Better Vendor Partners: A How-To Guide For Using the ARC

With margins on products at historic lows, and channel conflict with key companies, such as Hewlett-Packard, Oracle and BEA, as bad as it has ever been, partners are mad as hell and adamant that they are not going to take it anymore—"it" in this case means simply accepting the status quo. Take Norm Shockley. Once the head of Acclaim, one of the San Francisco Bay area's largest Sun partners, Shockley is back with a new company after his former organization collapsed when his distribution partner cut off his credit. In addition to looking at Sun, Shockley and his four employees are eyeing a new alliance with HP, of all companies. The reason? Though a Sun fan, Shockley wants to broaden his horizons, and HP is now courting him with all kinds of promises for help.

Considering a Change?

Before you consider dropping a vendor in favor of another, or before you contemplate entering a new market segment with one or more new partners, be sure to do your homework. That means spending some time with the ARC. In this special strategy guide, we have included a worksheet that shows you how to evaluate a vendor, its products and its partner programs in the most comprehensive way possible. For example, our how-to guide shows you how to view a potential alliance from four key points of view: product innovation, support, partnership and loyalty. Moreover, the ARC breaks down each subcategory into numerous criteria so you can judge a vendor on all of its attributes, including product quality and reliability, presales and postsales support, partner program and ease of doing business, just to name a few.

Use the scoresheet provided herein to grade a vendor on 16 different criteria, and then compare your scores to what our survey respondents had to say about the vendors and programs of interest to you. At first blush, the level of detail may seem a bit off-putting. But it isn't. Besides, judging a vendor on so many attributes is important because it can reveal exactly where it might come up short based on the views of partners already enrolled in that vendor's program. That kind of information could prevent you from making an expensive mistake, such as joining a program only to find you cannot make money from it.

It can also help you join a program fully aware of any weaknesses or problems with a specific vendor or vendor program. For example, with so many partners frustrated over HP's ongoing attempts to grow its direct sales, solution providers are looking at alternatives, including IBM's award-winning programs. And who could blame them? This year, IBM won top honors in satisfaction, overall, in eight different ARC categories, including two ties with HP in advanced desktops and workstations, and mobile computers. But before rushing to join IBM's PC program, VARs should be forewarned: Despite high marks in many criteria, IBM did score lower than its rivals when it came to revenue/profit potential in both of these categories.

Here's another example that helps put the dynamics of the ARC criteria into perspective. If you were to judge AT&T solely on product quality/reliability, you may conclude that it is the company for you. After all, it tied for first for that criterion in the business-class communication services category this year, following up a strong showing from last year. But the landscape has changed, especially in the field, since AT&T took home top honors in 2003. Despite scoring well in product quality and reliability, you might want to think twice before jumping into AT&T's program: The company finished last in the overall category this year, receiving rock-bottom scores compared with its rivals in presales support, postsales support, technical support, partner portal, sales partnering, solution-provider program, communication, managing channel conflict, revenue/profit potential and ease of doing business. In fact, the 34 score AT&T received for ease of doing business was among the absolute lowest scores in this year's entire ARC study.

How You Can Get the Most Out of the ARC

Armed with the findings from this year's ARC study, you should be able to better understand exactly what you see happening in the field around you. Take Symantec, for example. Partners this year were disappointed, in general, by what they saw happening at one of the industry's better-performing vendor companies. (Symantec partners gave the Cupertino, Calif.-based security giant the highest marks in security in 2002 and 2003.) After two years on top, Symantec dropped to fourth place this year, slipping behind Computer Associates, Cisco and Trend Micro in security management software. Partners gave Symantec relatively low marks for product innovation, support and partnership.

Here's where this year's ARC can help you better understand what's happening with a particular vendor. In Symantec's case, the low scores for product innovation stem from the vendor's challenge trying to combine all of the technologies that it has acquired in the past several years into a cohesive product platform. Symantec's own CTO, Rob Clyde, acknowledges that Symantec has a job ahead of itself making things easier for enterprise customers to protect themselves. But, Clyde notes, he has more in his technology arsenal than anyone. As for problems in the field, Allyson Seelinger, vice president of global channel sales and strategy, says several things are likely to blame for partner discontent this year—a transition to a new U.S. partner chief, changes in the field, new ways of classifying partners, etc.—but that the groundwork the company has laid should return dividends for partners ahead.

"Some partners may have felt disappointment when they learned that the face-to-face management they once had was going to be replaced with another method. But we did that to help drive up their business," she says.

Randy Cochran, vice president of sales for Americas channels, explains that some Symantec field personnel who were once partner-facing have been redirected to call on customers on behalf of partners. With a lot of prospecting work now behind them, partners should expect to see more opportunities coming their way. "That should do some positive things for partner satisfaction," he notes.

Tips From the Pros

Whereas Symantec has gone out on a limb to try to make things better for partners, others, including IBM, have played things a bit more conservatively. Earlier this year, Mike Borman, IBM's former general manager of PartnerWorld, told VARBusiness that IBM has actually rejected certain initiatives designed to help partners because they either were too cumbersome to manage or they added too much complexity and/or bureaucracy to the company's programs.

"Even the best of ideas can have negative downsides that we find unacceptable if they wreak havoc with our predictability and consistency," Borman says.

At least for now, partners respond positively to that pragmatism. "The simple answer is that IBM never deviated from their Business Partner Charter during the recession, and even increased incentives to help us drive growth during this time, especially in the SMB space," says Jeff Medeiros, president of rs-unix.com, an IBM Premier Business Partner based in San Francisco.

No wonder IBM partners are among some of the most loyal in the business.

That's not to say, of course, that partners don't respond positively to individual efforts designed to ease their burden. Take CA's efforts to help out in presales support, for example. This year, CA tied for top honors with Cisco in the security management software category. Moreover, it alone received the highest marks when it came to presales support. How? Well, over the course of the past 18 months, CA has expanded its Customer Interaction Center (CIC) and delivered nearly $700 million in qualified opportunities to more than 2,000 unique partners, created an innovative Try and Buy program that delivers thousands of leads to partners via a co-branded direct-mail campaign and deployed a formalized "CA Smart" training program that provides free training from basic sales training to accreditation and certification to all partners.

"Look, if you want to win points with solution providers and build their loyalty, I believe helping them generate new business is a good place to start," says George Kafkarkou, senior vice president of worldwide channel operations at CA.

Hard to find fault with that logic.