The Final Cut
By Steve Burke
The Worst Channel Decision Of 2012
December 14, 2012
Given the blinding pace of change in the tech market, there were many channel blunders this year that have forever altered the indirect channel sales landscape. But none, in my opinion, was more damaging than Microsoft’s decision not to leverage the channel to sell its new Surface Tablet.
The irony here is that Microsoft’s Surface effort has been flummoxed by Apple envy. Microsoft CEO Steve Ballmer admitted as much in an interview with CRN earlier this year when he asserted that Microsoft would leave no “stone unturned” in its innovation battle with Apple. At the same time, Ballmer told CRN that if Microsoft partners want to buy Surface, they can buy it from Microsoft.com.
It’s a classic case of a copy-cat CEO and a company in the midst of an identity crisis. Microsoft is not Apple. I know Apple, Mr. Ballmer, and Microsoft is no Apple. Instead of leading with Microsoft’s top-down advantage in the business market, its monopoly position and huge installed base in the business-productivity software market with Office and Windows, Ballmer decided to take a bottom-up approach, battling Apple on its own high ground -- the consumer market. First off, get real.
No one -- and I do mean no one -- is a better consumer product and marketing company than Apple. The iPad is unassailable in the consumer market. Surface is like a 50-year-old dad trying to be cool with a comb-over hairdo. And, remember, Microsoft is two-and-a-half years late getting into the tablet game. Surface is simply the classic case of a product that needs to be sold. That’s right, it needs someone to sell it. What a concept! Apple stores fulfill demand for a consumer product. Surface is a product that is begging to be sold into the business market where IT professionals are dying to put the lid on the BYOD (bring your own device) to work phenomenon with a business-approved tablet that has all the security of a laptop or a desktop. The ultimate irony: Microsoft has a robust, fully baked channel acting as trusted advisers to millions of businesses who are anxious for a secure business tablet.
Given the right strategy, Surface would have been a monster hit for Microsoft. Instead, Microsoft’s Apple envy is sinking Surface faster than a two-ton anchor. Detwiler Fenton & Co., a Boston-based brokerage, surveyed the damage earlier this month reporting that Microsoft sold just 500,000 to 600,000 Surface tablets in the current quarter. Compare that to Apple, which is expected to ship 24 million to 26 million iPads in the current quarter. “Regarding (Surface) RT, lack of distribution is killing the product,” said the Detwiler Fenton advisory.
Microsoft admitted as much by announcing last week that it was expanding retail distribution for the Surface RT, adding outlets like Staples. My bet is that the beleaguered computer giant will be forced to let partners sell Windows 8-based Surface Pro to make up for its subpar direct-sales performance.
Microsoft needs to be Microsoft and get its partners to bring Surface into businesses. Instead, Microsoft wants to be Apple. That’s why Microsoft’s decision not to sell Surface through its trusted partners is the biggest channel blunder of 2012.
BACKTALK: What are your thoughts on Microsoft and its Surface initiative? Contact Steve Burke at steve.burke@ubm.com.
Do You Have 'Channel Attitude?'
November 21, 2012
Getting a Harvard MBA may gain you entrance into the Harvard Club, but it is not the best route to becoming a successful channel chief.
You certainly need to understand complex channel economics that can be taught in a prestigious university and be introspective to be a good channel chief, but it takes something more to develop what 30-year channel veteran Kevin Gilroy calls "channel attitude."
"You don't develop channel DNA just because you went to Harvard Business School or because you are smart," says Gilroy, the senior vice president of global indirect channels at ERP software giant SAP who is featured on CRN's 2012 Top 25 Channel Sales Leaders list. "It takes years. You have to chew the dirt of the street with the channel."
Gilroy, who has helped drive a channel renaissance at SAP, knows of what he speaks. He was also instrumental in building a strong channel culture at HP. Gilroy, in fact, drew a line in the sand between the indirect and direct sales organizations at HP with what he termed a "hard deck." That hard deck, which focused the HP direct sales on only the top 870 accounts, led to explosive channel sales growth at HP.
What Gilroy did at HP, and now has done at SAP, is bridge the divide between the direct and indirect sales organizations. "Good channel leadership has one foot in each camp," says Gilroy. "They know they work for representing the supplier, but they also represent the [indirect] channel inside the company, fighting for the channel, acting as an advocate for the channel."
That street-fighting channel attitude, by the way, extends into the sales trenches, pushing the company's solution provider partners to step up for the vendor, making investments, for example, in next-generation technology ahead of revenue and committing to sales growth year after year.
Gilroy, in fact, is put off when he visits partners that tell him their account rep is the "nicest person" in the world. "Show me that partner account manager, and I will show you a flat revenue line," he says. "It's not just about going out for beers or lunch. You need constructive contention. The best account managers push partners and get under their skin."
