Working relationship
The second of our two reports on partner programmes reveals resellers have mixed feelings towards efforts to unite them with vendors
In the first article we took a look at partner programmes from Microsoft, IBM, Hewlett-Packard, EMC and BT Indirect Channels. One thing was clear: partner programmes are the glue that unites vendors with the channel, but the complex rules and conditions of such schemes belie the basis of their existence.
Partner programmes are put in place to motivate and incentivise. So far so good, but tension usually arises from four main areas: the relative support that some members get over others; the ineffectiveness or complexity of some bonus/discount/rebate programmes; vendors' insistence to see customer details; and the conflict from direct and online sales.
Most of the recent attempts to address these issues have had mixed results. There is a tendency to create fairer accreditation systems, with points systems being the flavour of the year from Microsoft and IBM.
These systems reward a range of activity rather than simple skill-based learning. There is also a trend to simplify programmes. IBM, for example has unified its programme by rolling four separate schemes into one.
There is also a growing desire from vendors to communicate more effectively through portals and extranets. While Microsoft admits its recent registration drive was marred by an ineffective online sign-up procedure, the trend is generally positive.
Indeed, the hot ticket in the US looks like the Microsoft 'buddy' system, which is a guaranteed named individual to support many of its leading channel players. But unfortunately this system is unlikely to reach the UK, possibly because this service would prove just too expensive.
But for some resellers it will take more than buddy systems to be convinced that things are getting better rather than worse. Mike Lawrence, marketing programme manager at Bentpenny, believes his firm is typical of the smaller resellers that feel pushed around by partner programmes.
"We have been dissatisfied many times. For example, we were involved with Sage, and had some free training, but then they wanted us to pass an exam and pay for full accreditation, so we decided not to continue. I think a lot of vendors have a dreadful attitude."
Lawrence adds that there is a growing tendency for vendors to want to see full customer details in advance of a sale. "We tell them where to get off. Why should we share customer information? To me the word partner means slave," he says.
But Ian Kilpatrick, chairman of the Wick Hill Group, is more pragmatic. "What resellers really care about is lead generation, and what is happening is there is a greater focus on distributors to work closely with resellers to generate leads that progress to sales.
"Whereas before, lead generation would trickle down from the vendors, it is now more focused and specific. We even do things like provide speakers for seminars organised by our resellers," he says.
Oracle, the leading database software vendor, has 948 partners in UK, split into three categories: 12 Certified Advantage Partners; 48 Certified Partners; and 888 resellers at Partner Level, also known as members. Elevation up the ranks is by virtue of sales and skill levels, which are measured by accreditations. Its best known resellers are Compel Sysao, Quantix, Basilica and SX3.
Worldwide, ISVs account for 48 per cent of its partner network and 48 per cent of its worldwide licensing revenues are derived from partners. In the UK Oracle channel sales account for just over 50 per cent of sales, a figure it intends to increase this year. Oracle is also seeking to increase its total number of UK partners, particularly at Advantage and Certified levels.
Oracle says it is in the process of increasing support to the Certified Advantage Partners by increasing pre-sales and tendering support, providing a single point of contact through a Partner Sales Delivery Manager and providing Technical Support Manager reports for a number of key projects and managed services.
The push for Oracle is about maintaining its lead position in databases while growing its application server and business applications market share.
Oracle's marketing support includes: advertising and exhibition opportunities, exposure via Oracle corporate PR, customer references, publicity on Oracle.com and Oracle magazines, and specific partner marketing campaigns. Partners also get online access to marketing, planning and execution tools.
Trudy Norris-Grey, vice-president of alliances and channels at Oracle UK, says: "We treat the channel like family, not the in-laws. When we do training on a new product, we do training for internal staff and partners at the same time. That way they feel very much part of it. Financially our partners are doing better than ever," she says.
Access infrastructure provider Citrix claims it has increased its channel team 60 per cent in the last year. It makes all of its sales through the channel.
Citrix has three categories of partner: Silver, Gold and Platinum. In the UK this adds up to 214, 33 and seven accredited resellers respectively. Partners are elevated through these categories by virtue of sales volumes and accreditations. There are also two managed consulting partners and 19 ISVs.
A year ago, Citrix launched the Advisor Reward Scheme. Resellers can log a potential opportunity as soon as it appears to ensure that even if the sale goes elsewhere, they are still rewarded.
Citrix says that 2,500 opportunities have been recorded to date across EMEA, and more than 85 partners have been rewarded with a seven to 10 per cent bonus for deals they flagged, which have subsequently closed, even if it wasn't them that closed the deal.
The firm is also seeking to allow the channel to be more flexible. Last September Citrix announced 'Easy', a new licensing programme that allows companies to buy small numbers of licences electronically. Easy joins the 'Flex' programme for large sites and 'Open' for 350 licences and more.
On the marketing front, Citrix agrees marketing plans and specific objectives to help generate incremental sales revenue. The company supports its resellers through production of marketing toolkits and templates that resellers can re-brand.
Kevin Bland, channel sales manager at Citrix, says the current aim is to grow the quality rather than size of the channel.
"We want to improve the quality and the level of motivation," Bland says. "We are only as good as the channel so we are focused on rewarding for meeting targets or influencing sales. It's about helping customers to see why they should move to Citrix."
Paul Russell, head of consultancy at Servo, says: "Historically, Citrix has judged its channel on licence sales. We're pleased this has changed because as a system integrator, we engage in Microsoft-led consultancy advising clients at the project design stage right through to project delivery.
