Spread the Word

It has certainly happened to MidCo, a large VAR and systems integrator in Burr Ridge, Ill.

"Every once in a while, you'll suddenly look at a vendor's price book and wonder what that new product is," says MidCo president Paul Janik. "We'll tell the vendor that it's too bad they didn't let us know because we could've sold it. Then, for the next product release, we'll get inundated with advance information."

Unfortunately, this teetering balance between too much, too soon and too little, too late is fairly common. Hoping for totally seamless communication between vendors and their VARs and distributors probably is a pipe dream, but VARBusiness' 2004 State of the Market survey shows that while glitches like these remain, communication between vendors and partners ranges from just OK to solid, and it seems to be improving, albeit slowly.

To be fair, vendors are often tinkering with a product right up until its release, and the entire industry relies on irregular, often unpredictable upgrade cycles. But VARs still would prefer to have too much information rather than too little. Our State of the Market survey bears that out. Roughly one-third of respondents said their vendors communicate too little with them, while only about 10 percent said vendors communicate too much. As vendors come to rely more heavily on the channel, and as technologies such as partner extranets develop, there's no reason to think things won't keep getting better. But, of course, all the technology in the world won't change the necessity of forming and maintaining good relationships.

Microsoft weathered a well-chronicled how-not-to example of that last year with the introduction of its Software Assurance licensing plan. The company didn't so much as announce the new initiative as dismissively drop it into the laps of its partners, creating a stream of bad publicity and mea culpas that flowed for months. In the aftermath, Rebecca LaBrunerie, Microsoft's licensing and pricing product manager, voiced an uncharacteristically contrite company line. Although she contends that the new licensing model will prove to be very channel-friendly, she admits, "We didn't communicate effectively with channel partners on Software Assurance."

Steve McHale, vice president of research for software partnering and alliances consultancy IDC, says the lack of communication in this case was particularly troubling.

"VARs are typically risk-averse with new products anyway, and the market at the time put them under a lot of pressure," he says. "When Software Assurance came out, a lot of companies weren't able to think about how it would affect them until late in the process."

How Much Time Is Enough?
As many bigger VARs know, communication is always better when a vendor sees a VAR as a particularly strategic ally.

"If you're a key partner, vendors are much more willing to come on-site and spend time with you," says Bill Hopper, vice president of professional services at AimNet, a network services provider in Norwalk, Conn.

How strategic a VAR is to a vendor often dictates the kind of advance notice it gets, as does the size of the VAR, although many of our survey respondents appear to be resigned to a less-than-optimal schedule. Even though they'd like to be told as much in advance as possible, approximately three-quarters of our State of the Market respondents claim to be satisfied with only four weeks' notice from product notification to end-user announcement. About one-quarter would prefer eight weeks or more. Predictably, smaller VARs with inherently less planning requirements than larger VARs are more comfortable with shorter lead times.

According to Janik, MidCo--which resells solutions from vendors including Adtran, HP, Mitel and Toshiba--usually starts hearing about a new product line six or eight months before its scheduled release; it receives product specs about 30 to 45 days before launch.

"That's not long enough, and we're leery about getting it right off the assembly line," he says. "We'd prefer to be able to play with it first and see what it can do."

Getting precise product specs in a timely fashion is one of the more common breakdowns in partner communications--one that can cause considerable headaches.

"A lot of times...the product gets announced, but all the relevant information comes behind it," says Elio Levy, senior vice president of marketing for Tech Data, Clearwater, Fla. "If this happens, mistakes get made because customers buy things that don't end up working with what they already have. For completely new technologies, we prefer to have more one-on-one dialogues with product managers to explain how it fits into our offerings."

Communication problems also can extend beyond products to things like testing and certification, thus making it more difficult for VARs and systems integrators to keep their technical people up to speed.

