The Best & The Worst: IT Disservices?

HP, which not long ago made a failed bid for PricewaterhouseCoopers' consulting division, identified IT services as a major growth area after reporting its third-quarter earnings this summer. HP also announced plans to increase its services business, including a bid for Comdisco's technology services business, even before its decision to buy Compaq. Will the services push antagonize an already disillusioned channel?

HP CEO Carly Fiorina says that's not going to happen. The embattled executive says the company's Hard Deck sales engagement program, which reserves all but approximately 900 named accounts for HP partners, has helped reduce channel conflict. "While we still have work to do, we are already seeing a higher level of channel interest and engagement with HP," Fiorina said during the earnings announcement.

Two years ago, HP shined in the ARC. But then after some highly profiled channel mismanagement, the company's scores--along with its stock price and earnings--took a nosedive. HP is hardly alone. Many vendors that once had high ARC scores, including 3Com, Microsoft and Network Associates, have crashed in recent years with poor showings in the overall partnership subcategory.

Partnership was essential again this year. Communication, for example, was an especially crucial metric. In nine out of the 14 overall product categories, those vendors who scored the highest in communication also went on to take the No. 1 spot in their respective surveys. In the five remaining categories, the winning vendor placed no lower than second in communication.

In addition, there is little consistency in the performances of the vendors that are featured in several categories. Only three vendors--IBM, Sun and Macromedia--won more than one overall award. Of those that won in more than one category, Macromedia was the only vendor to win all the categories (application development and deployment tools, and Internet application server software) in which it competed.

While the services rage continues, some vendors, such as ARC winner Macromedia, are distinguishing themselves by staying away from services and potential channel conflict. Rob Burgess, chairman and CEO of Macromedia, says he has no intention of jeopardizing the channel-friendly reputation of Allaire, which Macromedia acquired earlier this year (see Q&A with Burgess on page 91). Burgess believes the build-out of services has damaged technology vendors' channel relationships.

"We have a small services operation, but that's really just to support the sale of our products," Burgess says. "I think there are a lot of technology companies that are getting increasing revenue from their services business--and that does compete with some of their partners--but that's not our plan. Our plan is to continue to have most of our revenue come from the software side and leave rich services opportunities out there for our partners."

Part 1: The Best & The Worst

Part 3: No Other Choice

Part 4: Battle for the Midmarket

Part 5: Web Services Scare