All that glitters ain't Gold

01 Oct 2014

In the quest for completeness of partner resources - ensuring the now ubiquitous ‘partner portal' is fully stocked with anything that any reseller partner could ever need - many IT vendors are in fact missing the central purpose of their partner strategy: the quest for effectiveness. If a big fat partner portal risks draining resources that could be better spent instead on proven, targeted channel activities, then we would all be better off without it.

I've long taken issue with the futility of overinflated partner portals, but theExclusive Networks' Barrie Desmondre is another branch of vendor complacency to expose: the accreditation programme.

Partner accreditation programmes used to be Gold, Silver and Bronze, mirroring the Olympian prizes for ‘best', ‘almost best' and ‘recognition for trying your best', and signifying rarity as well as value. Now you'll find Platinum, Diamond and - for all I know it - Asteroid. In many partner programmes, the exciting new names represent the sum total of the imagination that anyone has ever invested in them.

Incidentally, Platinum isn't the most valuable, or rare, metal. Students of the periodic table will be familiar with Rhodium (Rh), known for its shininess, density and ability to appear new despite its age. Like a few reseller salespeople I could mention!

The purpose of the partner programme is to efficiently run individual partner relationships at the most effective level possible, investing the vendor's limited technical and pre-sales resources where they count most, and providing a strong and equal commercial framework for rewarding and incentivising sales activity that makes a real difference. Partner programmes are also the communications point for knowledge transfer, new opportunities, propositions and other important sales and technical information.

Often, these objectives are simply lost in the context of a tiered accreditation programme. And as with the partner portal argument, resources are wasted where they could so easily be focused on driving great results.

Indeed, many vendors are sucking their thumbs with partner programmes - getting comfort from a fake substitute for some genuine care and nourishment.

Here are some examples:

- The communications flow is frequently ‘broadcast' orientated rather than a real two-way conversation where partners feel they are listened to and where the vendor can apply its expertise to channel issues.

- Tiers are typically based on size rather than commitment, meaning a big partner with minimum commitment is better supported than a smaller partner with total commitment.

- Too little effort is invested in understanding the DNA of the most successful partners, and trying to copy, develop and improve their blueprints for success

All IT vendors that pursue a tiered accreditation programme do so to avoid giving a ‘one-size-fits-all' solution to every partner. Think of it like a T-Shirt - the one-size-fits-all never fits anyone! But providing Large/Medium/Small, in the manner of Gold/Silver/Bronze is not the answer either. Remember we are talking about partners creating market opportunities for disruptive, high margin enterprise technologies. They will benefit from tailored support, and benefit the vendor in return.

Barrie Desmond is chief operating officer at Exclusive Networks

Softcat's a channel success story, but where next?

12 Jun 2014

Softcat chairman Martin Hellawell confirmed to us yesterday that the £400m-turnover VAR has given thought to the possibility of an IPO.

Hellawell was at pains to point out that a stock market flotation is just one of a range of "long-term" options Softcat is examining as it grows from a small into a large company, the most likely option being that it simply remains as a privately held entity.

"Part of my role is to make sure we understand all the options and to keep those options open," Hellawell (pictured, bottom) explained. "It's all that corporate governance stuff Softcat has not done in the past but is trying to get more professional abousignpostt."

But it got us thinking how few publicly listed resellers there are in the UK, compared with some other countries.

The US has Insight, CDW and Systemax, Germany has Bechtle and the Nordics has Atea and Proact, for instance.

With the obvious exception of Computacenter – which these days bills itself as more of a services firm – the vast majority of home-grown firms in the upper echelons of Top VARs are privately held. Even more so since Morse was bought. Alternative Networks, new Redstone owner Coms and Accumuli may be among the exceptions, but these are small-to-mid-sized firms on AIM, not the main market of the London Stock Exchange.

Of the real big guns, SCC doesn't appear to be a candidate while Kelway seems intent on completing a trade or private-equity sale by this autumn. Another candidate, 2e2, went bust last year.

So what would be the benefits for a firm such as Softcat to go public?

If Softcat is to displace Computacenter and SCC at the peak of the UK channel, the firm must move beyond its SMB and mid-market stronghold and deeper into the enterprise market. To do that, it needs to build brand awareness among the UK's largest blue-chip firms, something a listing on LSE would undoubtedly bolster.

Taking the IPO plunge would also improve its access to funding, which could be used for acquisitions or general working capital purposes.

Arguably, Softcat doesn't need the cash, and why meddle with a winning formula? After all, its sales have ballooned from £219m in 2011 to a projected £480m this year and that growth has come organically. But as Softcat grows larger still, the 30, 40 or 50 per cent sales hikes that have been the norm will get harder to come by, making bolt-on acquisitions more desirable (Softcat even recently revealed it is open to the idea of making a smaller acquisition for the first time in its history).

