While not every reseller can enjoy the same level of success, a poll by the 2112 Group does suggest that higher rates of growth, revenue and profitability tend to go to those with more vendor-based experience in business management and development.
Most resellers, SIs, and managed service providers (MSPs) are proud of their technical acumen, and with good reason, and vendors reward their partners based in part on technical certifications, domain specialisations, and sales volume of specific products.
Speak to vendors about their field engagements with partners, and they'll often say they conduct co-selling to ensure partners are positioning their complex products correctly to end customers.
Resellers in general often pay short shrift to business management and business development skills. The average IT provider has a small sales team, and little marketing and business development resources. True growth is often more challenging to achieve or even stunted.
The 2112 Group, publisher of Channelnomics, sought to quantify this notion as part of its regular research. The results of our enquiries don't guarantee that business acumen produces greater degrees of success. Nor does the research say that resellers without experienced business managers will fail.
What it does say is that resellers with seasoned business managers that have previously worked for vendors may tend to grow faster and be more profitable than their counterparts.
To measure business acumen, we asked a sample of tech providers if they had former vendor executives on their management teams. The presumption was that managers with vendor experience would come with a certain level of business administration discipline.
Surprisingly, a majority of those we spoke to did have managers with vendor experience, a reflection in part of the number of resellers born from vendor ranks. However, 44 per cent had no vendor experience in the management team.
It's not surprising that resellers with higher turnover also had more ex-vendor execs on their management teams. Virtually all providers with more than $25m in revenue had a staffer who formerly worked for a vendor on the management team.
Conversely, the smaller resellers were dominated by management teams with no vendor experience.
The same held true for reseller profitability. Most providers with gross profits greater than 20 per cent that we spoke to had at least one staffer formerly from a vendor as part of their management team. In fact, no reseller with margins greater than 60 per cent was devoid of vendor experience across management and operations.
When it comes to general rates of growth, resellers with little or no vendor experience had expanded their businesses by less than 10 per cent a year. Resellers with two or more managers with vendor experience enjoyed growth rates better than 25 per cent per annum.
Having experienced managers in business development and administration is no guarantee of success, but our poll does paint a picture suggesting that having people with vendor-level business backgrounds and skills does pay off.
Larry Walsh is president and chief executive officer of Channelnomics
As part of our special editorial partnership, CRN is republishing this article from Channelnomics
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