"On a number of occasions, our client has come to us for advice and design work, but has a local supplier for licence purchases. The new programme gives us recognition for our contribution."
Fujitsu Siemens Computers (FSC) says it does business with more than 5,000 resellers per year, and sees more than 1,600 different partners selling at least one product each month. It has 404 Accredited Partners in the Elite accreditation programme, split into 339 Certified Partners and 65 System Centres. There are also three Corporate resellers and five distribution 'centres of excellence'.
FSC sells all of its products, apart from the high-end PrimePower Unix (Sparc/ Solaris) Enterprise systems, through the channel.
FSC's top-selling products are currently mobiles, such as the Amilo Pro V1000 series, the Scenic X desktop range, and the TX & RX servers, together with the associated volume selling options and accessories.
"For us, accreditation is about identifying partners prepared to invest time and resources in developing skills around Fujitsu Siemens Computers, its products and services," says Ian Snadden, UK director of channel and SME sales at FSC.
The Elite programme includes training, contact points for further information, pre-sales tech support, special pricing support for projects, access to market development funds, and quarterly partner briefings and other events. All partners which are accredited Elite status are assigned single dedicated account management point of contact at FSC.
FSC also has a small reseller initiative called Pulse. The programme includes a number of product offers and promotions, together with a specific business growth incentive.
Pulse is about to start its third wave after the 50 partners participating in the previous wave generated well over £1m of incremental business, growing their combined sales by more than 172 per cent year on year.
"At a reseller level, I see many resellers who have tried to build a services business over the past few years, with some success. Recognising perhaps 'a shift too far' in the direction of services, a reduction of their hardware foundation upon which services sales are built, and a desire not to leave money on the table," Snadden says.
Network anti-virus and security software and service specialist Trend Micro has a partner programme with three levels. The highest accreditation is Premium, followed in descending order by Authorised Partner and Business Partners. All other partners are named resellers. The programme focuses on providing sales and marketing support, sales and technical certification, and preferential pricing with distributors.
To be eligible for accreditation, reseller partners must commit to and generate minimum sales figures. The target depends on the reseller's level of accreditation. There is two levels of sales and three levels of technical accreditation. Level three technical accreditation costs £850 (£1,250) per product group.
Resellers gain access to the PartnerWeb portal, which offers news updates, sales support materials, marketing materials.
Trend Micro is actively growing the channel in the light of a very successful year. According to a recent study from analyst IDC, Trend accounted for $383m in worldwide revenue and a 14 per cent share of the $2.7bn anti-virus software market in 2003. IDC expects the anti-virus market to reach $4.85bn in 2008.
"The main change (to Trend's channel programme) is that it is better managed now," says Tony Larks, business development manager at reseller Peapod. "With any programme it is important that it is policed to ensure margin parity. If you don't do that - and it's not that common - you get conflict and competition between distributors, and customers play one reseller off against another."
Larks adds that he thinks there will be a lot of interest in a recent announcement that Trend has teamed up with Computer 2000 to better target the SME market.
According to Roger Levenhagen, Trend's managing director in the UK, the channel is getting more cut-throat as customer demands are greater.
"More enterprise-class software vendors are trying to crack the SME market, but my concern is that many vendors are tempted to simply push cut-down versions of enterprise class software," says Levenhagen.
"There is also a flood of point products available to the market. But with the combined threats that have become so prevalent, point products are not enough. The channel is telling us that their customers require comprehensive solutions which raises the game for some in the channel in terms of how they educate themselves."
Network software vendor Computer Associates (CA) says developing its reseller channel is its "number-one priority" for this year. The firm's intention is to have an equal split between direct and channel sales revenue by 2006, with a target of £8m of new business for UK channel partners.
In the UK, CA divides the channel into 2,500 affiliates, 75 Premier Partners and 25 Premier Enterprise Solution Providers. It has 3,500 resellers, most of which are affiliates. CA's main distributors are Computer 2000, Ingram Micro and CMS Peripherals.
The company has just opened what it calls a Customer Interaction Centre in Barcelona, which generates sales leads for channel partners as well as providing free technical support.
"Continual change is needed to ensure that resellers can see the benefit of a programme," says Sarah Guy, head of marketing at Ingram Micro. "CA has taken the time to look at the requirements of different resellers and have produced exactly what they need with their three programme categories."
Partner programmes are all very shiny on the outside, but the reality, according to some resellers, is that if the vendor's programme is not capable of policing the rules it sets out, it gains little respect. This is particularly true in relation to conflict with internal sales, or finding stock on online sites that make a mockery of prices through recognised distribution channels.
"With one vendor I deal with, there is the constant fear that direct sales will go and pick off one of our customers if they are light on sales that month," says one reseller, speaking anonymously. "In addition, channel pricing structure is a joke for some of our stock, because we can buy it online for 10 to 15 per cent less than through the distributor. How can that be right?"
But James Governor, founder of consultancy RedMonk, says the channel must not get disheartened. "Yes, direct sales are squeezing the channel, but the point is, it's all about service. Where is service in the direct sell? The customers are crying out for good service, and that is where the channel scores highly. The IT business always needs it," he says.
CONTACTS
Citrix (01753) 276 200
www.citrix.com/site/partners/index.asp
Computer Associates (01753) 242 679
www.ca.com/channel/emea
Fujitsu Siemens (0800) 004 003
www.fujitsu-siemens.co.uk/aboutus/partners
Oracle (01189) 240 000
www.oraclepartnernetwork.oracle.com
Trend Micro (01628) 400 500
www.trendmicro-europe.com