When solution providers partner with a vendor, they're looking for more than just another supplier of computer hardware or software. They're looking for a business partner, an ally with whom they can fight the good fight in today's competitive markets.
So what has your vendor done for you lately? Sure, the technology itself is important: Any product that's not innovative or doesn't provide value to customers is a non-starter. And margins offered by vendors are also important: VARs that can't earn a decent profit on a product won't be in business for very long.
But a successful vendor partnership must go beyond--way beyond--good margins and solid products. It starts with how a vendor recruits channel partners and includes pre- and post-sales support, marketing efforts, training and partner communications, among other initiatives.
"The most important thing a vendor can do is dance with us," said Rolf Strasheim, director of client solutions at Peak Uptime, a Tulsa, Okla.-based solution provider that partners with storage equipment vendors such as Network Appliance Inc., Sunnyvale, Calif., and Overland Storage, San Diego. Any potential vendor partner has to, first, have a top quality product that allows Peak Uptime to make a decent profit, he said, but above, all it's important that they make a commitment to their channel partners.
So it is with great pride that we offer this year's VARBusiness Partner Programs Guide and the Five-Star Partner Programs awards that recognize those vendors with the most comprehensive channel offerings for their particular markets and technology sets. Silver and gold-star winners have listened to their partners and assembled programs that offer key elements for channel success.
(Vendors that excelled in specific partner program criteria such as sales support, marketing support, partner profitability, channel operations, communications and partner recruitment earned silver stars for each element, while those with overall top-notch partner programs won gold stars. For a detailed description of the judging methodology see page 40.)
It's hard to find a vendor that isn't good at something when it comes to partnering with solution providers. Of the 125 vendors that applied for this year's guide, most won at least one silver star for some aspect of their partner program, such as Ricoh Americas Corp. (West Caldwell, N.J.) for partner profitability, Autodesk Inc. (San Rafael, Calif.) for sales support, Ipswitch Inc. (Lexington, Mass.) for partner recruitment and Level 3 Communications Inc. (Broomfield, Colo.) for, appropriately enough, communication with channel partners.
But the vendors that solution providers should think about hitching their wagons to, if they haven't already, are the 64 companies whose partner programs won an overall gold designation in this year's VARBusiness Partner Programs Guide. And the cream of that crop are the dozen vendors who won overall gold and silver stars in all six partner program criteria and the 17 vendors who won overall gold and silver stars in five of the six criteria.
Outside of those high-achievers, 21 vendors won a single silver star while another 20 garnered two, 19 won three silver stars and 21 were awarded four.
One finding of this year's VARBusiness Partner Programs Guide is just how good many smaller vendors have become at assembling top-notch partner programs. Sure, the list of gold-star vendors includes such big names as Cisco Systems Inc. (San Jose, Calif.), Hewlett-Packard Co. (Palo Alto, Calif.) and IBM Corp. (Armonk, N.Y.) But this year's gold-star roster is heavily populated with small companies such as Epicor Software Corp. (Irvine, Calif.), FalconStor Software Inc. (Melville, N.Y.), QLogic Corp. (Aliso Viejo, Calif.) and Sophos Plc. (Burlington, Mass.), proving that world-class partner programs aren't found only among multibillion-dollar companies.
Take Acronis Inc., a Burlington, Mass.-based developer of data backup and disaster recovery software that competes against such giants as Symantec Corp. (Cupertino, Calif.) and CA Inc. (Islandia, N.Y.) Acronis won silver-star designations for channel operations, sales support, marketing support and partner recruitment, as well as a gold-star designation for its overall channel program. In 2007 the vendor added 500 new partners and expects to increase that roster by another 50 percent in 2008, according to the company's VARBusiness Partner Programs Guide application.
Acronis has been aggressively recruiting solution provider partners by offering free certification training and a deal registration program that offers rebates or up-front discounts even if a reseller doesn't win a contract. Certainly Acronis' products are a key attraction for solution providers. But it goes beyond technology. Channel partners want to be sure their investment in a vendor in time and resources will be protected, said Eric Dougherty, channel sales director at Acronis. "It comes down to trust. Can they trust their vendor? There's a lot of solution providers out there that have been burned."
"They're extremely channel-friendly," says Mike Piltoff, senior vice president of strategic marketing at Champion Solutions Group, a Boca Raton, Fla.-based solution provider that partners with Acronis. He praised them particularly for the two-way, lead-generation efforts the vendor and partner engage in. "We bring them in and they bring us in," Piltoff said.
Juniper Networks Inc., Sunnyvale, Calif., isn't exactly a small company, although it often plays the role of David to Cisco's Goliath in the networking arena. Phil O'Reilly, CEO of Solunet Inc., a Melbourne, Fla.-based solution provider, said Juniper has been an effective partner because the vendor understands that ultimately it's the solution provider/customer relationship that's most important, even more so than the solution provider/vendor relationship. Juniper even helps its channel partner promote their own brands, he said, rather than just trying to drive the Juniper message through the channel to end-user customers.
