We have all heard with monotonous regularity about how sales are all about adding value and being a trusted adviser -- and we imagine many VARs are heartily sick of such talk. But now a vendor is saying OEMs themselves need to add more value.
Storage and networking vendor Brocade reckons resellers are being impeded in their efforts to move towards cloud-based professional services because vendor partners themselves are displaying a lack of flexibility and capability.
“The study revealed that, in addition to direct competition, channel organisations’ professional services ambitions are being restricted by a lack of innovative vendor solutions, overly complex programmes and proprietary vendor technologies,” the company says.
Well, stone the crows: did we really just hear a vendor say that? And can they really mean it? But to back up its viewpoint, Brocade released an online study this month -- called Channel 2020 -- that quizzed 532 channel-focused companies worldwide in June and July on where they believe they need to be in 10 years’ time.
According to Brocade, about half said they wanted professional services -- for example, cloud consultancy -- to become their main revenue generator by 2020. Services is clearly one of the more potentially lucrative areas remaining in the IT channel, with hardware and software increasingly commoditised and customers more concerned about complexity and cost.
However, most respondents also indicated that professional services account for, at best, only 25 per cent of their revenue today.
Regan McGrath, senior vice president of worldwide sales at Brocade, says vendors need to have strategy, vision, and an approach to tech design that supports their partners’ need to maximise professional services and support opportunities.
Vendors should not compete with resellers for these opportunities either, he suggested, and clearly they should provide genuinely differentiated technology offerings as well as finance and marketing support.
“Subscription, and tools and resources that help channel players develop their reputation as consultants, will all become increasingly critical to developing competitive consultancy businesses that drive significant revenue returns,” McGrath (pictured, right) noted.
Unsurprisingly, he went on to suggest that Brocade was not one of the offending vendors in this respect - but we think resellers themselves might be the best judges of that. However, few resellers would argue that vendor programmes are not important for growth, or that vendors, like their channel, do not need to evolve with the times.
What else is in the survey?
The report begins with a riff on the themes we hear a lot about these days: mobility, cloud, virtualisation and shrinking budgets. In that sense, Brocade’s perceptions reflect much of the authoritative analysis that is available on the current state of play.
Respondents indicated that they were slowly evolving into hybrid players - part consultancy, part IT reseller, part hosted cloud services provider - to deal with increasingly hybridised and complex IT environments.
Many continue to hedge their bets in hopes of kit margin -- not least because cloud and services are not yet profitable for many -- yet in the long term they will still need more services revenue.
“The very solutions that promised to resolve complexity by simplifying and streamlining data and information delivery and application access have created new problems,” said Brocade. “The question [for customers] will not be whether to adopt cloud, or which cloud, but how to manage multiple clouds.”
Resellers that cannot make money fast enough will fail. Also, many have an old-fashioned idea of vendor-VAR relationships. “Innovation in technology is required, but fear of competition from vendor partners means innovation in other areas seems inhibited within some channel organisations,” the report says.
Only 11 per cent of survey respondents said they look to their vendors for innovative finance offerings, and just 19 per cent for marketing funding, according to Brocade. Service-oriented VARs, straight services providers, standard VARs, distributors and hosted services resellers with just a few to more than 1,000 staff responded to the online poll.
Vendors must not compete with their channel, but should be providing assets that help resellers generate revenue from their consultative offerings, Brocade said.
Do vendors need to do more to help VARs win at services? Let us know.
Email Fleur Doidge, or leave a comment.
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