Software Developers Leave Money on the Table With IT Services Channel Programs
The research reveals nearly all software-development firms are using channels. However, many of them are using channel partners for less than 10 percent of the services they sell or deliver. In fact, channels continue to be an afterthought, resulting in a significant amount of both revenue and profits being left on the table.
Software developers often prefer to allow IT service-channel partners to design and deliver their own unique service offerings in support of the particular software platform, thus creating a unique value and service brand in the market. In these cases, the software developer may have little to offer in the way of services that can be sold and/or delivered by the channel.
In many cases, software developers do not share a vision of services and support that coherently includes their channel partners; they seldom appear to distinguish between the organizations recruited for their software product channel and those recruited for their software services and support sales channel. For the most part, software developers treat software services and support sales that come through partners as a bonus, rather than as integral part of an overall strategy.
The Keys To Success
If solution providers want to better sell themselves to software developers, they should understand the potential positive impact for service-channel programs is twofold. First is increased opportunity for service penetration into new markets (i.e., the SMB market). Second is increased services customization by channel partners with continued ability to identify, target and resolve customer pain points.
Software developers claim that the keys to success and differentiation with service-channel programs are execution and compatible cultures.
Choosing Partners
The most prevalent criteria used by software developers in their selection of service sales channel partners are geographic presence and vertical-market experience. For service-delivery channel partners, the most prevalent selection criteria used for these programs are the partner's scope of services capabilities and its ability to deliver services with a high degree of customer satisfaction.
Software publishers are apt to turn to companies with expertise in selling solutions when recruiting partners into a channel for the sale of service and support,primarily VARs, and consulting and systems integration firms. Those firms are also the partners most often chosen to deliver services. The service organizations of hardware OEMs are also a prevalent sales channel, but are used much less frequently as a service-delivery channel.
Training And Certification
The four most commonly cited training and certification requirements for sales channel partners are classroom training, Web-based training, the number of certified employees, and the ability to demonstrate their partners' sales capabilities. Program-entry requirements for service-delivery partners are even more sharply tilted toward obtaining and demonstrating technical proficiency. Classroom training is the most commonly cited element, followed by a tie between Web-based training and number of certified employees.
What To Do Next
Based on the growth forecasted in the IT services market, coupled with the emergence of IT services aggregation and value chains, Gartner Dataquest suggests that software developers revise and refocus on their service-channel strategies if they expect to experience healthy growth in services. These objectives can be accelerated by increased focus on such channel issues as profit, differentiation, enhanced usage of metrics and measurement, dedication to training and certification programs (including selling skills training), and, finally, implementation of relationship- management tools.
Michael Haines is a principal analyst at Gartner Dataquest's IT Services Business Strategies Group, Omaha, Neb. Contact him at [email protected].