And opening up its shares to Joe Public would net Softcat's oSoftcat's Martin Hellawellwners a tidy sum: with an operating profit of £28.2m last year, the firm's market value would be well into nine figures. Computacenter currently commands a market cap of about £860m, roughly 10.5 times its adjusted operating profit last year. Although it's doubtful Softcat would command as high a multiple, on the same basis it would have a market cap of £296m.

Then there are the downsides. Moving from private hands onto the stock market would mean increased regulation and red tape, and would subject Softcat to the prying eyes of investors.

Even more worrisome for a firm as fiercely entrepreneurial and independent as Softcat would be the fear that listing would spark a shift in the VAR's culture.

And note that Softcat is still not nearly as large as Computacenter when it listed in 1998 with revenues of £1.6bn.

But according to Gavin Lyons, chief executive of AIM-listed security services firm Accumuli, the upsides outweigh any challenges. Softcat may lack the annuity revenue streams investors so prize but it is a leader in its field, meaning it would be a hit on the stock market, Lyons said.

"Multiples are sometimes based on whether someone else could come in and do the same thing and it would be very hard for someone to establish the customers and the relationships Softcat has," he said. "Clearly, Softcat has a high degree of brand presence and so therefore I'm sure it would be worth a premium."

Lyons picked out access to capital and brand exposure as two of the main benefits of being stock-market listed.

"The third benefit is about supplier credibility," he said. "If you're a PLC, people know there is a bunch of compliance required and your accounts are publicly available." There are no major drawbacks, Lyons maintained, although he warned liquidity can be an issue for smaller stocks. "Being a PLC has been excellent for us," he added.

All this means there's plenty for Softcat to consider as it peruses its long-term growth options. If – and this is a big if – Softcat does one day take the plunge, then at the very least it would cement its status as one of the UK channel's biggest ever success stories and mean the UK has not one but two publicly listed super-VARs.

Softcat has grown at break-neck pace in recent years and now stands at a crossroads, as symbolised by its promotion this year to the category of "Large business" in the Great Places to Work rankings. All its suppliers and customers will be hoping that – whatever its long-term corporate trajectory – Softcat can remain the lean, mean sales machine it is today.

Can Samsung channel success?

02 Jun 2014

Despite its huge success in the mobile device market in the last two years, Samsung largely remains a bit-part player at best in the enterprise IT kitbag of most channel players. But the Korean giant has big plans to make a much bigger impression in the B2B space, having spent more than a year steadily trying to boost its credentials in the market ahead of the launch of a global partner scheme today.

It will be interesting to see how it approaches a channel that has had its share of grief from PC makers in recent years. Acer is the most famous - but surely not the only - example of a vendor to have suffered from the fallout of declining sales and a bloated inventory. And resellers will need no reminding of the unedifying ‘will they-won't they?' saga of HP's half-cocked attempt to exit the market.

Meanwhile Apple seems to engage more or less on its own terms with pretty much everyone who wants to buy or sell its products, such is the clamour for its wares. Samsung has already emulated the Mac-maker's success in creating tremendous consumer demand for its kit, even launching a range of stores this year - including up to 40 in the UK in partnership with Carphone Warehouse.

The Galaxy manufacturer will be hoping the demand for its products is impossible for resellers to ignore. VARs, meanwhile, will be hoping Samsung is equally unable to overlook the channel in the way Apple has often been accused of doing.

Sam Trendall is special projects editor at CRN

Could Microsoft do with more warmth and less hot air on XP?

08 Apr 2014

Having been launched in 2011, Windows XP is considered ancient in operating-system terms. But perhaps, in seeking to understand why it is seemingly having such a hard time getting users to upgrade from the 13-year-old software, Microsoft should take some genuinely ancient lessons on board.

Aesop's fable of The North Wind and the Sun teaches that brute force is not as effective a show of strength as gentle persuasion. The sun proves its power, and gets the traveller to do as he wishes, with pacific warmth, while the wind's bullying bluster is just met with more and more resistance.

One reseller has characterised Microsoft's attempts to convince users to migrate as "scaremongering". It is certainly fair to say that the vendor's awareness campaign has focused a good deal more on the claimed security perils of staying on XP past today's end-of-support date than it has on the benefits of adopting its newer technologies.

Much like a child with a cherished toy, it can prove impossible to strong-arm someone into parting from a technology they know and trust, and that still works. The most effective way to separate a child from its favourite plaything is invariably to capture its imagination and its attention with a toy it loves even more.

XP is clearly a product that people love and, rather than huffing and puffing, perhaps Microsoft could trade a little more on the warmth generated for its brand by the ageing software.