At SAP, Gilroy has brought in a significant amount of channel talent from HP, including former HP channel executives Michael Coleman, Meaghan Sullivan and Susan Reynolds, to build what he calls channel DNA.
Getting that top channel talent is one thing, but if you don't have a channel-savvy CEO, it is for naught. At SAP, Co-CEO Bill McDermott has made driving an aggressive channel sales transformation a top priority. "McDermott understood the value of the channel and he set in motion a plan for 40 percent of the business to go through the channel," says Gilroy.
That 40 percent of sales going through the channel was a 2015 goal. But Gilroy says he believes the 40 percent target will be met in 2014. Those are the kinds of numbers that would impress any Harvard MBA.
BACKTALK: Do you have channel attitude? Contact Steve Burke at steve.burke@ubm.com.
A Cloud Computing Game-Changer
October 19, 2012
Twenty-five years ago, Sam Haffar and his brother Jason started out building white-box PCs for customers in Houston who were looking for a better value.
The two brothers built the business one system after another, investing every year in top-flight engineering talent to provide customers with more innovative IT products and solutions. All of it was backed up by a super-high level of local touch and a corporate credo of "Customers For Life and Employees For Life."
From day one, Computex has always been out in front of big technology changes and was a virtualization expert long before it was fashionable. It's those kinds of deep investments that have made the company, a member of the CRN Tech Elite 250, one of the most widely respected solution providers in the country. Top vendor executives and solution provider peers have sought out Sam and Jason time and time again for advice on how to cross the next big technology chasm.
So with cloud computing reshaping the technology landscape, more than a few were waiting to see what Computex's next move would be. With big investments necessary to continue to grow at a rapid clip, the two Computex founders decided to make a deal to be acquired by Stratos Management Systems, Atlanta, and become shareholders of the new company.
The deal with Stratos creates a $100 million hybrid IT cloud computing powerhouse with offices in five states: Texas, Minnesota, Florida, Georgia and Michigan. The deal is Stratos' second acquisition. In March, Stratos acquired another CRN Tech Elite 250 high-flyer, Nexus Information Systems of Minnetonka, Minn.
"Cloud changes the dynamics," said Computex President Sam Haffar. "You have got to have hosted systems and a slew of new offerings to compete in a hybrid infrastructure IT world, some of it off-premise, some of it on-premise. We are going to take Nexus' managed services to our customers and bring our data center services to them. We are going to offer a variety of cloud services like Backup-as a-Service, Infrastructure-as-a-Service and Platform-as-a-Service. We can now help customers build private clouds but also build hybrid clouds, federating data workloads between clouds. That takes a lot of costly engineering talent and facilities."
With Computex and Nexus, Stratos has taken two of the best solution providers in the country, combined their elite engineering and project delivery teams, managed services offerings and data center prowess into a hybrid IT power that is sure to give fits to national solution providers competing in the Southwestern and Central U.S. One of the central tenets of the Stratos philosophy is to maintain that super-high level of local touch that has made Computex and Nexus so prized by their customers.
Sam Haffar says one of the things that doesn't change with cloud computing is the need for strong local customer relationships. What's more, he says, the primary mission of the solution provider to "transform business through technology" and shield customers from the complexity of IT remains the same. That's something all solution providers would be wise to remember as they cross the cloud computing chasm.
BACKTALK: How has cloud computing changed your business model? Contact Steve Burke at steve.burke@ubm.com.
HP One Year Later
September 21, 2012
It's been just more than a year since Meg Whitman was named CEO of Hewlett-Packard. So it's a good time to look at just where HP was a year ago, where it is now and where it needs to go.
Whitman inherited an almost unimaginable mess of a company due in large part to former HP CEO Leo Apotheker and the HP board of directors that hired him and then fired him.
Whitman has done an admirable job of clearing up the chaos and confusion that Apotheker left after a mere 11 months at the helm. But there is a lot more that needs to be done to get HP back to the channel-strong position it was in before Apotheker messed things up. Now is the time for Whitman to pick up the pace by naming a single top channel chief. That appointment could go a long way toward eliminating internal, internecine political squabbles and getting partners behind one single sales arrow -- a single set of incentives with a single story to tell HP customers.
HP needs someone who has the ability to call the channel shots across all of the business units, clearing up any confusion in the sales ranks with regard to strategy or conflicts. And HP needs to give that new channel chief the resources and budget to aggressively re-engage the channel with an all-out offensive from sales strategy and execution to marketing and communication. As it stands right now, HP is simply not leveraging to the fullest extent what has always been one of its crown jewels: its robust channel sales force.