Next: Pay attention to big IT vendor scores
But solution providers should pay particular attention to the VARBusiness Partner Programs Guide scores of the big IT vendors simply because the fortunes of so many channel partners rise and fall on their success or failure. Microsoft alone, according to its application, has a mind-boggling 123,410 registered partners in North America and 371,790 worldwide.
IBM has 36,000 partners in North America and 100,000 globally, according to its application, and the company will rely heavily on those partners as it re- doubles its efforts this year to sell to midmarket customers. "We're going to use our partners to be the selling and fulfillment arm of that strategy," said Rich Michos, vice president of IBM's worldwide business partner strategy. One enticement for partners is the $100 million the company plans to spend this year for marketing and demand generation. IBM also has been streamlining its once bewildering array of partner incentive programs and beefing up its global partner Web site as a one-stop-shop portal for everything from deal registration to financing.
Analyzing the vendor applications for the VARBusiness Partner Programs Guide turns up some interesting statistics, such as the fact that, on average, companies intend to drop more than 6 percent of their channel partners this year. So laggards beware. The good news is that they also plan to increase their overall partner rosters by an average of more than 30 percent.
Some vendors, however, may be over-recruiting channel partners and creating competition among solution providers, said Bill Smeltzer, CEO of Seabrook, N.H.-based Focus Technology Solutions Inc., a Cisco partner. Cisco has 12,000 registered partners in North America and 41,000 worldwide, according to its application.
As for why vendors are hunting for new channel partners, 88.3 percent simply want to drive revenue growth. The need for better geographic coverage is cited by 86.3 percent while an equal number want to increase market share. Sixty-three percent of vendors are looking for expertise in specific industries, while 55.9 percent need solution provider partners with unique technical skills.
The VARBusiness Partner Programs Guide also offers interesting opportunities for comparing head-to-head competitors. HP and IBM partner programs were both designated "gold" overall, for example, and both won silver stars for partner profitability, channel operations and communications. But HP also won a silver star for sales support while IBM won a silver star for marketing support. AMD and Intel likewise both have partner programs deemed worthy of gold status. But while Intel won silver stars for marketing support and partner profitability, AMD won silver stars for marketing support, channel operations, communication and partner recruitment.
Silver stars were awarded to 62 channel programs for partner recruitment and for partner profitability while 61 silver stars were awarded for sales support, marketing support, channel operations and communication. While that means only about 50 percent of all vendors excel at any one program element, it also shows that vendors are remarkably consistent across all six criteria and aren't really terrible in, say, partner recruitment.
Tallying up the results of the VARBusiness Partner Programs guide also offers an interesting snapshot of what IT vendors are doing to support and motivate their channel partners. Vendors also have long lists of requirements for solution providers to join their partner programs, from annual revenue commitments (42.2 percent of vendors) and technical certification requirements (56.3 percent) to requiring a business plan (43.0 percent). Fortunately, 71.7 percent charge no fee to join while 10.9 percent have an annual fee and 3.9 percent have a one-time joining fee.
And what do channel partners get for all this? Fifty-three percent of the vendors generate sales leads that they turn over to all their partners, but 46.2 percent reserve such leads for their higher performing, more valued partners. Nearly all vendors provide pre-sales, post-sales and technical support and 87.5 percent offer market development funds and other cooperative marketing goodies.
Cisco's channel support is "the most valuable asset" the vendor provides, said Smeltzer of Focus Technology Solutions. Cisco assigns his company a channel manager in each specific technology area and each manager has a senior engineer that works with him. Smeltzer said he also highly values Cisco's communications about promotions, training and other incentives.
Despite the fact that 61 vendors won silver stars for excelling in communications with their channel partners, there's clearly room for improvement. Michael Worsham, owner of MWE Computer Services, a North Augusta, S.C.-based solution provider, says Hewlett-Packard's partner portal leaves something to be desired. Finding basic information on a simple product like a printer can be a real challenge, he said, because there are multiple layers of information to wade through.
Vendors also need to do a better job of preventing channel conflict. Asked if they have rules of engagement for managing direct/indirect channel conflict, only 76.4 percent of vendors answered in the affirmative. And only 57.8 percent had a clearly defined division between accounts for direct and indirect sales.
Every channel program has some value, even those that didn't receive any gold or silver stars. That's why you can find a searchable database online of all the information vendors submitted about their partner programs. Solution providers can use these resources to find and evaluate vendors that offer not just innovative technologies but also channel programs to support their entry into new markets. And solution providers that already participate in vendors' partner programs can use the VARBusiness Partner Programs Guide as a reality check to be sure they've made the right choice.