The Perennial Channel Question: Why Should I Do Business With You?
Why should I do business with you is a question solution providers have been asking suppliers for many years. The reverse also has often been the case. But the times they are a changin', as Bob Dylan said. In the future, partners need to think more about what they bring to the table. I address this because as we move more toward managed services, off-premises private cloud and, ultimately, to public cloud, the criteria vendors will use to choose channel partners will change.
The vendor community traditionally has looked for partners that have a host of characteristics, including customer base that fits its target market, technical expertise, certifications, dedicated engineers, and so on. The old world largely centered around technical capabilities, and the ability to build out and deliver the technology. While those criteria remain important for the time being and, to some degree, will so for the future, it's not enough. The checklist many vendors will be using to evaluate partnerships in the coming months will include things that historically have been less of a consideration, or not a consideration at all.
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Like everything in this industry, it will take time. Being forewarned is being forearmed as they say. An example of this is that in the past, vendors were concerned about the financial health of a partner largely to the degree that it could meet its payment obligations. This hasn't been a major issue, however, because the credit in the system either comes through distribution or the partner's ability to manage receivables vs. payables or, for that matter, sells its receivables to manage cash flow.
Moving forward, however, suppliers will be looking for channel partners that have the wherewithal to invest in and build out in different ways than in the past. Historically, when a vendor announced it was in recruitment mode, it typically meant signing up any partner that had a business. Then many of those new partners wouldn't perform, and before long there was a need to purge many of them and find better ones.
The problem this created for vendors was they had to build a corresponding infrastructure to support the partners they recruited, and with nonperforming partners eating up resources, nobody won, including the performing partners. It also created animosity toward the channel inside the vendor organization by executives who questioned the investment being made for the return that was delivered. It's a self-generated problem because had the supplier done a better job of finding the right partners, the return would have been higher. Instead, bonuses were set for individuals inside of the organization to recruit a certain number of partners. The end result was not all of them were good. This practice was OK when every vendor took this approach, but it's not going to work well now when some breakout suppliers understand and look for other assets. A good example is some of the innovative recruitment changes SAP has made. As SAP's Kevin Gilroy explained in a recent CRN interview, taking a different look at this results in a higher success rate for all those involved.
Ultimately, partners need to do exactly what we've been advocating for several years now: Invest in marketing capabilities, new sales structures, and push an understanding throughout the organization that there is a new sales and delivery model.
If you do those, you not only will remain relevant but become a highly sought-after partner, and that means margin.