Partners Wary As Business Objects Expands Services Business

business intelligence

Some solution providers said they welcome the opportunities to partner with Business Objects on projects, yet others complain that the software company is encroaching on their turf.

"We want to form a more trusted-adviser relationship with our clients, and as we expand our relationships with our clients, we're looking to expand the duration of our projects," said Clement Kichuk, Business Objects' director of global services marketing.

Business Objects, with headquarters in Paris and San Jose, Calif., has increased its Global Services staff to about 700 employees, up from 658 at the end of last year. Professional services sales totaled $48 million in the company's most recent quarter, a 30 percent year-over-year gain.

Several solution providers said Business Objects is sending the message that it's staking out the enterprise market as its own for direct engagement and wants channel partners to concentrate on the small- and midsize-business space.

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"It makes sense strategically for them. You want to push your partners into the lower-margin, higher-overhead areas," said Bill Dunn, CEO of Dunn Solutions Group, a Business Objects Gold partner in Skokie, Ill. "We've been expanding into SMB, but we also do quite a bit of enterprise work. And we're not going to stop doing that."

Dunn said that overall he's happy with his relationship with Business Objects and his business around the vendor's products has been strong lately. Still, he added, Business Objects could do more to embrace partner participation in enterprise accounts.

Another Business Objects Gold partner had a darker view of the vendor's growing services push. At a meeting last month between Business Objects and its top partners, "the No. 1 issue was the amount of margin partners are getting on enterprise accounts, and right behind it was the services issue," said the partner, who requested anonymity.

Business Objects' Global Services overhaul is part of broader organizational changes. The company appointed a new CEO, John Schwarz, in November and named a new Global Services head, Mark Doll, in January.

Doll, formerly a partner at Ernst and Young, is spearheading a revamp aimed at standardizing Global Services' worldwide offerings and systematizing the business. A new "Business Intelligence Solution Accelerator" methodology defines practices for project management and deliverables, and a new Six Sigma framework is being used to measure services quality.

"We're trying to operationalize this target of being a really good vendor to work with," Kichuk said. Five practice areas -- education, product, platform, data and decision services -- guide how the company structures its services engagements. Golden Consulting Group President Ken Dixon said his company, based in Bloomfield, Conn., is picking up subcontracting work and better leads from Business Objects as the vendor expands its services business.

"From where we sit, it's actually a good thing," Dixon said. "They're looking for partners to have more focus on the small-to-midsize companies, and our company is very well-suited to target those customers."

Business Objects' services push comes in the wake of margin revisions that annoyed some partners. Earlier this year, the vendor revised its commission terms and trimmed margin to 5 percent on enterprise deals with customers that have more than $1 billion in annual revenue, according to channel sources.

"Everyone agrees that Business Objects' partners are not commissioned enough for selling its products," said one partner who has worked with the company for more than a decade.

Business Objects spokesman Peter Olson acknowledged that the company adjusted its partner compensation structure but declined to give details. Overall, the company is paying more in partner compensation this year than last, he said, but he didn't dispute the claim that Business Objects has cut margins on enterprise deals.

"On certain deals, [the changes have] reduced our margins," Dunn said. "We're not worried about it, but I do think that new partners might not like it as much."

Golden Consulting's Dixon also was unfazed by the changes. "You always want the highest margins, but you have to look at what's going on overall," he said. "We believe it's the best product set that's out there, and Business Objects has always been very supportive of their partners. They've got a group of inside sales folks that refer opportunities to us in the midmarket, and what's happening now is that the leads are becoming more appropriate for what we can deliver."