Who Knows Your Customers?

Hungry For Information
Of course, channel conflict is not a new issue. For years, solution providers have swapped horror stories of losing customers after sharing information with a third party. What's changed now is the fact that vendors have become more comfortable with their own CRM, PRM and other supply chain systems that track product sales. The functionality of those systems has led manufacturers to develop an insatiable appetite for customer information. And therein lies the problem, say some solution provider and distribution executives.

The executives feel manufacturers now are more likely to misuse the new information than in the past. It took years for distributors to earn the trust of solution providers regarding end-user information. But now more than 70 percent of shipments from distributors are delivered straight to end users, according to the Global Technology Distribution Council.

Sharing customer data also has become a more pressing issue because of the increased interest by larger vendors in targeting small- and midsize-business customers. And the Internet has made instant software subscription renewals and updates via a customer credit card a reality.

Share And Share Alike?
Tracy Butler, president of Acropolis Technology Group, a St. Louis solution provider, said he has no problem sharing customer names with longtime vendor partners like Cisco and Microsoft, Redmond, Wash., so he can obtain higher margins via deal registration and rebates. But sharing the information with other vendors scares him. He notes Citrix Systems' move last July to contact customers directly for license renewals as an example.

"We only share customer information with strategic tier-one vendors that can be trusted with that information," said Butler.

Last summer, Citrix told partners it was implementing an online license-renewal system and would handle all revenue from the transactions and that VARs would receive an influencer fee. Citrix said the policy levels the playing field for loyal partners who saw their renewal business poached by other partners.

But many felt it was just another example of a vendor finding a subtle way to appear channel-friendly without actually being so. They point to the marketing materials sent to end users, which referred to "your Citrix Authorized Solution Advisor" and nowhere provided a specific VAR's contact information. Citrix, Fort Lauderdale, Fla., declined to comment for this story.

Butler said direct subscription software licensing has become de facto for solution providers, and he has adjusted his business accordingly.

"You have to add value in the process or you're not going to be needed," he said. "So you need to figure out a way to add value or get out of the way. That is the way a capitalist system works. There are always going to be things that are commoditized. Our job is to find where Acropolis can add value."

Ross Brown, a former Citrix channel chief who is now a principal at Peak Consulting, said in an e-mail exchange with CRN that software is different than hardware, given that the license agreement is between the end user and the vendor. "Generally, software vendors feel that they have right to renew and expand the relationship with the customer and they are right—the vast majority of partner sales are project-driven and the economics of a license sale for expansion is a lot lower than the initial sale, so often it's a different partner or the vendor doing the renewal and expansion," said Brown.

Butler said the issue would be diminished if vendors laid out a clearer road map about their plans. "That is the thing I love about Microsoft," he said. "They telegraph to us at partner events well in advance, so we know where they are going and we have time to adjust our business model. That garners a lot of respect from us. It is vendors that don't telegraph well in advance that I have issues with."

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