Enterprise application vendors are turning to indirect sales channels to win smaller customers, but their efforts can backfire because of inadequate support.
Indirect strategies to target companies under $500 million have been adopted in the past six months by Baan, SAP and Oracle, and are set to be emulated by JD Edwards, Peoplesoft and other manufacturers this year.
Forrester Research, however, warned that vendors run the risk of lowering their standards of service to users, and over-stretching themselves by trying to support too many resellers.
Thomas Gormley, author of a report entitled Middle Market in Transition, said: ?Baan will find itself stretched to support 200 channel partners.?
He predicted that recruiting, training and supporting more than 30 partners in the first year will be difficult and the quality of the Vars will be inconsistent.
Gormley said Oracle had an advantage over its rivals in the large corporate applications area because of its huge consulting resources. It can be drafted in to offer on-the-job support and ?handholding? for partners on customer sites, which Forrester said was essential in the early days.
?Indirect efforts, if not managed well, will violate a critical middle market requirement,? said Gormley. ?The assurance of direct involvement by the application vendor is necessary to support the user.?
Forrester agreed that the move to channel partners is unavoidable for the software giants. Their margins and quality of service cannot be maintained through directly selling in the more price-sensitive middle business market.
Some companies see their channel as a first step to a component-based future where components will be sold through integrators and application houses and high-cost distribution structures will become less necessary.
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