One of the bright spots for the channel, however, has been the merging of the printing and personal computer units under Printing and Personal Systems Group Executive Vice President Todd Bradley, who remains a strong channel advocate. Hats off to Whitman for keeping top talent like Bradley, who is working to restore HP's channel momentum.
But whether HP wants to admit it or not, it has clearly lost partner sales share of mind and resources over the past year. Key HP partners have taken on new vendor lines such as Oracle or Dell or focused more aggressively on Cisco's Unified Computing System. Cisco, by the way, beat HP at its own game this year with a stunning victory in the midrange server category in CRN's Annual Report Card awards, based on a survey of more than 3,600 solution providers.
What's more, unlike Cisco and Dell, HP has no clear and compelling cloud computing services channel strategy that fully embraces all partners. The channel at this point is an afterthought as HP builds out its cloud services and solutions business.
HP's current siloed approach has resulted in a channel organization that has failed to deliver deep and long-lasting solution incentives that cut across business unit boundaries. It has failed to effectively communicate with partners as well.
The siloed approach isn't working. That single channel sales leader post is critical for both HP's customers and its partners.
BACKTALK: What do you think of HP's siloed approach to the channel? Contact Steve Burke at steve.burke@ubm.com.
A Cloud Storm Ahead
August 27, 2012
There is a twister that is about to wreak havoc on the channel landscape, and it’s going to hit those solution providers that are coming up short in terms of making investments to sell cloud computing services. Make no mistake about it. There are far too many legacy solution providers moving too slowly to make the treacherous transition to the cloud computing services model. One reason for the growing gap between the cloud computing solution provider haves and have-nots is the heavy investment in both technology and thought leadership that is necessary to cross the cloud computing chasm. It’s one of the reasons, by the way, that we here at UBM Channel, with prodding from solution providers, put together the BoB (Best of Breed) conference, which is celebrating its second anniversary Oct. 15-17 at the Grand Hyatt in Tampa, Fla.
Remember, the cloud represents the first time in the history of the channel that solution providers have been forced to implement simultaneously both a major structural change to their business model, while making a massive shift to a completely new technology paradigm. Bottom line: The transitions in the channel up until now -- like PC to local area -- were cakewalks compared to the current cloud computing services shift.
Those that want a lesson in what it takes to pass muster in the cloud computing era would be wise to look at the investments being made by 2012 SP 500 IT Solution Provider of the Year GreenPages Technology Solutions. GreenPages began making the cloud shift in 2008 when many IT executives were looking at cloud computing as a fad. Each year, GreenPages has upped the ante with bigger and bigger cloud investments. This year, GreenPages used its conference to demonstrate its own groundbreaking Cloud Management as a Service (CMaaS) offering, which provides a single pane of glass to manage public, private and hybrid enterprise cloud environments. GreenPages is also making big application development bets with a focus on application modernization, big data and business intelligence.
“Solution providers in the future have to be integrating business services, not physical technologies anymore,” says GreenPages CEO Ron Dupler. “That is what we have to become. That is why apps and [cloud] management become important. In a cloud world, companies like GreenPages need to be about business process, integrating business service platforms.”
Dupler, who will be hosting a best practices cloud integrator forum at the BoB conference, says the cloud computing bet is paying off for GreenPages, with sales up 22 percent this year. He sees “infinite demand” for companies like GreenPages that have invested in the technical talent to make cloud computing a reality for customers.
At the same time GreenPages is prospering, there is a growing number of solution providers that are hitting a wall. Those cloud computing have-nots are doomed to die a slow death unless they start making some big investments to compete in the cloud computing services era.
BACKTALK: Are you Best of Breed (BoB) or part of a dying breed? Contact Steve Burke at steve.burke@ubm.com
- The Worst Channel Decision Of 2012
- Do You Have 'Channel Attitude?'
- A Cloud Computing Game-Changer
- HP One Year Later
- HP And EDS: A Tale Of Two Cultures
- A Cloud Storm Ahead
- Steve Ballmer Is Back
- Government Must Leverage Private Sector's Expertise
- Microsoft Partners Left Dazed And Confused
- Change Is In The Air At Apple
- Intermec's Three Channel Tenets
- M&A Madness: It's Not A Game
- Social Media Lessons: Always On, Always Be Careful
- ServiceKey Puts Partners First
- Silicon Valley Superstar's Departure Is A Big Blow To HP
- Are You Ready For 2012?
- Welcome To The Garden Of Eaton
- Hurd Has Done It Again
- Michael Dell Is Number One
- Jobs: The Ultimate Solution Provider
| • |
| • |
| • |
| • |
| • |
| • |
| • |
|
|
