Best Suited To You

How To Get The Most Out OfThe ARC

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In order to grow your business, you need allies--companies whose products or services you can add to your current portfolio so you can increase sales to new and existing customers alike. But which companies should you choose? The question isn't easy to answer, as there are as many options as ever, despite the massive consolidation that has gone on in security, PCs and even business software. For every company that has been merged or acquired, there seems to be a new and channel-friendly vendor hoping to take its place.

In the pages that follow, we provide insights found nowhere else in this edition of the VARBusiness Annual Report Card (ARC)--information that can help you better understand some of the findings extracted from our survey of 5,400 solution providers. They were asked to rate their satisfaction with vendors' products, support and programs. In all, more than 80 vendors' programs across 19 different product categories were examined. We also asked solution providers about the loyalty they have to a particular vendor.

Throughout this special ARC edition, you will find articles and charts designed to help you choose vendors best suited to you. In this feature, we zero in on those key words: "best suited to you." That's important to keep in mind because not all alliances are alike. Some alliances mean the world to a solution provider, representing the bulk of a company's revenue. Take Iteration2, for example, an Irvine, Calif., Microsoft partner. Though the company's founders hail from enterprise- software companies including JD Edwards, their new company counts on Microsoft for virtually all of its revenue, says co-founder and vice president Greg Carter. "Microsoft is definitely our most important relationship," he says.

Other vendors represent ancillary or complementary opportunities to VARs. Bringing them on board requires careful thought, but not necessarily as much risk. Where things get tricky is when a solution provider brings on a platform vendor that competes with its primary, core vendor. Mike Cox, president of Logicalis' U.S.-based operations, says he thought long and hard about bringing on IBM, given that his company was a close HP ally. But he did so just the same after concluding that his company needed the additional brand to maximize opportunities with existing and new clients. How that ultimately will sit with HP remains to be seen; its CEO, Mark Hurd, recently said his company will not lavish its finest benefits on those that don't show loyalty to HP. But he may want to rethink that "iron-fisted" sentiment after reviewing this year's ARC. HP's Unix server partners have less loyalty than other VARs.

Attracting Attention

The primary reason solution providers are drawn to a partner is its technology. Top tech scores can overcome shortcomings elsewhere. If your company is not dependent on vendor sales support or interested in the elegance of a vendor's partner program, then the number of potential vendor allies your company can align with is significant, at least greater than for those who depend upon the financial, technical or marketing support that vendors provide. For example, Trend Micro this year tied for first in the Security Management Software category with Cisco Systems. Cisco, which has spent tens of millions of dollars in the past year on new financial incentives and business consulting for key allies, received high marks from partners for its support and programs. But Trend Micro swept the Product Innovation category. No wonder Trend Micro's partner revenue has grown 70percent to 90 percent in certain categories year-over-year, according to the company.

While the company remains behind Symantec in market share, Trend Micro clearly has some momentum behind it. Although it hasn't shown up in market share just yet, that doesn't bode well for Symantec. A past ARC winner, Symantec has slipped in the past two years in the Security Management Software category. Distraction over the Veritas merger is one reason. But so, too, are the relatively low scores allies gave Symantec for Product Innovation. The Cupertino, Calif., software giant scored below average in Quality/ Reliability, Richness of Features, Technical Innovation, and Compatibility & Ease of Integration--the very areas where rival Trend Micro fared so well. In fact, Symantec's score for Technical Innovation was second to last in the category, which is ironic, given that the merger of Symantec and Veritas demonstrated true vision.

Palaniswamy Rajan says his company, Vigilar, is a loyal Symantec business ally. Rajan's company is so focused on security that the CEO has made it the Atlanta company's tagline: "Your Trusted Partner in Information Security." But Rajan occasionally struggles when recommending Symantec technology because it sometimes comes up short in competitive product "bake-offs" for clients. That has prompted him to consider McAfee and others, testing his loyalty. In addition to technology, Revenue/Profit Potential can also keep a vendor in the game. Lexmark finished a disappointing last place in this year's ARC partner-satisfaction study in the Network Color Laser Printers category, well behind its rivals, Xerox and HP. But the company stays in competition for one key reason: Partners can make money selling Lexmark's products thanks to healthy financial incentives. To some in the VAR community, that's enough to overcome below-average technology, support and communication scores.

The preceding analysis can help your company look beyond some of the obvious trends when selecting a vendor partner. It can help narrow down certain choices, or open your eyes to new companies. Before adding or dropping a vendor, be sure to do your homework. As we did in 2004, we have included a worksheet this year to help you evaluate potential allies. It helps assess their products, partner programs and support mechanisms in a systematic fashion. In addition, our ARC scoresheet breaks down each subcategory into numerous criteria so you can judge a vendor on all of its attributes.

We suggest starting out by evaluating a current vendor partner. Rate your satisfaction with each of the criterion listed and see how your answers stack up against what dozens of other solution providers said about the same company. (Those scores can be found elsewhere in this issue.) The exercise may reveal where your company is getting shortchanged on sales support, for example, or where your experiences are no different than fellow solution providers.

Then move on to a vendor you are considering adding to your portfolio. Do they rate as well as your current vendor? Is their technology as competitive, their support as helpful and the potential to make money as high? If not, spare yourself heartache and move on.

One last thing: When looking at scores, don't underestimate the importance of loyalty. This year, Sun's VARs gave Sun low grades in our annual Partner Satisfaction survey in the Entry-Level Servers category. The company finished third of four companies, beating only Dell. Despite the disappointing showing, Sun's VARs say they remain loyal to Sun, more loyal than either HP VARs are to HP or IBM VARs are to IBM. Had Sun's support scores not been so disproportionately poor, Sun would have challenged its rivals for first place, thanks to the loyalty Sun's VARs have for the company.

And that's something to keep in mind when looking for your next alliance partner.

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