Small Partners Make Noise, Rouse Vendors
While Ionia had experience managing a small business, Ed had developed a passion for computers during his service in the U.S. Air Force, where he served as an electronics radar technician, and later worked for an office equipment dealership. It was at the dealership where Ed first developed a vision for the future of the IT VAR, one in which managed services played a key role.
But his former employer didn't share that vision, so he and Ionia decided to go it alone. Today their company, ACE, is growing 10 to 20 percent a year.
ACE is exactly the type of reseller that many IT vendors claim to want to attract to their ranks.
Vendors, however, have traditionally structured their channel programs based on VARs' revenue performance, which typically benefits larger resellers. Some vendors are beginning to break with convention and restructure their programs around performance, specialization, verticals and geographies.
While most small VARs still lament that they don't get enough financial incentives and support from vendors, some say they're starting to see positive changes in a few vendor programs.
ACE, for example, has benefited from Microsoft's partner program initiative to reward partners for focusing on specific categories it calls "competencies and specializations." Competencies include technology areas such as networking infrastructure, mobility and security. A specialization is a dedicated focus to an area such as SMBs. Partners that commit to a category and gain relevant certifications get financial rewards, such as access to leads and MDF.
ACE completed the training required to achieve certification as a Microsoft Small Business Specialist, a move that's paid off well so far. "They gave us a way to differentiate ourselves from the competition," Lohman says. "They've gained my loyalty 100 percent."
One aspect of the program resellers like is the Technical Assessment Toolkit for the Microsoft Small Business Specialist, basically software provided by Microsoft that gives the reseller a questionnaire for its customers to help it match technology to a small business' needs.
"It has enhanced our business greatly. It's a structured program that shows us what to do, but yet it's not set in stone," Lohman says.
Microsoft also gave the reseller funds to help it market its products and services. In addition, the VAR won a contest Microsoft held, in which VARs submitted their marketing plans. The grand prize? Several hours with a marketing specialist--a perk the small VAR says it could not have otherwise afforded.
On the support side, ACE now has consistent access to a partner account manager at Microsoft, Lohman says. This was a surprising benefit for the reseller, as unreliable and nonexistent access to vendor partner managers is a common complaint among smaller resellers.
"I have a guy I can call anytime, and he actually calls me once a month," Lohman says. "Once I e-mailed him with a couple of questions and got an answer in a couple of hours."
Industry analysts say that modifying partner programs in ways that reward metrics beyond just revenue performance will help vendors gain favor among partners below top-tier resellers.
"If a vendor is stuck in a world of low partner productivity, rewarding partners on revenue alone will ensure they have even less productivity tomorrow," says Ryan Morris, director of channel intelligence at the Institute for Partner Education & Development. (IPED is a part of the CMP Channel Group, which publishes VARBusiness.) "The only way to break the barriers of the status quo and get more partners to engage and sell is to do something different from what they're doing today."
IBM, too, is altering its programs to drive solution providers to specialize in a customer segment or technology category in exchange for margin enhancement or protection.
"Revenue performance is still important, but we're [putting] more program emphasis on specialization in various customer segments, technology categories and solution areas," says Rich Michos, IBM's vice president of worldwide sales for SMB solutions and services.
Michos points to IBM's PartnerWorld Value Net Connections program, a subset of its PartnerWorld framework, which drives development of SMB solutions by creating ecosystems, or "value nets," of complementary ISVs, VARs and integrators. IBM is working with distributors to develop those ecosystems and, since the first quarter of 2006, has created six new value nets with Avnet.
"Other vendors in the printer space are starting to add nonrevenue metrics, such as new customer acquisition or total solution selling," Morris says. "Perhaps most encouraging is that it's typically the smaller vendors that are more willing to break with tradition and try something new."