Vendor Execs Say They've Learned From Their Mistakes

The panelists said their biggest partner mishaps generally have involved a lack of communication and the inability of top corporate executives to grasp the real costs of direct-sales models.

Hewlett-Packard, for one, pursued a direct model and ended up losing a degree of partner loyalty and trust, according to Kevin Gilroy, vice president and general manager of North America commercial channels at HP.

"A few years ago, we launched a program for our Unix channel that was basically a disintermediation. There were people inside HP who believed we could do it better, faster and cheaper and could take some of the cost out of the system by disintermediating [distributors Arrow and Avnet," Gilroy said.

However, HP underestimated the distributors' value to solution providers, he said. "We lost the relationship with the VAR because we made the assumption that the distributor was the unnecessary middleman that didn't understand the field relationships and their ability to create what I call a 'tapestry' of partners," he said.

Yet Gilroy said he learned key lessons from the experience: "You cannot do pro forma analysis without understanding the dynamics, and your enthusiasm for direct [business needs to be matched by your capabilities to go direct."

The need to carefully consider the channel implications of a corporate policy change served as a wake-up call for other roundtable executives. For example, Microsoft's move to tie profit-and-loss accountability to its consulting services group had a ripple effect in the channel, where many partners accused Microsoft of competing directly with them in the field, according to Rosa Garcia, general manager of partner sales and marketing at Microsoft.

"We said [to Microsoft's consulting arm that we are going to make sure that every one of our practices is profitable. All you need to do is be 1 percent profitable. And we believe you are going to need some [extra head count, so you will be able to add some [staff to those practices," Garcia said. "The problem was, the economy got very very sour, and at some point [our consulting arm was competing with [partners."

Poor communication with solution providers exacerbated the problem, Garcia added.

"We changed our enterprise services strategy a bit, and we communicated in the field very poorly," she said. "The situation got out of control. But in reality, it was very bad communication and bad execution. So we changed the way we charge our consulting practice managers. We've completely changed the way we compensate them, and we have seen an evolution."