GroundHog Day

February 2, 2008 at 7:36 am Leave a comment

 

Beth Vanni

Beth Vanni

Sometimes it’s hard for me to believe I’ve been in the high tech market focusing on partnering for over 20 years.  Those days of wonder and discovery of my early 20’s when Microsoft was just coming on the scene, IBM had just announced the first personal computer and Unix was on the only game in town for enterprise computing.  Ironically enough, some of the most fundamental issues facing the channel at that time are still around 20+ years later (when I’m not so fresh and new anymore!) —  issues like what are the most efficient ways to get products delivered to customers and do distributors do enough to warrant their margins?  Which channel is getting the best vendor pricing and how are they locking their competitors out by selling at cost?  Should partners be only authorized to sell product regionally, or nationally?  Should partners have to pay for vendor technical training or not?One of my favorite of these Groundhog Day-like  recurring issues is the delivery of professional services and the role of the channel. In the mid 80’s,  professional services for the channel were largely focused on break/fix contracts and annual support agreements.   But, IBM Global Services and the big accounting firms were already building very sophisticated professional implementation services to help large businesses understand how to deploy personal computer software, hardware and networking products.   Fast forward to 2008 when most technologies have gotten infinitely more complex and converged (think SOA software and VoIP) and there’s a very high dependency on successful P.S. implementation for customers to get the real value out of their IT investment.  It’s interesting to explore what role the channel was expected to play then vs. today in the delivery of these services. 

In the Amazon Consulting 2008 partner program study, there was a resounding response from our vendor community about the perceived importance of having P.S. delivery competency from their partner community it was the third most important “value based” activity vendors are trying to reward in their programs this year.   And partners continue to indicate that development of services offerings is fundamental to their business success and profitability in a recent Ziff Davis study, 21% of partners indicated that new/incremental services sales were one of the top two things that would drive their profitability this coming year.   BUT, when asked where vendors were actually applying dollars, focus and resources in their channel programs this year, managing services delivery conflict between their direct organizations and their partner community was nearly the last priority on the list !

If so, why is this issue so low on the vendor’s priority list?  Almost every major enterprise-class product company (think Sun Microsystems, HP, BEA Systems, Computer Associates, EMC and Symantec) all have significant P.S. teams and large revenue expectations from these organizations.  They spend lots of money evolving their methodology (think focus on ITIL methodology standards lately), funding full-time architects at their big accounts, and participating in organizations like the TPSA (Technology Professional Services organizations) to continue to evolve their business model and processes.    But, what is the proportionate spending on partner engagement, enablement and incentive programs around the deployment of P.S. offerings through channels??    I would suggest in most cases it pales in comparison.  

Does it all really just come down to the P&L model for these P.S. organizations and not having the money (or lack of accountability to a profit model) allocated to engage the channel?   Is it that difficult to take a group of folks within a P.S. team and make them the “channel enablement squad”, giving them a low or no cost deployment model?  Couldn’t you just hold them accountable to the number of partners with full knowledge transfer and training on vendor P.S. methodology or to metrics based on the number of successful customer deployments conducted through partners?    How many would it really take?   Oracle has over 10,000 consultants in its professional services team worldwide.  How many do they have on their “partner enablement squad”?   I would suggest it’s a lot smaller % of that 10,000 than the % of business that Oracle does through channel partners (currently at about 44%).

If the difficulty continues to be companies still struggling with the issue of  sharing  precious intellectual property or services methodologies, there are ways to license it to partners.  If companies don’tt want to give up their profits on their P.S. revenue stream to enable partners, they’d be well served to remind themselves what Wall Street scrutiny has been applied to nearly every company who’ve reported their share of revenues from licensing/products vs. P.S. out of proportion in their annual results.

I read the trades.  I see the channel program evolutions and levels of sophistication happening with how to engage channels to sell and market products.   I guess I just keep hearing the “I’ve Got You Babe” tune coming out of my bedside clock every time I hear about services conflict with channels.  Aren’t we smart enough now to finally figure this one out??

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Entry filed under: Industry Perspective.

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