A Turnaround In the Making

If IT vendor-partner programs left you feeling a bit dissatisfied in past years, chances are you're feeling more satisfied this year. The grades VARs and solution providers gave to key vendors in the 2005 VARBusiness Annual Report Card (ARC) improved this year, reversing a five-year slide.

"From Microsoft to Symantec to elsewhere, vendors are adopting best practices and competitive policies, which is leading to our improved satisfaction [rating]," says Sean Burke, president of GovPlace (No. 474 in the 2005 VARBusiness 500), one of the nation's more influential integrators focused on the government market.

For this ARC, VARBusiness polled 5,400 solution providers across 19 different product categories. More than 80 different vendor-partner programs were measured against 15 different criteria, such as Product Quality/Reliability; Presales and Postsales Support; Technical Innovation; Sales Partnering; Ease of Doing Business; and Loyalty. It's the largest partner-satisfaction study of its kind in the IT industry.

In this special edition of VARBusiness, part of the magazine's Business Intelligence series, you will find articles that analyze the results of this year's study and a complete ranking of all companies participating in the 2005 ARC. In "5 Winning Ways," on page 38, read about the vendor initiatives that capture and retain partner loyalty. Then turn to "10 Bright Ideas," on page 44 for a description of the 10 most important trends shaping the channel today. VARBusiness also presents an assessment of why some vendors come up short at report card time in "Falling Down," on page 50.

In addition, VARBusiness has amassed an analysis of all 19 measured product categories, zeroing in on the key trends and market conditions that are shaping the areas of technology that most solution providers find appealing--everything from Security Management Software to Advanced Desktops & Workstations to Network Storage.

VARBusiness refined several categories this year, improving descriptions and sharpening criteria. We also added a new category: Business Software. The net-net of these changes is the single largest and most comprehensive edition of the VARBusiness ARC study ever completed. For additional insights and information, log onto varbusiness.com, which hosts exclusive content on vendor-partner programs.

What's interesting to note from this year's study is the level of competition in each category. Virtually none of the industry's market leaders took home top honors in the categories in which they dominate. (Intel was the exception, but it had only one other competitor to beat out--AMD.) Microsoft, for example, lost to Novell in Server Operating Systems. Likewise, Cisco Systems came up short against Hewlett-Packard's ProCurve in the Networking Infrastructure/Data Networking category.

The same is true for Oracle, Dell, HP and EMC; each lost to another company in the categories in which they dominate--Data Management Software, Entry-Level Servers, Network Color Laser Printers and Network Storage.

One explanation: The nation's solution providers simply have higher expectations for market leaders than they do vendors whose revenue they appreciate, but do not necessarily depend on. For upstart vendors, that means unprecedented opportunity. Clearly, VARs and solution providers are responding to the opportunity to sell and represent alternative vendors in categories where entrenched leaders were thought to be untouchable.

That's not to say the largest IT vendors came up short in the ARC. Several major IT companies took home honors in multiple categories, including Microsoft, Cisco and IBM. Their efforts to curry favor with partners in key emerging-technology categories are paying off and winning allies. Cisco, for example, has found that the uplifts it pays VARs and systems integrators for selling its advanced technologies are valuable incentives and is ponying up even more investment dollars for driving sales of security, VoIP and advanced-switching products next year.

"While we're disappointed at our loss in data networking, we are very pleased that the market is responding to how serious and committed we are to advanced technology categories," says Chuck Robbins, Cisco's vice president of U.S. channels.