2010 Partner Program Guide: Guiding Light

"What we're looking for is, give me as much margin as possible and give us as many sales leads as possible," said Alex Rooney, vice president atVision33, an Irvine, Calif.-based solution provider that resells SAP's BusinessOne and Business-by-Design products. He said SAP, whose PartnerEdge program has 5-Star status, does a good job providing leads. "But they can always do more. I've never been in the situation of having too many sales leads. An SAP-generated lead tends to have a better close rate than partner-generated leads."

That fits with what Novell President and CEO Ron Hovsepian is hearing from his company's channel partners."There's a desire for leads, always.That's very consistent." Among changes Novell has made to its partner program in the last year are increased rewards for bringing in new customers. "We put a very rich incentive program in place for the partner to drive a new customer to us," Hovsepian said."Well above any of the other standards you'd see out in the marketplace."

IBM has begun offering more market development funds to help channel partners develop their own leads rather than developing leads for them. Solution providers, the argument goes, know their geographic or vertical-industry niches best and are better positioned to drum up business given more resources. While that may be true in some circumstances, Vision33's Rooney notes that not many potential customers look in the phone book for a local provider when they need SAP software -- they call SAP.

Some statistics provided by vendors show that they understand the value of the channel and want to preserve it. More vendors (74.2 percent in 2010 vs. 69.5 percent in 2009) said their partner program included rules of engagement for managing channel conflict. And 62.1 percent of vendors provide a clearly defined division between accounts for direct and indirect sales (up from 53.4 percent last year).

But there have been setbacks in vendor-partner relationships, according to the Partner Program Guide questionnaires. Fewer vendors, for example, have a partner advisory council today than in 2009. And of those that do have a council, fewer played an active role in designing partner programs. Fewer vendors provided partners with assistance in finding professional talent -- perhaps new employees are easier to find in a recession. And vendors were more reluctant to brief partners about new products more than a month before launch.

Vendors continue to recruit channel partners to improve their geographic coverage. But the percentage of vendors recruiting solution providers for "certain technical skill sets" dropped significantly, both for 5-Star programs and among vendors overall. If that trend continues, resellers run the risk of being seen as just an extension of a vendor's sales force and not the value-added solution providers they are.

Requirements for joining partner programs have shifted with more emphasis on focused business planning, territory coverage and quarterly revenue commitments. Nearly three-quarters (72.5 percent) of 5-Star vendors say they evaluate partners between one and three times a year to determine which ones should be deauthorized, up from 65.8 percent last year.

Vendors seemed conflicted when it comes to the need for industry expertise among their channel partners. When asked why they were recruiting channel partners, fewer vendors this year cited "certain industry expertise." And yet, when asked about requirements for joining a partner program, more vendors with 5-Star programs (44.0 percent in 2010 vs. 35.1 percent in 2009) cited "vertical industry/market expertise," as a criteria, as did a greater number of vendors overall (44.0 percent vs. 31.3 percent).

Vendors, not surprisingly, also report less market development funding (MDF) being left on the table by their partners. This year, 41.3 percent of vendors with 5-Star partner programs and 36.3 percent of vendors overall said that no MDF goes unspent on a quarterly basis. That's up from 29.2 percent and 32.8 percent, respectively. While that still left a lot of vendors reporting unspent MDF, the amount of unspent funding declined among 5-Star vendors and vendors overall.

Vendors, generally speaking, are cutting resellers a little slack when it comes to eligibility for MDF and cooperative marketing dollars. The percentage of vendors that based MDF eligibility on such criteria as sales volume, number of certified technicians and other benchmarks decreased somewhat this year, according to the PPG questionnaires, while more eligibility decisions were "discretionary based on channel account manager approval."

But while all the channel programs and resources are nice to have, Parisella said the most important thing a vendor can do for its channel partners is don't get in the way. "I don't need them to make my job more difficult," he said.

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