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Certainly the channel is critical for many IT vendors. More than 34 percent of the vendors who submitted applications said indirect revenue accounted for between 91 and 100 percent of their total sales. On the flip side, only 23 percent of the vendors said the channel accounted for 50 percent or less of their sales.
IT vendors seem to be doing an adequate job of covering the basics. Nearly all said they offer presales (99.0 percent), post-sales (96.4 percent) and technical support (98.4 percent), according to the applications. Local account/field representatives for the channel are provided by 86.5 percent of the vendors, while 82.9 percent provide dedicated account teams.
Nearly all provide marketing resources and a partner portal (96.9 percent for each), while 93.3 percent offer channel support and 86.0 percent say they provide partners with qualified leads.
But is that enough? IT vendors still seem to be struggling with channel conflict issues: Only a little more than two-thirds (67.4 percent) said they have rules of engagement for managing direct/indirect channel conflict, and slightly more than half (56.5 percent) reported having a clearly defined division between accounts for direct and indirect sales.
Some vendors are taking steps to help partners expand their service offerings. More than 84 percent of vendors said they provide services- and solution-selling training to help partners increase their services-attach revenue. That's up from 73.6 percent last year and 81 percent in 2011.
But only 52.8 percent offer incentive programs to help partners increase services-attach rates. And only about 60 percent said partners are eligible to sell the vendor's own services.
Clearly there's room for improvement. More than 20 percent of vendors said in their PPG applications that for every dollar of product sold through their channel program, the value of attached services is less than 50 cents. Another 14 percent put the services-attach rate at between 50 cents and $1. (In last year's PPG applications, 31.9 percent of vendors put the attach rate at $1 or less.) Another 14.5 percent put it between $1 and $2.
Only 8.3 percent of vendors put the attach rate at more than $10 for every $1 of product sold (up slightly from 7.4 percent last year and 4.9 percent in 2011).
The number of vendors who provide training to help partners transform their businesses to capture more services revenue was virtually unchanged, from 49.1 percent last year to 50.8 percent this year, according to the applications. The number of vendors offering training to help them deliver hosted and managed services was 54.9 percent, up from 47.2 percent last year.
The number of vendors who provide information to help channel partners break into new vertical markets was down slightly to 65.8 percent from 67.5 percent last year. But the number of vendors who assist partners with training and advice on incorporating cloud solutions into their offerings was 73.6 percent, up significantly from 64.4 percent in 2012.
While vendors are imploring their channel partners to expand into cloud computing, 89.1 percent of PPG applicants are relying on their existing partner program to support their cloud products and services. Only 8.8 percent have a separate partner program to support cloud products and services.
And despite pleas from vendors that their channel partners add innovative, new products and services to their repertoire, only 29 percent of vendors said they offer awards specifically for innovation.
UBM Tech Channel Research assembles the 5-Star Partner Program Guide using a methodology it developed for assessing information provided in vendors' PPG applications. The objective criteria includes vendor investments in program offerings, partner profitability, partner training, education and support, marketing programs and resources, sales support and communication.
The methodology enables the research team to generate a prioritized list of vendors based on scores from their responses to a series of questions in the PPG application. A proprietary weighting scheme is assigned to each section, question and response set. Vendor responses to each question included in the analysis determine a vendor's overall rank in the 5-Star scoring process. Each year the scoring threshold used to determine the 5-Star status is determined by the responses received and scores achieved by the entire PPG applicant pool.
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