"We always have problems with getting solid information about new tests and revisions to old ones," says Dudley Lehmer, CEO of Total Seminars, a testing and certification provider in Houston. "Vendors rarely meet their own schedules, so they don't want to commit."

One of the ways VARs can get informed is by rubbing elbows more actively with their vendors.

NetNumina, for instance, is a systems integrator in Cambridge, Mass., that focuses primarily on the financial and pharmaceutical sectors, partnering with BEA, IBM, and other middleware vendors. Greg Sabatino, NetNumina's vice president of custom application development, says vendor events are an invaluable source of information about what's coming down the pike.

"We often go to developer days because we can get account-level briefings that give [us] a deeper look at what a vendor is up to," he says. "The vendors that consider us a strategic partner put us together with other middleware companies, and the account managers give us good insight into their organizations."

Sabatino says he sometimes gets general product information as much as two years in advance if it's part of a prominent launch.

"For specific products, we can usually get our hands on it three to six months before release," he says.

Again, how well a VAR can adjust to the changing flow of information usually depends on its size. According to our survey, small VARs added an average of 2.1 vendors and 3.1 product lines this year to their offerings, while large ones added 5.0 vendors and 7.0 product lines. So while larger vendors have more infrastructure to add new partners and products, they also have to deal with the increased integration headaches of the process.

That said, small VARs in our survey seem prepared to welcome those headaches: They anticipate adding, on average, 6.6 product lines in the coming year, more than even midsize VARs (4.2), suggesting that most small VARs don't intend to remain that way for long. The vendors most often mentioned as prime candidates for new product additions in the next year were Dell and Symantec for small VARs; Cisco, HP, Intel and Symantec for midsize shops; and Cisco, HP and IBM for larger ones. And, of course, VARs of all sizes plan to add more Microsoft.

Respondents to our State of the Market survey were understandably reluctant to bite the hands that feed them, even if the food sometimes arrives late, but they're happy to talk about which ones communicate well. Tech Data's Levy says IBM and HP do especially good jobs of disseminating information, a process that he says is easier for products with longer life cycles.

"The successful vendors have open, forward communication when bringing out a new technology," he says. "By giving us lead time and sharing research on things like customer segmentation, it helps us plan what to do with our inventory."

Security vendor Symantec also drew high praise from VARs for its comprehensive communication. The company's much-lauded PartnerNet portal has shown how extranet technology can enhance partnerships, and Symantec VARs say the company's commitment to them has remained steady even as it has grown into a market leader.

"We've always had representation and sales and marketing resources with Symantec," says Denise Mahaffey, director of marketing for Technology Integration Group, a systems integrator in San Diego. "Sometimes companies lose contact with certain VARs as they grow, but that's not the case at all with them."

Relationship Factor
The relationship point Mahaffey makes is key. Just as a chain is only as strong as its weakest link, communication between partners is only as strong as the specific relationship between companies' point people.

"We've found that a vendor just working with the sales channel in a general way isn't sufficient," Levy says. "Our goals are more aligned when we have direct contact with a vendor's product managers, when we're part of a check list that shows that they're thinking of us when planning new products."

Sabatino echoes this, saying there's no technological equivalent to good interpersonal interaction. "It sounds like a cliche, but it's all about what kind of relationship you build on the street; it's not our CEO meeting with their CEO," he says.

MidCo's Janik says innovations like extranets and online transactions have made VARs' lives somewhat easier, but it's still primarily about the people. "We're only as updated as the specific product manager tied to our product," he says.

One area VARs don't expect much from vendors is in lead generation. Even though the idea of vendors helping VARs find sales targets seems mutually beneficial, it simply doesn't happen. "We rely on vendors to make the public aware of their products, but you'd starve to death if you waited for them to give you leads," Janik says.

In the end, how well a vendor communicates usually says a lot about its overall fitness. "By making their plans well known, companies are indicating how firmly in place those plans are," Sabatino says. "When companies aren't so good at it, it's usually an indicator of larger problems in their organizations."