ISVs And Manufacturers: United We Sell

A simple connection is what it ultimately came down to for one independent software vendor trying to land a contract. Hoffman Estates, Ill.-based ISV Syclo was working hard to sell a mobility solution to the National Labs but needed some help to seal the deal.

Enter its hardware manufacturer, Symbol Technologies, and the finesse of the company's PartnerSelect program, which unites VARs with ISVs to better serve niche customers. Symbol came through with a solid recommendation--Annapolis, Md.-based SCLogic, which offers bar code and wireless-system integration.

Through the connection, SCLogic provided Syclo with the appropriate hardware configurations for the project and the customer, National Labs, with consulting services that led to a fast, cost-effective procurement. The deal was done--all within the planned rollout schedule.

This is just one success story driving a trend in vendors' channel programs. Unite ISV partners with VAR partners to help target vertical markets--most notably government and health care.

The theory is that specific markets require specific solutions, and that VARs can better accommodate those requirements by teaming up with software providers that offer customized applications.

"[Alliances] allow each company to focus on its strengths, particularly if they know they have a noncompeting trusted partner on call to back them up when the need arises for software or hardware," says Michael Saldi, president of SCLogic.

In a properly conceived ISV program, the vendor gets hardware designed into the ISV's offering, the ISV gets access to the vendor's customers, sales force and service providers, and the VAR gets introduced to new clients who may already be sold on the ISV's software.

"It's a great three-way go-to-market strategy," Saldi says, "but the details of the program matter, and the chemistry between parties needs to be right. There's a lot of genuine trust required to make it work."

Making the Connection

Symbol's PartnerSelect program is one of the most noteworthy initiatives that seek to unite VARs with ISVs. The mobile technology manufacturer opened up the program to include ISVs in April 2005, and already boasts 146 members.

This year, Symbol is more heavily emphasizing driving partnerships that accommodate named verticals, including government and health care. For example, the manufacturer is taking ISVs around the country to showcase the vertical solution sets they offer to reseller partners. In government, it may be a mobile Web application that enables combat personnel in the field to securely access a department network; for health care, it might be a mobile-database application that synchronizes with a hospital's electronic records system in real-time.

"What we find in the public sector, in particular, is that requirements often incorporate both the horizontal and the vertical," says Jan Burton, vice president of worldwide channels at Symbol. "There are the solutions that target, for example, the police force and first-responders at the state and local levels; but there are also solutions that enable asset-tracking for a federal-defense agency. That translates to big opportunities for all kinds of partners in so many different areas."

While some vendors require a degree of hardware exclusivity by VARs that take advantage of the ISV programs, Symbol does not. Instead, the manufacturer provides added resources through the program to ease the process of integration and naturally drive partner loyalty. Symbol's Solutions Validation Program, for example, enables ISV partners to co-validate their applications and solutions on Symbol hardware at the company's testing lab in Holtsville, N.Y., and the SymbolPlus Partner Program validates third-party peripherals devices to ensure they operate out of the box.

"Symbol creates a preference by making the necessary technical expertise available, so a company like ours can ensure not only that our software is compatible with the Symbol products, but also that we can take advantage of unique hardware capabilities," says Jeff Kleban, executive vice president of alliances and partnerships at Syclo, which counts the Department of Defense, Federal Aviation Administration (FAA) and Delaware Department of Transportation among its users.

"Symbol doesn't dictate that we sell their products," Kleban says, "but they put every mechanism in place to make Symbol the hardware piece of a best total solution."

While a number of vendors seek to unite partners, hardware manufacturers and distributors are now taking the strategy one step further, pulling ISVs under their partner umbrellas with the specific goal of being able to better accommodate certain markets.

"We're finding more and more partners in this ecosystem--which is so large in Public Sector--that need to learn how to partner among themselves," says Alex Gogh, vice president of marketing for IBM Public Sector. IBM announced its Public Sector Edge initiative in August 2005, which brings ISVs, integrators and solution providers together with government-focused resources and events. So far, 1,000 partners participate. "It's not just about getting IBM to partner with them; it's about an ISV working with a regional systems integrator, working with a VAR. Every salesman has a sense of urgency, and any tool or capability that can facilitate finding the right person at the right time is nirvana," Gogh says.

Similarly, Avnet Partner Solutions introduced a new program in December that matches ISVs with HP VARs at the beginning of the sales cycle according to geography and target market--one of those markets being health care.

"Right now, we've chosen a slice where we can get some substantial return on our investment in the fastest time frame possible," says Jim Custer, ISV business manager of the HP business unit of Avnet Partner Solutions. "We're looking at where HP has strengths and where our VAR community has strengths, and complementing them with specific software that offers a differentiation. As you look at the traditional set of hardware infrastructure resellers, they have kind of a horizontal value proposition to the customer community. Mostly, it's limited to the middleware stack and not necessarily the business application."

At the same time, ISVs that may have a hard time getting their applications into certain markets can tap into VARs' installed bases. HP resellers that participate in the Avnet program are, therefore, expected to bring some market presence to the table.

Avoiding Conflict

But even with all the happy connections being made, there is still room for conflict. Regardless of whether or not firm exclusivity requirements exist, it's always in a VAR's best interest to not bite the hand that feeds it. Even Symbol might take exception to a VAR that used the vendor's ISV program to land an opportunity, only to sell another vendor's products into the end solution. In Avnet's case, such actions can get an HP VAR bumped from the program, Custer says.

But as is true in any public-sector program, absolute vendor loyalty can be challenging, if not impossible. For one thing, federal agencies and health-care institutions face budget constraints and legacy systems that can result in multiple manufacturers that VARs need to juggle.

