Clear Policies Help Ease Channel Conflict

Check Point Software Technologies has forged strong partnerships with solution providers by committing to sell its products exclusively through the channel,although large customers sometimes ask to buy directly from the security software vendor, said President Jerry Ungerman.

"I just don't think there is any benefit,even though there is a tremendous request,to alter our philosophy. The channel is too important, and it is the key to our success," Ungerman said. "We started out as 100 percent indirect, and we have not varied from that."

Occasionally, customers ask to cut out the solution provider so they can get a better price, said Allyson Seelinger, vice president of channel marketing and sales at Symantec. "We don't play that game at all. That is not going to happen," she said.

Software sales representatives at IBM must get approval before selling directly to a customer, according to Mark Hanny, vice president of worldwide SMB and partner marketing at IBM Software Group.

"We have a process in place that the direct software rep can't take an order direct until Mike Colleary [vice president of software channel sales at IBM is in the middle of it, his reps talk to the customer and they work with the local partner," Hanny said. IBM also identifies solution provider skill sets by region so the company's sales reps have a road map for selecting channel partners to work with, he added.

Microsoft urges its sales and consulting staff to work with solution provider partners, which get a commission on each product or license sale, said Rosa Garcia, general manager of partner sales and marketing at Microsoft.

"We make sure that [our staff understand that there is never going to be a deal involving software unless you have a partner involved," Garcia said, adding that Microsoft's 4,000-employee services organization isn't chartered as a for-profit unit.

Cisco Systems has enlarged its direct-sales force at the same time it has expanded its channel business from 35 percent of total sales to 90 percent, said Tushar Kothari, vice president of channels at the networking hardware vendor.

"We always have a direct account manager trying to set the brand preference and define the architecture, and partners are always there to provide integration services," Kothari said.

Cisco's direct-sales reps only get credit for bookings in which products are sold to customers through solution providers, according to Kothari. "That's a key point because it prevents bad behavior," he said.

Sun Microsystems limits channel conflict by ensuring that every company sales rep "compensated on a revenue component is compensated on indirect as well direct [sales," said Gary Grimes, vice president of sales operations and partner management at Sun.

Sun's professional services arm will do consulting work on infrastructure only, not on applications such as ERP, Grimes added. "What we will do ourselves are systems architecture and network architecture. We are not going to go much above that level," he said.

To ease channel conflict, one key is to ensure that policy decisions are made with "real due diligence" in terms of the effect on partners, said Kevin Gilroy, vice president and general manager of North America commercial channels at Hewlett-Packard. Vendors must take time to pilot programs and assess their own capabilities to avoid business decisions that could alienate partners, he said.

Like IBM, Compaq Computer also is mapping out its partners' areas of expertise and comparing them with its own services capabilities to help squelch channel conflict, said Dan Vertrees, vice president of North America partner sales and marketing at Compaq. "It might not be a core competency that Compaq has today, so we're looking for pipelines of solution providers to map those [capabilities in," Vertrees said.