Why your vendors might be introducing PRM software soon

CRN investigates the recent rise in popularity of partner relationship management software and why the UK channel is slow to adopt it

The partner-vendor relationship model has remained relatively unchanged since the formation of the IT channel roughly 35 years ago.

That could be about to change, however, as partner relationship management (PRM) software continues its stealth growth among vendors.

PRM operates in a similar manner to CRM by allowing vendors to track and manage the relationships with partners in their ecosystem.

"The PRM system enables you to see which customers you have, what opportunities you have, which partners are taking the lead with that opportunity and where it is in the sales cycle," explained Jacqui Rand, co-founder of Channeliser, which works with PRM vendors.

The software has been gaining ground among vendors in recent years, and earlier this year PRM automation specialist Impact raised $75m (£60m) from private equity backers. It counts tech giants such as Microsoft, Lenovo and McAfee among its clients.

Though vendors are the main demographic that uses PRM, Rand added that a good platform is one that also caters to partners.

"A good PRM software will also give visibility to the partners," she said.

"So a vendor will have this PRM software which will track leads, the status of them and the contact, but it will also provide visibility to the partners who can see their list of opportunities with that vendor as well."

Rand co-founded Channeliser five years ago and described it as agnostic and able to "snuggle up" to most PRM vendors. It has worked with LeadSmart and Web Infinity among others. She has observed an uptick in demand for the software since Channeliser's inception.

"Previously, PRMs were really the domain of the very large vendors - the likes of Microsoft, HP and Cisco - because they have a lot of partners and therefore needed to track and have them on record," she said.

"I think an increasing number of mid-market vendors - and even smaller vendors - know that there are now solutions out there that are more economical; they can now have a fully functioning PRM for a fraction of the price."

Coming of Age

Though PRM has been around for roughly two decades, the revenue that vendors reap through their channel leads them to grow that community, which in turn leads them to find an easier way to manage that ecosystem that can have thousands of partners in it.

Jay McBain, principal analyst of channels, partnerships and alliances at market watcher Forrester, says that the channel is now entering the "third stage of sales and marketing".

The first stage, he explained, was when CRM took off in the late 1990s; marketing automation's exponential growth a decade ago marked the second stage of this transformation and PRM will anchor the third stage.

"We're entering this third stage where I feel that PRM - and the broader channel software stack - is going to get more play, as companies really look to the 75 per cent of their business that runs indirectly," he said.

"We're at the point where Microsoft is bringing on 7,500 new partners a month and Salesforce has announced that they're recruiting 250,000 new partners to double the size of the company for the next four years.

"We're off the charts in terms of scale. Even smaller vendors are figuring out that they may need thousands of companies inside their ecosystem to get in front of the buyer and to properly represent them through the entire buying journey, which never ends now that everything is subscription and everybody's a technology company.

"In this world, you can't do that on a spreadsheet, you can't do that with humans in the middle - you've got to have a system of record.

"And you've got to have an operational system that can do all those things - and the other 90 pieces underneath those things - to keep partnerships alive, stable, growing and connected."

McBain estimated that "pure" PRM software sales currently stand at between $300m and $400m, with an additional $500m worth of services wrapped around that. That is expected to grow to about $1.7bn by 2023, he added.

It's a growing market that is ripe for consolidation, with McBain estimating a 14 per cent consolidation rate in the PRM market. However, he doesn't believe that the channel is utilising the software as much as it could be.

"There are roughly 10,000 companies in technology alone that run channels," he explained.

"If you were to ask them on a scale of one to 10, what their maturity is in terms of using the tools, automating processes and using technology to its fullest to really drive their partnership strategy, the average answer is three out of 10.

"We're at a stage now that there's a lot of room to grow. And I don't know if any company on the planet would score 10 out of 10.

"So there's a journey that almost every one of these 10,000 companies needs to go on, to better improve how it works with partners, and how it scales that to a new level, given all these new trends that are happening in the marketplace."

The future form of partnering?

The growth of PRM software has particularly taken off in the US, with 77 per cent of PRM vendors headquartered there. The UK, though, is still an immature market for this technology, according to Antony Young, CEO of business intelligence platform IQBlade, which works alongside PRM.

He co-founded the company in 2015 because he a number of vendors were approaching him as an external consultant for advice on who to partner with. He believes vendors aren't relying on PRM software as much as they could be, which is part of the reason for the slow rate of adoption in the UK.

"I think it is still to hit the UK, in terms of adoption," he said.

"I don't think we're seeing it yet for a few reasons. Some of the interesting challenges are: how does a channel partner use it if they're multi-vendor? If each vendor comes to them and has a different PRM system, does that mean the channel partner then has to have access to and use different PRM systems? Another challenge is that, historically, some of the vendors have tried to do it themselves.

"I think adoption is going to be driven by the vendors or the distributors because that's really who it benefits in the first instance. It benefits them by being able to get a good handle on their pipeline and their funnel.

"What's key is that the partner starts to see some benefit from PRM and, primarily, that's got to be about business growth."

Both Young and McBain agree that PRM is the future form of modelling and that the channel will see a shake-up in that respect in the next few years.

"It's inevitable because as more business moves to the cloud, so will those transactions," said IQBlade's Young.

"People will start to use systems to transact business rather than physically passing orders and emailing orders and that kind of thing.

"In terms of what partners can do to be ready for it, if they're going to have increased knowledge and increased data at their fingertips, they need to start to think about how they're going to then deploy that data to maximise the benefit of having those systems."

Analyst McBain warned, however, that PRM is not a miracle cure for issues that partners may have with vendors.

"PRM is not a simple, fix-all scenario, but it is one that starts to solve some of the collaboration and communication issues that partners have," he stated.

"A lot of times they are trying to chase down data or numbers, and it's all human-based, and they get frustrated that they don't get the answers, or they don't get them immediately.

"PRM has the capability of exposing a lot of information to the partner that they need and creating partnerships that are more self-service, which is absolutely what partners are telling us - ‘don't put a human in the middle of things'."