The Loyalty Tug of War

Ever-changing relationships are pushing and pulling solution providers within the channel. There are all kinds of channel players throwing fastballs, curve balls and, yes, there are even some screwballs. Customers are pulling solution providers in one direction, vendors pushing in another and distributors trying to steer in yet another. The challenge for you, the solution provider, is to maintain focus and keep your eye on the mark, which in today's market is a moving target.

Channel issues typically arise because everyone is looking out for their own interests. And they should. There have been loud squawks from both vendors and solution providers at different times about the dynamics of these channel relationships.

As someone who has been involved with the channel for more than 20 years, I have watched this channel evolution with great interest.

One of the current channel storms is centered on vendor loyalty and exclusivity. The push for vendor loyalty is nothing new; it has been around since the inception of the channel. Historically, there have been too many vendor-loyalty strategies to count. They have ranged from crude and forceful "I-don't-need-you, you-need-me" strategies to more positive incentive-based programs.

I think the current loyalty push is partially driven by a new level of maturity in the technology market. End users have become increasingly dependent on technology to meet their business goals--and they know it. As a result, they have become much more savvy and business-driven in their technology decisions. End users are looking for trusted advisers, and the opportunity for VARs to fulfill that role is the biggest I have ever seen it.

"We are forming advisory councils with our customers," says John Varel, CEO of FusionStorm, a San Francisco-based solution provider. "Being at this higher level within the customer's IT infrastructure, price point is not the concern. Customers are asking questions like, 'Is this the right road map for us to take for the next three years?'"

In light of that, everyone in the channel is a bit nervous. Solution providers are driving hard to get in earlier in end users' IT decision processes and higher up on the decision chain, fearing the door will close on them as the process progresses. Vendors know this and think if solution providers don't help get their technology embedded in end users' IT strategies now, it will become increasingly harder to get a foothold, and they will lose out in the future.

The Vendor Loyalty Issue

From the solution-provider viewpoint, the degree of vendor loyalty is a subjective call. Many solution providers say vendor exclusivity would kill their competitive value-add and remove their ability to differentiate themselves to customers.

"We're trying to do what's best for the customer in the customer's eye," says Tom Halberda, senior vice president of sales and marketing at Global Data Systems in Lafayette, La. "It's incumbent on the VAR to differentiate its value-add to the customer, and that should not be through a channel program. Our Solutions Development Group evaluates solutions and products, picks the best-of-breed and drives them through our organization...so we have our best foot forward when we go in front of the customer."

Don Richie, CEO of Sequel Data Systems, Austin, Texas, has a different approach. "We're exclusive to HP, and that was done by design," Richie says. "When I go into a customer, I wear my exclusivity to HP as a badge of honor."

Although Richie is every vendor's dream, the reality is that vendors deal with many VARs that share Halberda's business strategy and go to market with multivendor solutions. Most vendors accept that and have developed channel programs that incent loyalty while also leaving room for the multivendor approach.

"VARs are basically in the business of satisfying their customers," says Frank Vitagliano, vice president of worldwide distribution channels at IBM. "If the VAR determines an IBM point product is the best-of-breed, he will choose to integrate it into the customer's solution."

Surinder Brar, senior director of worldwide channels strategy and programs at Cisco Systems, believes the IT industry is large enough for multivendor solutions, and takes a positive approach about sharing the pie.

"The market and technology is always changing," Brar says, "and you need new partners to penetrate new markets and deliver new solutions."

Quite frankly, I think vendor alignment, exclusive or not, is becoming less and less important to the end user. The bottom line is that if the degree of vendor loyalty you adhere to is successful for you, then stick with it.

Quality And Partnership Focus

A solution provider's main focus must be primarily on delivering high-quality solutions on a consistent basis and building strategic relationships with its customers. To consistently deliver quality solutions today, you have to be careful relative to developing technical competency. New technologies, combined with the complexity of today's business-driven IT solutions, require a lot of technical know-how. Developing the competency to consistently deliver high-quality solutions is expensive and time-consuming. If you're spread too thin, quality can suffer.

"There's a cost issue," says John Thompson, vice president and general manager of Hewlett-Packard's Solution Partner Organization. "To become an expert on multiple lines is a lot more expensive."

Am I suggesting a move toward single-vendor exclusivity? No. Different degrees of vendor loyalty can work, depending on your business model. There are many successful solution providers across the spectrum. And as I mentioned, your philosophy on vendor loyalty is becoming secondary to customer loyalty.

In today's market, much is at stake for end users. They will surely gravitate toward solution providers they can trust, those that understand their businesses and can help them better utilize information technology to meet their goals. They want trusted advisers that understand and help them execute their business plans. If you can build such a relationship with a customer and consistently deliver the goods, you'll be the winner. You'll shut out and shut down your competitors. Plus, the customer won't care much about your choice of vendors because they trust you will deliver exactly what they need.

For solution providers, the ultimate focus is not about the vendors; it's about your relationship with your customers. Don't get distracted by channel conditions and vendor issues. If you can strategically partner, you will enjoy the ultimate success opportunity in today's market.

Jeff Baker is president of Development Resources, a channel consulting company headquartered in Sedona, Ariz.