Raising the bar
Jack Gilbert asks what is driving a growing number of vendors to ‘make bigger bets on fewer partners', and whether some channel players losing out as a result?
"The relationship between vendors and partners has changed," said Darryl Brick, partner director for UK, Ireland and southern Europe at Juniper Networks. "It is now better to invest more dollars with fewer partners and get a higher return."
This statement encapsulates a mood among many that vendors are beginning to focus more of their attention, and cash, on bigger partnerships with fewer, more committed resellers.
Last summer, EMC warned partners to "go hard or go home" as it imposed eye-wateringly high sales targets as part of the rollout of its new Business Partner Programme. To achieve top-level Platinum status on the new programme, partners must sell $65m (￡42m) worth of EMC kit in a year, $15m to reach Gold and $1.25m for lowest-level Silver. Under the old scheme, no revenue requirements were in place, leaving some resellers on the previous top Signature level facing being relegated
to the bottom of the pile this year.
Symantec was another to raise the accreditation bar for partners last autumn as it promised to "make bigger bets on fewer partners". Fewer than one in five of its Platinum partners in EMEA retained their top-level status under the security and storage giant's new partner programme.
Although EMC and Symantec grabbed the headlines, Juniper made the decision to focus on fewer partners 18 months to two years ago, according to Brick, who said the trend went on to sweep through the entire industry last year.
"I feel we were quite early adopters of this new strategy of having a much sharper focus in our channel and placing a much greater value on fewer partners, so I was sort of pleased when I started seeing other vendors following suit," he said.
The rationale for this trend is many-pronged, Brick (pictured) added. "Firstly, the types of solutions that are being sold are evolving and are different now to what they were two or three years ago," he said. "Selling into cloud environments, selling into virtual environments, selling into service provider networks - this is different to the old IT model of selling products to customers.
"That's the reason why vendors are changing: the selling model and the target customer is different," he said.
Vendors are now looking for partners with more competencies and skills to sell their products and solutions in these new environments, Brick added.
"A guy sitting on the phone flogging away on a price is probably not the best model one needs to sell services to a cloud provider," he commented.
The overall relationship between vendors and partners has changed, Brick said, adding that there has to be "a greater degree of trust, familiarity and engagement".
"A partner needs to understand the vendor's strategy really well, whereas before you could just pick a good product, look at the spec sheet and try to sell it."
Paul Barlow, managing director of Servium, believes this shift in the channel has been driven by economic factors.
"The economic climate over the past few years has driven more of a focus on return on investment (ROI), and that is not just on marketing campaigns but also the ROI the vendor gets from the reseller," he said.
If the vendor is giving the reseller its focus, then they would expect to have that mirrored back to them and "ideally in sales numbers as well", Barlow added.
"The more focus you get, that normally drives the numbers, but vendors are saying they cannot directly deal with a lot of partners - they are getting distributors to fill the gaps and there is outsourcing as well."
This shift could be dangerous for smaller resellers that are not doing the numbers to justify the attention from the vendors, Barlow said.
"The momentum the larger resellers have with a product or a vendor gives them an advantage and it can be very difficult for the smaller resellers," he said. "It's a numbers game and the vendor looks at the numbers and they work out where it is best to apply the direct management."
Symantec claims top partners can potentially double their total compensation package under its new competency-based partner programme, which went live on 7 October. However, only those able to make big investments in technical and sales headcount and joint business planning have made the grade for the new Platinum status.
Mark Nutt, vice president of partner management EMEA at Symantec (pictured), said it is not easy to build high-growth partnerships, and commented "you can't do it with everyone".
"If you want to do it well, you have to focus and think about where you are going to invest and therefore it forces you to think about placing fewer, bigger bets to drive that growth," he said.
"We are not apologising for raising the bar - we are not just looking at technical capability; we are looking at sales capability and we have created some revenue thresholds, so the bar is higher than it previously was, but the rewards are also much greater. That is the mechanism we'll use to help us find the right partner to drive the growth we think is ahead of us."
An old boys' club
Inevitably, this trend among vendors to double down on fewer resellers hasn't benefited everyone, however.
Mark Adams, managing director of Galtec, said he felt this shift in the channel has meant some resellers are missing out on partnerships with vendors.
"It has created a hierarchy in the channel, and there is a sense of an old boys' club between the top end of the resellers, and the value-added ones are somewhat put into second place," he said.
Adams believes this is not happening at just one or two vendors, but across the board.
"It's elitism among all the vendors alike, and they are all chasing the big boys in the industry," he said. "If you look at the facts, it's the same people getting the same vendor accreditations over and over again, especially with the tier-one vendors - the likes of HP, Dell and Lenovo, it's the same names coming up every time."
According to Adams, this is having a negative effect on his and other small and medium-sized resellers.
"There is a psychological impact but also a financial impact, which means that marketing funds are not as readily available in terms of quantifiable income."
But is this trend of vendors readjusting their channel partners a worrying and irreversible theme for the channel, or just a passing fad?
Barlow at Servium said he felt the process was "nothing new", but rather a natural cycle of business that vendors go through.
"I would say it is more of a reiterative process. Although there are a few vendors who have been doing it over the past few years, it's not really anything new, it's just a cycle of business the vendors go through," he said.