Jordon De Leon, Senior Analyst, Canalys, speaks to Amit Singh to highlight the teething channel conflicts and how vendor-partner relations have transformed over the last few years
What are the key changes you have observed in the vendor-partner relations over the last few years?
The key change we are seeing is that vendors are transforming their businesses rapidly, moving from a product-led model to IT as a service model. Vendors realize that in order to transform their business, they need to take their partners along, which is a massive challenge. For many vendors, their top partners find it easier to transform – invest in new skill sets, set new incentives for sales reps etc. However, the vast majority of channel partners are still very much product-led; this means that many partners remain transactional.
Sometimes this can frustrate vendors, especially those that have set programs to drive partners to the ‘as-a-service’ business model. In turn, many of the partners are upset as their business might not be ready to shift or their customers are not ready to move.
In fact, most of the partners consider the following as top 5 channel frustrations: conflict with vendor’s direct sales teams; a complicated and difficult to understand partner program; being managed by dashboards (lacking a personal touch); being forced to change their business models even though partners are not ready yet; and slow response time to support requests or help with an existing deal.
Vendor partner relationship over the years has been more skewed towards and dominated by vendors. How do you think equilibrium can be maintained?
I think the solution selling approach will help in bringing the equilibrium, but in all of these cases, it requires a personal touch. While having great tools and dashboards are great, partners always prefer meeting channel leaders face to face, discussing issues, tackling business challenges, setting goals, and getting leadership to buy in.
Vendor going direct has been a long-standing problem affecting the vendor partner relations. In addition, vendors’ high focus on quarters, unfair pricing, manipulative deal registration, favoritism, and demanding exclusivity are few other pain points in vendor partner relations. How do you foresee these factors affecting their relations over the next few years?
Channel management is essentially a focus on fundamentals. In fact, channel conflicts arising from vendors going direct, channel stuffing (essentially selling partners massive amounts of products at discounted rates), ineffective deal registration etc. will never go away as these are very people-driven.
However, the key steps that vendors need to take are to have effective rules of engagement, show transparency and have a business model that sets rules and boundaries for direct sales and partners to follow. This can be driven by leadership and commitment from the top.
Traditional channel partners including IT VARs and systems integrators are intimidated as vendors are more inclined towards a new set of highly-specialized solution providers for technologies like cloud computing, mobility, analytics, AI, and blockchain. How do you foresee the relevance of traditional IT channel partners in today’s dynamic IT landscape?
IT channel will continue to remain relevant because these technologies, including AI and blockchain, are still very niche and tiny. On the cloud front as well, the big three cloud providers have realized that they need partners as they simply do not have the massive scale and reach to serve every single customer. Partners are in a unique position because they are able to build complex solutions, provide customers choice, and help vendors accelerate their strategy. However, partners must also need to invest in new skill sets, retrain their people, relook at their business models, and plan for the future.