Panel: Services Key To Channel Growth

The panel, entitled "The Profitability Puzzle" and moderated by Heather Clancy, vice president and editor of CRN, quickly zeroed in on how services represents the best way for vendors and their channel partners to work together.

Services is a $350 billion market, said John Thompson, vice president and general manager at Hewlett-Packard, told a group of solution providers who attended the event. "The question is, how do you get a part of that?" Thompson asked. "How do you sell your own services? How do you work with HP services? We're looking to give you a choice. But it's up to you to tell us how do we coach you, and what you need from us."

There is a finite amount of money that can be made between vendors and their channel partners, and the only way for that to grow is for both sides to invest in services, said Julie Parrish, vice president of global channel sales and strategy at Symantec. "Vendors need to invest in the channel, while the channel needs to invest in new services," she said.

Services are important to growth for both sides, said Christopher Froman, senior vice president of US sales at Oki Data Americas. However, Froman said, vendors are already offering a number of services that the channel can take advantage of, and it might be foolish for solution providers to duplicate such services. "But we are looking to help them develop other services," he said.

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Froman said feedback from partner advisory councils is important in developing services programs. "We can see if we are offering the right services, or if someone can do them better," he said.

Services are not only about helping clients, said Jerry Lumpkin, vice president of channel sales, Toshiba. "We're not only looking at how we can support you support customers with services," Lumpkin said. "We are also looking at what we can do to support you. We have 24-hour service centers around the country to help you with customer services."

The vendors also discussed a number of other ways they can build better partnerships with their solution provider partners.

Froman said that it is possible to tie non-traditional product sales to managed services successfully. For instance, he told solution providers to focus more on selling consumables, citing the example of a VAR he recently visited for which consumables accounted for 20 percent of revenue but 70 percent of profit. "If you can lock management services with consumables, you can be very profitable," he said.

Lumpkin pointed to tablet PCs as an example of a product where partnering with ISVs is essential for success.

"If you are a partner with specific vertical application experience such as healthcare, we can partner with you so you can deliver not hardware, but a solution," he said.

Greg Knieriemen, vice president of marketing at Chi, a Cleveland, Ohio-based solution provider who attended the panel, said it was interesting to hear vendors talk about channel profitability. However, he said, it's important to listen to them with a level of skepticism. "Channel profitability's their secondary consideration," he said.