At your discretion

EMC and Avaya latest vendors to confirm that discretion will have growing hand in how they dish out marketing funds

The list of large vendors embracing a discretionary model for allocating channel marketing funds continues to grow.

In the wake of HP's market development fund (MDF) shake-up, both EMC and Avaya have confirmed they have recently made changes to the way they dish out marketing dollars to their distributors and resellers.

Traditionally, EMC has ploughed 95 per cent of its marketing cash into co-op marketing funds that partners accrue automatically. Just five per cent went into MDF, which is discretionary.

But from 1 April, the storage giant changed the split to 75-25 in order to encourage more forward planning and help partners react more rapidly to changes in the market.

EMC's top partners are allocated co-op towards the end of each quarter based on the revenue they make on its four Velocity Specialities. In contrast, MDF funds for demand generation activity are dished out at the start of the quarter based on the strength of the plans partners submit, explained EMEA channel marketing director Kathleen De Bondt.

"We want to directly link how we spend our money to partners' strategic planning and help them increase their reach," she said. "MDF is more flexible and can help them adapt to changes in the market."

De Bondt added: "A lot of vendors are moving from co-op more towards MDF. We would prefer partners to have produced plans before the quarter than to be reactive with co-op at the end of the quarter."

Avaya recently went even further, ditching its entitlement-based MDF model in October to one based entirely on discretion. The old model is still being phased out but director of EMEA marketing Michelle Jones said partners had reacted positively to the overhaul.

MDF submissions will be judged on three key criteria to minimise complexity, Jones said, adding that the total pot is the same, if not bigger, on an annual comparison.

"We have clearly outlined our strategy," she said. "We want to see demand generation activity that will directly affect pipeline in a positive way. And we want to invest in partners that take us into opportunities that are new to us or represent portfolio expansion."

Eighty per cent of the funds will now be pumped into demand generation activity that the comms vendor can measure and track through to revenue.

Jones said the discretionary model would allow Avaya to map funds to the partners that represent the best bet for growth. "In the past, we had some partners that wasted money because they did not have the marketing resource or did not execute," she said.

Despite the wider trend, PC vendor Lenovo is moving full steam in the opposite direction, having recently begun tying the MDF its top Gold partners accrue to revenue.

Darren Phelps, UK and Ireland SMB and channel director, said the new system is more generous and would offer more predictability for its top 20 resellers. "The new programme delivers 20 per cent more in MDF," he said. "Resellers can predict what they will earn, so they can build plans for the next quarter."

MDF will still be available to Lenovo's smaller partners on a case-by-case basis, with Lenovo currently engaging with 25 partners on this front, said Phelps.

In a statement, IBM said it had not changed the way it funds MDF.

"In fact, we have increased the funds," said Ian Jeffs, channel and mid-market marketing lead for IBM UK and Ireland.