Trust Is Key As Vendors Tap Into the Midmarket

VARBusiness

On hand were Paul Mountford, senior vice president of worldwide channels at Cisco; George Kafkarkou, senior vice president worldwide channel operations at Computer Associates; Mike Borman, general manager of iSeries at IBM; John Koury, vice president of channel marketing at EMC; and Steve Dallman, senior director of North American channel and distribution sales and marketing at Intel.

Trust was a hot topic as one audience member pressed panelists about how partners can trust vendors not to work through them, see profits and then take the midmarket business back.

In response, the panelists emphasized their need for solution providers, who know the market and know the customers, as well as their inability to field the staff to service the market.

"We're not going to hire more sales representatives or support personnel to cover the midmarket ourselves," IBM's Borman said. "It's not in the cards and doesn't make economic sense."

He added that IBM is continuing its shift from direct to indirect sales, with more than 60 percent of its hardware now sold through the channel. His No. 1 goal? Borman said it's getting profitability back into the channel for the iSeries; he emphasized that IBM can't be successful without its channel partners.

Meanwhile, CA's Kafkarkou said his company can't scale to sell directly to the SMB. In addition, the majority of his customers prefer to work with solution providers, and CA has made a commitment to its partners and is always working to improve its programs.

As for EMC, Koury said his main challenge now is encouraging partners to work with the company and changing the corporate culture to embrace the channel and its partners.

"It's imperative that we work through the channel, understand it and learn to do it right," he said.

According to VARBusiness research, the midmarket represents a $240 billion business opportunity, and partner profitability is key. DeMarzo asked the vendors to assess the profitability picture for their solution-provider partners. Cisco's Mountford said that while his company has profitability programs in place, there is still more work to be done. Kafkarkou agreed and said that while CA was the first to roll out software rebates, it can absolutely do better. Dallman also explained that Intel is in the process of rolling out changes to its benefits suite program that was initiated 10 years ago.

In terms of the technology, targeting the midmarket is not just about cutting down enterprise solutions, the panelists agreed. Mountford said taking features out is not the solution.

"There is a big effort this year around new products for the SMB space," he said. "We have 30 new products that we are working on and have millions going into the effort."

Kafkarkou said CA is also working on technology for the SMB market, designed "from the ground up." And EMC's Koury said his company is re-engineering for the midmarket and "preaching internally" on the possibilities.

"We can't make a lot of money off the desktop anymore," added Intel's Dallman, whose focus is more on mobility and products in that space.

Consistency around pricing and programs is also something audience members were interested in seeing from the vendors. IBM's Borman agreed that change for solution providers is a big deal. In terms of change, "think 2006," he said, and those changes won't be major, other than to increase profitability.

Mountford weighed in, saying Cisco also is working to stay consistent and that the company is using workgroups to help improve its programs, but the changes will be limited to "fine tuning."