"When you deal with an agency, you have to work with the technology already in place," says Luigi Valentini, director of federal business development at Digicon. The Rockville, Md.-based systems integrator's clients include the Department of Defense and most civil agencies, as well as a number of state and local governments. Recently, Digicon leveraged Sylco's software to outfit 7,000 FAA field service technicians with mobile solutions for maintaining the North Atlantic air infrastructure. "It becomes a process of mitigating costs while also providing a solution. In some ways, there is still a partnership with the vendors already there as well as the new vendors whose technology is being introduced to expand the solution," Valentini adds.

Also making vendor loyalty a challenge is the federal government's requirement that procurements go up for bid and be determined by "best value"--or a balance of price and project objectives. In those situations, Saldi says VARs should be willing to bow out if necessary. "You have to stay loyal and walk away or find a middle ground in everyone's best interest. Otherwise, you might win the deal but risk killing a potentially lucrative partnership."

Of course, even if VARs can manage loyalty to vendors, inevitable conflict still exists within the channel. Symbol avoids overlap in its partner program by allowing only ISVs that don't sell hardware to participate, and Avnet tries to mitigate conflict that comes from marrying two channels together by targeting ISVs that traditionally sell through a direct or hybrid direct/channel model.

"If the ISV has an established relationship with another VAR that it chooses to go with, there's not much we can do," Custer says. "But we might want to pick another ISV in that area to join the program. Exclusivity is a strong word, but Avnet will definitely work to make ISVs understand the opportunities our partners bring to the table."

Even with such safeguards, partnerships can still go sour. "It usually ends when the ISV 'goes hardware,' or the customer raises the smallest of objections and an inexperienced salesperson jumps in and cuts everyone out in fear of losing the deal," Saldi says. "ISV relationships require mature and secure management that can withstand a few objections and curves thrown by the customers, and get the deal closed using the best partners available."

IBM's Gogh adds, "The partner [will] go through a little bit of an analysis to figure out who's the best match. For the public sector, where everyone is entitled to bid, that analysis becomes all the more important."

Market Matters

Regardless of how superior the program, another factor directly impacts how valuable teaming with ISVs really is for a reseller: the technology. Contributing to Symbol's success with PartnerSelect, for example, is the fact that mobile software and hardware are very dependent upon one another. They benefit, therefore, from a program that seeks to unite them.

"Mobile solutions require a stream of partnering--from the hardware manufacturer that provides the device, to a software vendor that provides the intelligent front end, to an application developer that provides the custom solution, to a company that can implement it all together," says Murray Bergin, vice president of strategic alliances at Bothell, Wash.-based Dexterra. The ISV provides a mobility interface that enables field personnel to access enterprise data systems and works with integrators such as Electronic Data Systems (EDS) and Unisys. "It's a natural environment for a myriad of relationships, particularly in government where there are so many specific requirements and an increasing demand for mobile solutions. That's caused people to ask up and down the chain, 'How can you help?'"

Obviously, a device that's appropriate for stock-room management would be completely inappropriate for servicing a radar site for the FAA. In that sense, applications are very sensitive to the hardware they run on. At the same time, mobile devices have specialized functionality determined by the software solution installed. Given those factors, mobility applications or devices alone become a far more difficult sell.

"There are great opportunities for groups of partners that together have expertise in the hardware, the software, the government market, and how technologies can be applied to solve a problem," Kleban says. "VARs recognize that while they can deliver the mobile hardware, it's a big heavy paperweight if there's no application running on it."

In contrast to mobile technology, there's often little synergy between an application and the PC, laptop or server it runs on, making required integration by the VAR minimal to nil. Because enterprise applications often run equally well on IBM, Dell, HP, or any other traditional hardware, VARs may not see as many tangible benefits to a program that unites them with the ISV.

And specific to the public sector, the nature of how government buys could further dissuade VARs from engaging with ISVs for enterprise applications. "If you're a marketing consultant trying to sell services, you'd get a lot of mileage out of this kind of strategy," says Robert Deitz, president and CEO of Shingle Springs, Calif.-based Government Technology Solutions. "But if you're a guy on the street trying to call on the Department of Justice or the Army with some customized solution, you'd be blown out of the water."

Federal agencies demand commercial off-the-shelf [COTS] solutions that they can easily buy, modify and run, although Deitz argues that's not typically the forte of an ISV.

"ISVs offer customized or specialized programs, some involving a third party handling data, which is directly contrary to every government initiative of the last five years," he says. "This ISV push is just an attempt by vendors to put a Band-Aid on the cut they inflicted on themselves. No one wants to do business with them because they created so much channel conflict over the years, but the fix they came up with makes no sense in this market."

Others argue, however, that plenty of ISVs do indeed provide shrink-wrapped solutions that accommodate government's requirements, and that VARs need only be selective when deciding which to partner with--opting for those that offer the less specialized applications with more expansive, customizable functionality. The vendor programs ease that process by providing quick access to a segmented catalog of alternatives, while at the same time, the vendors act as trusted advisers.

Regardless of whether a VAR does indeed decide to leverage ISV partnerships in its drive into public-sector markets, successful vendor initiatives that encourage them to do so will recognize two things: one, that much of the purchasing decisions in the public sector are beyond any partner's control, and two, that partners will be influenced first by the customer's needs.

"Really, it comes down to serving government customers better by giving them what they ask for faster and more efficiently," Kleban says. "And to do that, it's critical that all different kinds of companies work together. It's just the reality of doing business; you can't do it alone anymore."