A monopoly in any industry tends to be detrimental to not only the suppliers outside the dominant elite, but also to customers.
According to some in the channel, the government IT framework system is just that; the way the requirements work mean only the biggest resellers get on them, the smaller specialist players are left out and customers don't always receive the best service. Entry criteria based on revenue means many smaller partners are turning to alternative methods such as subcontracting to get a piece of the pie, but not everyone is happy with this. Some have labelled the system "antiquated", while certain resellers have dropped out of frameworks.
Last month public sector reseller Prolinx agreed with its vendor partner EMC to leave the National Server and Storage Agreement (NSSA), saying the framework for universities and colleges was now less important to it than it was three or four years ago, with its sales through it declining significantly.
Simon Blackburn, Prolinx sales director, said he decided to leave the purchasing vehicle because the rigid lot structure means you can only sell individual technology - servers on one lot and storage on the other - rather than a complete solution, which doesn't meet "some of our customers' needs anymore".
Blackburn said that while some frameworks such as G-Cloud and Technology Solutions are flexible to the customers' needs, deals like NSSA support only resellers that can ship high-volume hardware.
"But from our perspective, we are a value-added reseller and that type of framework doesn't suit our model because we are not a hard-and-fast technology provider," he said.
And it's not just resellers who are dissatisfied with some framework models. According to CRN's 2015 Education Report, only 23.9 per cent of purchasing decision makers at schools, colleges and universities said they purchase all or most of their ICT products through frameworks. Thirteen per cent said that given the choice, they would never use frameworks, with some respondents labelling them "restrictive" and "not very appropriate".
Daniel Bailey, director of public sector reseller Altinet, said frameworks are sometimes a hindrance to customers because the criteria to get on them do not always reflect the suppliers' ability to deliver the best-quality solutions at the best price.
"Some of the requirements seem quite arbitrary and very little of getting onto a framework is about how well that reseller can deliver that IT product," he said. "It's more like ‘how big is that company?' That's what the framework is based around."
In response to claims that the system benefits the bigger players over the small, a representative from the Cabinet Office sent CRN a statement which noted that 95 per cent of suppliers on the G-Cloud 7 framework are SMBs and 77 per cent of the suppliers on the Digital Services Framework are SMBs.
The statement highlighted that there is regulation which means there will be no IT contracts over "£100m in value, unless there is an exceptional reason to do so, no automatic contract extensions, and if a company has a contract for service provision, it should not also do the service integration for that service".
Do not collect £200
Bailey said one of the biggest misconceptions about frameworks is that the resellers who get onto them are the ones that offer the cheapest price. He said that often resellers who miss out on frameworks because they aren't big enough can offer more technical support, specialist expertise and in some cases better prices because they are higher up the accreditation ladder with certain vendors.
"Let's use the example of Barracuda, which has a partner programme with four tiers," he said. "For whatever reason, the biggest resellers are not necessarily the biggest partners of Barracuda so if you were a customer looking to buy Barracuda, then Altinet would be able to give you a better discount than a reseller such as Computacenter."
An example of a vendor that works well on frameworks is Microsoft, Bailey said, as its licencing model means resellers will race to the bottom on prices for the purchasing vehicle and sometimes lose money to make it back up on the rebate.
But he added that frameworks are now generally "less relevant" to resellers and a lot of resellers do not go for them because of the costly and time-consuming process of bidding for them.
"Frameworks are important to some organisations for purchasing things, for example Microsoft licencing," he said. "But for IT projects that require complex technical knowledge, consultancy and putting together a tailored solution, frameworks don't work as well as they are intended to and I think customers ultimately swerve and work around them."
The primary method customers and resellers use to do this is through subcontracting, or primers as they are sometimes known, according to Bailey.
This is where a reseller who is not on a framework will go through all the prior logistics with a customer, but the order will be placed through another reseller which is on the framework, and that reseller will take one or two per cent of the margin.
This practice of subcontracting is so common in the channel that some of the bigger resellers will even have a number of people solely responsible for these relationships, Bailey said.
The reason the bigger players who do make the frameworks subcontract work is because they get the revenue figure, even if they only get around two per cent margin for the deals, Bailey said. While for the smaller players it cuts out the expensive and onerous process of getting on and staying on frameworks.
One reseller to have greatly profited from the subcontracting system is Circle IT, which has seen this form of business go from less than 10 per cent to half of its sales, according to managing director Roger Harry (pictured below).
He said using these deals has been vital to Circle IT as it has allowed it to win a huge amount of business on which it otherwise might have missed out.
"If we didn't have this option available to us, we'd have to decide which frameworks we were going to go for," he said. "Especially as an SMB, there is no way in hell you are going to be able to get on every single framework."
But not everyone is happy with the subcontracting method. Sam Mager, director at Dell partner Krome Technologies, said it "doesn't seem fair" for resellers in the middle to "make money for paper shuffling".
"I think it [subcontracting] shows the limitations because [customers] need to look outside the people on the framework to fill their requirements," Mager said.
At the moment, because of short response times coupled with the huge bidding resources of the Kelways of the channel, frameworks are "almost a monopoly," for the big resellers, he added.
Mager said that frameworks should be a "revolving door" or a fluid system on which resellers that demonstrate a certain level of profitability, growth and accreditation are allowed. If a reseller falls outside those parameters - by losing accreditation, for example - it should be removed from the framework until it gains it back.
This would give customers a greater level of choice and allow resellers who are focused and experts in specific vendors access to the frameworks, he said.
"At the moment they have to go out to 10 broadliners," he said. "And are they going to end up with the best service? No. That is where frameworks fall down, in my opinion. The frameworks are antiquated and have not kept up with the way intellectual property has evolved."
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