Cisco and Las Vegas; Confused? You will be...

27 Mar 2014

clock striking twelve with pound signIt's an oft-cited factoid that the casinos on the Las Vegas Strip have no windows and no clocks, so as to cultivate an environment where you lose track, not only of time, but of the reality of the outside world.

Having been here for five days now, I feel I can confidently confirm that this is just one of many ways in which this, frankly ridiculous, city tries to disorient you. The two hotels I have stayed in this week - while varying wildly in both price and pomp - have at least one thing in common: they ushered me to my room via the casino, and its attendant assault on the senses of noise, flashing lights, scantily clad women, and hard liquor.

Even in the early spring, the weight of the afternoon heat is enough to beckon you inside, where the hard-to-resist combination of pervasive air conditioning and ice-cold beer awaits you. And, once you're in, it can be very hard to get out. The mind-boggling monuments to excess that are Strip hotel-casinos are crowded, noisy, and labyrinthine.

And if do you get out - no doubt by having to circumnavigate a cornucopia of attractive hostelries, restaurants, and high-end boutiques - you join a boisterous but slow-moving bacchanalian parade of party-seekers openly guzzling enormous novelty drinks, while you all run a gauntlet of the opportunistic and the down-at-luck aggressively competing for a little bit of your attention - and your money.

(As a native Londoner, I'm no stranger to the variable merits of buskers. But this week marked the first time a street musician has met my usual quiet disinterest with an invitation to physical confrontation. Such a characteristically excessive reaction is enough to drive a man - at least this man - to drink. And air-con. And a comfy sofa. And - oh, look: that slot machine's progressive payouts are building nicely - surely 10 dollars can't hurt...?)

All of which makes Sin City a curiously apt location for this year's Cisco Partner Summit; "We want to make you uncomfortable," CEO John Chambers told VARs this week.

The vendor has big plans to progress way beyond its roots as a belt-and-braces networking company, and has outlined its intention to be considered the world's leading IT player. Its vision of the evolution of this industry centres on the so-called Internet of Everything, a somewhat confusing but highly impressive world in which items as diverse as rubbish bins and stalks of corn become connected devices.

Rival HP - which, coincidentally, is holding its channel get-together down the road this week - provided a salutary lesson in the havoc that can be wreaked by bewildering and upsetting a vast network of partners with a strategic about-turn. Cisco must know that its plans are a huge bet that could see it win big, or lose the shirt on its back. But that's Vegas, baby.

And it openly admits that not all its current set of loyal partners will ultimately follow it on the path it has mapped out. Chambers told attendees that one in three of the companies gathered in Nevada - presumably including his own in thatvegas equation - would not exist in 10 to 20 years.

At least, unlike its competitor further down the strip, Cisco is giving partners plenty of notice of its intentions. This intended next phase of its channel development began - at least publicly - at this event last year. But, as it gets more serious about cloud, smart cities, and the Internet of Everything, partners are going to need to place their bets.

Just like a Las Vegas casino, Cisco needs to make sure that, for the channel, the world outside its walls is not where you want to be.

Comrade Meg strikes again

06 Feb 2014

If the terminology of Meg Whitman's "five-year plan" to transform HP has a Soviet-style feel to it, her clinical elimination of the top lieutenants around her since she took the helm also evokes images of a supreme leader of an absolutist regime.

This is not a criticism: in times of war even liberal democracies vest their leaders with emergency powers or declare martial law. Whitman effectively HP's Meg Whitmanfound herself in the corporate equivalent of emergency rule upon seizing the baton in 2011. HP's share price and reputation was at a low following a string of CEO changes that, in her words, had "caused multiple inconsistent strategic choices and significant executional miscues".

Four of the top lieutenants Whitman paraded on stage at her first global partner conference in February 2012 have now either left or are rumoured to be leaving. IPG boss Vyomesh Joshi was the first to exit just a month later, shortly before Autonomy boss Mike Lynch - who was briefly given a grander job title of executive vice president of HP's Information Management division - left under a cloud.

And now it seems that former PC boss Todd Bradley and former enterprise boss David Donatelli are also being packed off to Siberia, according to a Reuters article.

Bradley and Donatelli, two of HP's most powerful executives, will leave HP in the coming weeks with seven- or even eight-figure payoffs after both being sidelined last year, sources told the news agency. This means Whitman will have disposed of four of the most powerful people around her when she took the helm as she looks to return HP to greatness.

Both Bradley and Donatelli were exited from their roles heading up its PC/printer and enterprise divisions respectively last summer, Bradley to helm HP's Chinese assault and Donatelli to a role identifying early-stage technologies for investment. They have not been seen regularly in HP's offices for months, sources told Reuters, and both are understood to be interviewing for potential jobs.

