Vendors With the Right Stuff
For the past 17 years, solution providers have been confidently turning to the VARBusiness Annual Report Card (ARC) to discover the best vendor partners in the business. Well-regarded as the comprehensive reference to the highest-rated vendors in the channel, the ARC is the
definitive benchmark of vendor/partner relationships and leading-edge technologies.
In the 2002 ARC survey, more than 4,500 technology solution providers participating in 67 vendor programs across 15 product and service categories were surveyed for approximately 20
minutes each. The result? An industry standard for what solution providers say about their vendor partners' products, channel and support programs. The ARC ranks vendors in four subcategories: product innovation, support, partnership and loyalty. While the scores on the pages that follow may not be directly comparable to last year's scores,that's due to a few enhancements to the methodology, which now contains the derived importance of loyalty along with a number of added criteria,recognizing vendor excellence and the ranking of winners are certainly comparable.
And the Winners Are...
IBM found a wealth of support among its VAR partners this year, winning the most overall categories in the ARC contest: advanced desktops and workstations, database software and midrange servers. Moreover, IBM's iSeries earned VARBusiness' Lifetime Achievement Award for topping its contenders in midrange servers for the fourth year running (see "Serve and Protect," starting on page 55, for more on iSeries).
Macromedia won big yet again this year, taking first place in two overall categories,application development and deployment tools and Web and Internet applications. NEC-Mitsubishi was singled out for improvement in the 2002 ARC survey as it strengthened its partnering and channel relations, and Avaya won a new VAR Loyalty Award for capturing the highest loyalty score of all vendors in the competition. Even Dell, the channel's newfound friend, took home more than one trophy, including a category win in entry-level servers. Other big winners this year were Cisco, HP, Veritas, Symantec, Western Digital, Xerox and Sprint (see page 60 and fold-out pages for all of the winners).
Hardware vendors captured the year's best scores, with Western Digital receiving the overall high of 81 in the disk drives category,surpassing the average ARC score by 12 points. Cisco (voice and data networking) tied with Xerox (network color printers) for this year's runner-up position, each with an overall score of 77, and NEC-Mitsubishi (display technology) placed fourth among hardware vendors with a score of 76. Among the software vendors competing, Symantec scored tops, with a 76 in the security management software category, followed closely by Macromedia (Web and Internet applications), with a score of 75 (see "Flash Point," page 38, for more on Macromedia).
Perhaps the biggest upset, however, came courtesy of Sun Microsystems, notably absent from the winner's circle this year. Last year, Sun led the pack among ARC contenders, winning two out of five overall category awards and 10 subcategory awards. This year, Sun fell to last place in four of the six categories in which it competed. Sun attributes its weakened performance to plunging scores in the support and partnership areas, including presales support, postsales support, communication, its solution- provider programs and ease of doing business.
Determining Placement
The overall ARC scores were weighted to reflect the relative importance of each criterion in the 2002 survey, with solution providers unanimously rating product quality/reliability as the most important criterion,indexing 17 percent above average. Compatibility/ease of integration and quality of technical support tied for second place, indexing 10 percent above average, respectively, followed by ease of doing business (indexing 6 percent above the norm). Of least importance this year was the e-business portal criterion (indexing 23 percent below average).
Most assume there is some latitude in an ARC win,and they're right. To illustrate the significance of the importance weighting this year, Veritas came in last place in the partnership subcategory, yet still was able to proclaim an overall victory in storage management software given its high scores in the important criteria of product quality/reliability, compatibility/ease of integration, quality of technical support and ease of doing business.
This year's ARC wins are consistently credited to victories in support; across all categories, a subcategory win in support translated to the No. 1 spot for the category. Furthermore, compatibility/ ease of integration, overall revenue/profit potential, presales support, postsales support, communication, innovation and quality of tech support are the individual criteria most likely to correlate with an ARC triumph this year.
Not surprisingly, Cisco, an overall ARC category winner for the third consecutive year in voice and data networking, has bested its competition in presales support, postsales support and communication since 2000,something other vendors should pay attention to when competing next year. Interesting as well, 11 out of the 15 category winners in this year's contest won both presales and postsales support, and nine out of 15 winners won product quality and quality of technical support.
On the other hand, a win in loyalty was the least likely subcategory to predict an overall win. For example, Avaya's top loyalty score of 87 in voice and data networking, a full 16 points ahead of the survey's average loyalty score, did not produce any other wins for the vendor in voice and data networking. Likewise, HP garnered the highest loyalty score for entry-level servers, yet tied for last place in the overall category.
Other Interesting Findings
Another aim of the ARC is to assess vendors' performance improvements, including incremental developments in innovative products and solutions, training/support and channel management. This year, three vendors showed major progress over last: Dell for entry-level servers, NEC-Mitsubishi for display technology, and HP for network storage,all moved from last place to first place in their categories. But how? Approximately one-third of the solution providers surveyed in this year's ARC (30 percent) cited product quality as the program area of greatest improvement, followed by partnering (18 percent) and communication (15 percent).
As tough times require a measurable return on investment (ROI), solution providers appear to be counting on their vendor partners to help increase their bottom lines. Accordingly, the paramount places to look for encouragement are in midrange servers, disk drives, display technology and Web and Internet applications,categories rated by solution providers as having the highest ROIs in this year's ARC.
There's no better time than now to rely on indirect channels to increase your bottom line. On average, 64 percent of the solution providers' purchases are sourced through distribution, and as good news in the coming year, a majority of solution providers surveyed (59 percent) anticipate increased business with their vendor partners.
What's more, nearly half (49 percent) of the solution providers' current annual revenue is credited to customers with small businesses (one to 99 employees), 26 percent to midsize businesses (100 to 999 employees) and 25 percent to large enterprises (1,000 or more employees).
Why not use the pages that follow to help you expand your product lines and increase your revenue with leading-edge technologies. In the end, you could find a strategic alliance that is both responsive to your business needs and will work with you to succeed.