Nix Shortsightedness

HEATHER CLANCY

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Can be reached via e-mail at [email protected].

One thing that really gets me going is short-sighted sales strategies. The furor over changes that Citrix Systems made to its software license renewal policies points up one of the most controversial issues in the channel right now: the financial credit solution providers should get for software license renewals.

Since we wrote our original story about Citrix's evolving tactics, the company's top services executive, Thomas Eacobacci, came forward to emphasize that although Citrix is taking over fulfillment of renewals, the vendor isn't taking renewals direct. Rather, it will pay a 15 percent commission to partners that influence deals at 100 percent of list. The move is being made to thwart discounting, Eacobacci said. Right now, about 65 percent of Citrix's renewal business is handled by its channel, he estimates, and that will grow.

But what, exactly, is influence?

Any true IT solution provider will tell you renewal anniversaries are an ideal time for much broader strategic discussions about the types of technology in which a business should invest. It's not just about re-upping an existing contract. The conversation could mean brand-new sales for the original software provider or additional services from the solution provider. Who knows? The point is, this is not a simple transaction. And I would suggest there's a whole lot of influence going on: Not only is someone associated with that particular software vendor putting in quality face time to talk strategy, but the value that customer will attach to that solution provider—and by association, its vendors—will increase over time.

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SAS Institute, which has the benefit of hindsight, got things right last week when it included subscription renewal credits among the benefits its partners will receive, provided they maintain certain satisfaction and certification levels. Now, it's time for other software vendors to reconsider the role renewals play in long-term client relationships and whether the short-term sales boost they'll receive from taking renewals direct is worth the possibility that a partner could just as easily use that renewal anniversary to switch the account to a competitive vendor.

What's new with your renewal business? HEATHER CLANCY, Editor at CRN, appreciates your feedback at [email protected].