What this illustrates is that Whitman is willing to dispose of even the biggest of beasts within HP in her quest to ensure its five-year turnaround plan remains on track. Whitman was not happy with the pace of growth at HP's enterprise arm, while Bradley's CV was stained with his dubious achievement of overseeing the ill-fated TouchPad tablet in 2011.

HP may not have overcome all the obstacles that faced Whitman when she took power - it is yet to enter the smartphone game and shows no sign of regaining the PC crown it lost last year to Lenovo. But, judging from HP's share price, which has more than doubled since sinking to a nine-year low in Autumn 2012, Whitman's style of leadership is working.

It's also clear from talking to partners that Whitman is a popular leader in the channel - alongside Michael Dell she is one of the few that finds the time to sit down one-on-one with top partners.

And she certainly seems to have done a lot of the heavy lifting that will allow HP to become an industry super-power once again. Unlike the Soviets, this might just be one five-year plan that comes together.

VARmaggedon? Not on my watch

13 Dec 2013

Last week I was shocked to hear that a term I'd not previously come across - VARmaggedon (or LARmaggedon as some have it) - is fast making its way into common parlance in the channel. I immediately feared the worst: what catastrophic event is lying in wait to befall the UK's 10,000-plus-strong community of VARs, I wondered? And would the CRN team be required to don space suits and detonators to avert the crisis.

Thankfully, I was quickly assured it is nothing as dramatic. Apparently, the apocalyptic-sounding expression describes the journey many resellers are making to remain relevant in this era of cloud, apps and services.

VARs no longer want to be just purveyors of third-party IBruce WillisT kit but instead known also as vendors of services in their own right, and ones which the customer trusts as much as HP, IBM or Microsoft.

While I salute the sentiment, I only hope it does not weaken the channel's already wavering allegiance to the term VAR in favour of vague, more Americanised terms such as "solution provider" or terms used in other parts of the market such as "service provider". After all, few traditional channel businesses would draw half of their gross profit - much less their revenue - from services, and that is unlikely to change even as the cloud revolution gathers pace.

The very reason vendors have perenially turned to the channel is because of the close bond VARs enjoy with their customers. In other words, the reseller is already the brand the customer trusts the most and the colour of the boxes they're supplying is seen as less important.

Although I'd stop short of detonating a massive asteroid to save the term VAR, it would be a shame if the expression were abandoned altogether.

HP's Chromebook gambit suffers minor setbacks

19 Nov 2013

Sails and masts of a ship

When HP launched Chromebooks running Google Chrome operating system, it had high hopes for offering consumers and businesses an alternative to Windows-based PCs.

Now, it’s suffering a minor setback as it pulls Chromebook 11 models from circulation because over overheating power supplies. HP began pulling Chromebook 11 — the 11-inch version — of the Google-based PC from retail outlets and channel distribution because it had received a handful of reports that its micro-USB power supplies were overheating and creating a fire hazard.

“Google and HP are pausing sales of the HP Chromebook 11 after receiving a small number of user reports that some chargers included with the device have been damaged due to overheating during use. We are working with the Consumer Product Safety Commission to identify the appropriate corrective action, and will provide additional information and instructions as soon as we can,” wrote Caesar Sengupta, vice president of product management at Google in a blog post.

HP and Google say Chromebook 11 owners shouldn’t use the original power supply and cord that came with their devices. Instead, they recommend using alternative micro-USB charger approved by Underwriters Laboratories. Many chargers that come with common tablets and smartphones will suffice.

There’s no telling when Chromebook 11 will return to market. HP Chromebook 14, the larger version of the Chrome-based PCs, are unaffected by the power supply issue.

While a setback, Chromebook 11’s power supply problem is likely just a minor incident. HP seems committed to the notion of carrying PCs that operate on different platforms and lessening its dependence on Microsoft Corp. for operating systems.

The HP Chromebooks are a direct response to Microsoft continuing to push its Windows-based tablets, Surface, to market in competition with similar tablets produced by PC vendors. HP CEO Meg Whitman recently cited Microsoft as a competitor because of the Surface tablet.

HP isn’t the only PC vendor offering Chrome-based machines. Lenovo, Samsung and Acer  all offer Chrome-based PCs. However, HP is the only vendor making a major push in the retail and business-to-business channels with the Microsoft alternative. By many indications, the Chromebook 11 was selling well prior to the suspension.

Chances are it will return to distribution once the power supply problem is diagnosed and corrected. There’s little chance this incident will slow the growing list of Microsoft alternatives.


As part of our special editorial relationship, CRN is republishing this article from Channelnomics

A blog that explores the views of some of the CRN editorial team as well as guest bloggers from the channel. Do get in touch with if you are interested in being a CRN guest blogger for a week.

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