Channel 2.0

The rise of managed services in the channel is raising new questions about the relationship between vendors and solution providers. Specifically, whose brand should hold precedence in the marketplace and, by consequence, who owns the relationship with the end-user customer?

Many predict a shift in the balance of power in the channel, whereby VARs will build brand awareness among their customers and have the ability to dictate terms to vendors on how they conduct business. What could drive that shift in power is the sale of end-to-end solutions.

"The ownership of the customer is moving to who owns the greater amount of the solutions," says Stan Jaworski (left), vice president of channel marketing at Network Appliance.

Before joining NetApp, Jaworski ran channel marketing at Symbol. When Symbol introduced bar code scanning to the retail market, he witnessed a shift in the balance of power between the retailers and manufacturers. In the old world, manufacturers could dictate terms on inventory, sale prices and marketing. They could do that because consumers bought their brands--Kodak, Kraft and Coke. Today, consumers buy retailer brands--Wal-Mart, Target and Macy's. Retailers have so much information about their customers that they can dictate terms to their manufacturers.

"As the retailer collected more information on the customers, the power shifted from the goods-makers to the retailers. Product was controlled by the manufacturer, but the brand shifted to the retailer," Jaworski says. "The same thing will happen in the channel. Enablement of the solution provider isn't about entrapment in vendor channel programs; it's about making the solution provider more independent so they can sell best-of-breed products."

Many solution providers trade on the power of the vendor partner's brand. Solution-provider marketing materials trumpet vendor relationships, proudly declaring that a VAR is a certified Cisco Systems partner, Microsoft Gold partner or authorized Hewlett-Packard reseller. However, the rise of managed services is giving more power to solution providers, since they're the ones delivering the service. As VARBusiness reported last summer, many solution providers turned managed service providers say that their brand is more important than their vendors', since the technology is interchangeable on the back end. What's important, they say, is how they deliver the service to their customers.

"If we can assist our clients in achieving their goals, they're happy to pay us, and they buy the Alvaka brand," Oli Thordarson, CEO of Alvaka Networks, told VARBusiness last summer. "There are certainly underlying technologies that come from valued and important manufacturers, but that's all under the hood or behind the curtain--our clients don't ever want or care to see (the branded technology)."

Vendor brands may not disappear or become unimportant to solution providers in the next five years. Vendors will continue to market themselves and build brand affinity in the marketplace, particularly for their direct relationships. Should solution-provider brand affinity rise with their customers, they could hold more power to dictate terms to their vendors.

NEXT: Channel going global