field representatives for the channel are provided by 86.5 percent of the vendors, while 82.9 percent provide dedicated account teams.
Nearly all provide marketing resources and a partner portal (96.9 percent for each), while 93.3 percent offer channel support and 86.0 percent say they provide partners with qualified leads.
But is that enough? IT vendors still seem to be struggling with channel conflict issues: Only a little more than two-thirds (67.4 percent) said they have rules of engagement for managing direct/indirect channel conflict, and slightly more than half (56.5 percent) reported having a clearly defined division between accounts for direct and indirect sales.
Some vendors are taking steps to help partners expand their service offerings. More than 84 percent of vendors said they provide services- and solution-selling training to help partners increase their services-attach revenue. That's up from 73.6 percent last year and 81 percent in 2011.
But only 52.8 percent offer incentive programs to help partners increase services-attach rates. And only about 60 percent said partners are eligible to sell the vendor's own services.
Clearly there's room for improvement. More than 20 percent of vendors said in their PPG applications that for every dollar of product sold through their channel program, the value of attached services is less than 50 cents. Another 14 percent put the services-attach rate at between 50 cents and $1. (In last year's PPG applications, 31.9 percent of vendors put the attach rate at $1 or less.) Another 14.5 percent put it between $1 and $2.
Only 8.3 percent of vendors put the attach rate at more than $10 for every $1 of product sold (up slightly from 7.4 percent last year and 4.9 percent in 2011).
The number of vendors who provide training to help partners transform their businesses to capture more services revenue was virtually unchanged, from 49.1 percent last year to 50.8 percent this year, according to the applications. The number of vendors offering training to help them deliver hosted and managed services was 54.9 percent, up from 47.2 percent last year.
The number of vendors who provide information to help channel partners break into new vertical markets was down slightly to 65.8 percent from 67.5 percent last year. But the number of vendors who assist partners with training and advice on incorporating cloud solutions into their offerings was 73.6 percent, up significantly from 64.4 percent in 2012.
While vendors are imploring their channel partners to expand into cloud computing, 89.1 percent of PPG applicants are relying on their existing partner program to support their cloud products and services. Only 8.8 percent have a separate partner program to support cloud products and services.
And despite pleas from vendors that their channel partners add innovative, new products and services to their repertoire, only 29 percent of vendors said they offer awards specifically for innovation.
UBM Tech Channel Research assembles the 5-Star Partner Program Guide using a methodology it developed for assessing information provided in vendors' PPG applications. The objective criteria includes vendor investments in program offerings, partner profitability, partner training, education and support, marketing programs and resources, sales support and communication.
The methodology enables the research team to generate a prioritized list of vendors based on scores from their responses to a series of questions in the PPG application. A proprietary weighting scheme is assigned to each section, question and response set. Vendor responses to each question included in the analysis determine a vendor's overall rank in the 5-Star scoring process. Each year the scoring threshold used to determine the 5-Star status is determined by the responses received and scores achieved by the entire PPG applicant pool.