Vendors had no problem acing product innovation in the ARC survey, but their scores in partnership and support were a little disappointing
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Solution providers seem fairly pleased with their vendor partners' overall product quality and reliability, but not much beyond that. In the 2007 VARBusiness Annual Report Card survey, registered partners generally gave their vendors the best scores in the area of product innovation, which includes product quality and reliability, as well as technical innovation, and richness of product features and functionality.
But when it came to partnership and support issues, VARs were more stingy with their ratings. The average satisfaction score partners gave for product quality and reliability was 74 out of a possible 100. That was the highest average criterion score. But, among the 17 remaining criteria, which measure partner satisfaction against qualities important to the channel, 10 of the average satisfaction scores were 65 or lower. These scores are well below the minimum of 75 that VARBusiness and its research partners consider the floor for "satisfaction."
The annual study, now in its 22nd year, asks thousands of registered partners to rate their satisfaction with vendors in one or more of 15 different technology categories to reveal how these vendors are performing in three main areas: product innovation, support and partnership. Some vendors are represented in multiple technology categories, and there were 76 vendor/technology combinations to evaluate. In all, 3,844 people completed 5,638 report cards. For more information about the methodology, go to varbusiness.com/extra.
Support And Partnership Score Low
In the area of product innovation, the average vendor scores in four of the six criteria were 70 or more points on our 100-point scale: quality and reliability (74), richness of product features/functionality (71), compatibility/ease of integration (71) and technical innovation (70).
The other two product innovation criteria are marketability, which averaged a 67, and services opportunity, which averaged only 64.
These criteria are all rolled up into an overall product innovation score by weighing them with the importance that partners assigned to them. Across all vendors and technology categories, the average score for production innovation was 69. For more on how individual vendors did, see "Innovation Above All," page 30, and the ARC score chart at www.varbusiness.com/extra.
On an encouraging note, in most of the criteria with low average scores this year, the scores were higher than in the past few years. (Scores from before 2005 were not compared.) Vendors seem to be doing better, for instance, in market support. Two years ago, the average score was 59, last year it was 60, and this year it rose to 63. It's still not a great score, but at least it's headed in the right direction.
Communication with partners rose from a 61 in 2005 to a 63 last year and 64 this year. Each of the following other criteria rose two points over the past two years: sales support (65, previously called "presales support"), maintenance support (66, previously "postsales support"), revenue and profit potential (65) and ease of doing business (66).
However, quality of field management has apparently decreased overall. In 2005, ARC participants gave an average of 67 points to vendors in what was then called "quality of technical support." The score rose to 68 last year. This year, it fell 5 points, to a mere 63.
Why Most Vendors Fall Short
If vendors are getting products mostly right, why are partners generally disappointed? Partly to blame are Byzantine partner programs that make partners jump through hoops, devouring time and other precious resources.
For example, IBM System i is at parity with Intel for the highest individual criterion score in the entire 2007 ARC. This vendor division received an 87 for product quality and reliability. But System i came in fourth out of five vendors in the Mainstream Business Servers category, taking a big hit for ease of doing business--with a score of 60.
"I think it's the best computer you can buy to run a business," said 19-year System i veteran Perry Mills, president of iTEC400 Inc. in Orange, Calif. "And their support structure, telephone and field support for this product is second to none."
"The IBM System i servers are so reliable that our service revenue suffers as a result," added Mike Ritsema, president of i3 Business Solutions LLC in Grand Rapids, Mich.
I3 has been selling System i since the business opened its doors in 1992. Ritsema said the reason for IBM's fourth-place score for partnership among server vendors might be due to the way IBM manages its channel. As Ritsema described it, if you as a partner are competing with others for a customer opportunity, you may have to submit documentation to IBM showing how much you've been working with a customer in order to be awarded margin. While Ritsema expressed a positive opinion about this policy, he did imply the documentation requirements can be onerous. "You could hire a professional team to help you get it right," he said. "This process, although clearly defined, is decided by an IBM team, in a far-off land, allowed no human intervention, and ending in what would appear to be subjective outcomes--upon occasion."
In the satisfaction study, many vendors' ratings suffered in the areas of training, partner portals and management of channel conflict.
