Channel 2.0

Assuming that there's some level of consolidation among solution providers, a shift in brand affinity and customer ownership, and an increasing level of partnership among solution providers, what form will channel programs take in 2013?

Perhaps no other issue is more vexing in the Channel 2.0 quest than this. Obviously, channel programs must evolve to meet the changing and dynamic channel ecosystem. But what those changes will be and how they'll impact the channel marketplace could take myriad courses. If there's a keyword for the future, it's flexibility.

"As manufacturers, we're not going to be setting the rules of commerce; they'll be dictated by the purchasers," says John DiLullo, vice president of worldwide sales at SonicWall.

Today's channel programs are too rigid and inflexible for future performance. End users are becoming savvier in their purchasing, and solution providers are the conduit for customization. Vendors will have to become more flexible in what they're willing to sell and how they're going to deliver it if they want solution providers' business, DiLullo says.

Likewise, vendor programs will have to become more flexible. The contemporary vendor channel program is structured around providing solution providers with discounted prices so they can resell with a reasonable margin. Vendor services can be boiled down to essential components: technical support, presales and postsales support, and marketing support. As solution providers evolve, they may become less dependent on vendor support mechanisms and look for better ways of delivering products and services. This will force vendors to become less rigid in the way they treat solution providers and concede better terms in discounts, rebates and MDF.

"The IT reseller channel is going to look like other channels that are direct or quasi-direct," says Gary Gillam, Xerox's vice president of channel operations.

Evolution doesn't mean that the vendor-solution provider relationship will weaken. In fact, stronger solution providers may actually increase the partnership bonds. Vendors could be freed of the expense associated with supporting solution providers' businesses, enabling the channel to function more as an extended salesforce that sells more products and delivers higher-value services. For this to happen, vendors will have to enable their partners more than they are today.

"To make that transformation will require a lot of training and knowledge transfer," says Roberts. "We'll need to create the tools to make sure solution providers can participate in the full solution."

Some solution providers are already feeling the transfer of responsibility. HP CEO Mark Hurd continues to press for greater operational efficiency to drive down the cost of sales and widen margins. Resellers say this is translating into fewer field reps and greater pressure to generate more business on their own.

"It's becoming the responsibility of the reseller to find the business, develop the proofs-of-concept and follow the deal from inception to the end," says J. Javier Uribe, president and co-founder of Mobius Partners Enterprise Solutions (VARBusiness 500 No. 435).

Vendors and solution providers agree that the channel will remain the best conduit for reaching smaller and midmarket customers. Regardless of who owns the customer relationship, vendors will continue to make products and solution providers will sell. How that relationship develops will be the subject of much discussion as VARBusiness' Channel 2.0 project evolves.