Some VARs said that the generally low scores across the board stem mainly from the channel conflict problem. Brian Deeley, a principal in Timonium, Md.-based Graymar Business Solutions, said he thinks this problem has recently become worse than before.
"One of the targets that is getting a lot of attention in the past 18 months is the SMB market. Everybody's saying that's where growth is going to be. That's changing the dynamics of the channel," Deeley suggested. "VARs ... have really been the owners of that market. We have the customer relationships. We're in the doors of those businesses on a daily or weekly basis. The vendors are seeing growth in that area, so now they want to attack that market segment."
Deeley added that many resellers perceive that as an infringement on their territory. "Part of it is fear of the unknown," Deeley said, but "part of it is what vendors have done in the past."
Far and away, Intel led the field in this year's ARC survey. The Santa Clara, Calif.-based chip maker received the top weighted scores in the 2007 ARC for product innovation, support and partnership.
Randy Jorgensen, president of RJNetworks, a Salt Lake City-based VAR and Intel partner for eight years, said the vendor's attention to even small VARs like his goes a long way in the channel. "I'm a small, two-man shop," Jorgensen said, "yet I've got a dedicated sales rep at Intel that I can get on the phone with at the drop of a hat, or e-mail and get a response back amazingly quickly addressing very specific questions, issues or problems."
Jorgensen said when it comes to channel conflict, Intel distinguishes itself from the rest of the major vendor pack. "Here's the difference," he said, "Intel does not have in any way, shape or form a direct sales force. HP does. Microsoft doesn't, but they've got their great big guys that are out there; the CDWs and so on. [Whereas] Intel knows that, going through me, they probably get a better profit margin just because the Dells and the HPs of the world make such cutthroat deals with Intel. Intel has everything to lose by not helping me--whereas Microsoft, HP and others don't care."
Caveat VenditorThe level of disaffection apparent in the ARC scores is dangerous in this age of waning loyalty. The Institute for Partner Education & Development (IPED) recently completed market research showing not only that loyalty is disappearing in the channel, but also that it's the fastest-growing VARs that have the highest propensity to be vendor-agnostic. IPED is a division of CMP Channel, which is also the parent of VARBusiness.
"If a vendor really lets you down, I think there are enough choices out there that you can build a relationship with somebody else. And everybody's hungry for the business," Deeley said.
For example, Deeley vowed never again to work with D-Link after what he described as D-Link failing to hold up its end while working customer deals. D-Link took last place of 10 vendors in the Network Infrastructure category and tied for last in Wireless Infrastructure, but came in second out of six in Voice Networking Hardware.
In Deeley's view, while most resellers do focus on one vendor per technology, they also tend to diversify a little bit. Doing so, he agreed, better positions a solution provider to quickly change their main vendor if they need to.
Still, VARs seem willing to forgive a lot if they feel the product is superior. As Jorgensen said, "In my opinion, HP still does make the best printers, so even though they have horrid support from my perspective, I still go back to them." HP came in fourth out of six in the Workgroup Color Printers category with an overall score of 69, but had the second-highest score in product innovation, behind Xerox's 77, with a 75.
Spots Of Excellence
Despite the general tenor of the channel, partners are also extremely happy with other vendors besides Intel, albeit in limited ways. While Intel comes out on top in 12 of the 18 ARC criteria, it does share the spotlight a bit.
Several companies tied with Intel for top score in communication: Xerox (Workgroup Color Printers), Sophos (Security Software) and Adtran (Network Infrastructure). IBM System i (Mainstream Business Servers) tied Intel in quality and reliability, and in maintenance support. (Note: It wasn't until after the ARC was conducted that IBM announced the restructuring of its System i division, which placed some of the System i series under the same group with System p servers.)
Also, in six of the criteria, other vendors took the highest score. The best score for product compatibility and ease of integration went to HP Proliant (Mainstream Business Servers). The top scorer for services opportunity was Sage (Business Software/Strategic). The best training score went to EMC (Storage Management Software). Xerox took honors for best partner portal (Workgroup Color Printers). AMD (Client or Server Processors) had the high score in revenue and profit potential. AMD also won out for best return on investment, tied with EMC (Storage Management Software). Except for return on investment, with a high score of 73, all other high scores were at least 75, inside the range that indicates partners are satisfied. n