Slash those software suppliers

Many resellers take care not to carry too much hardware while software portfolios expand, warns Irvin Shillingford

The IT channel is trying to manage too many suppliers of hardware and software. Trends such as BYOD, big data and cloud computing, combined with customers' insatiable demands for greater choice, are straining the supply chain.

And while most resellers have turned their attention to rationalising the number of hardware vendors they deal with, their ballooning software portfolios have gone largely unaddressed.

In fact, while most resellers deal with three or four suppliers for the same piece of hardware, they will often find themselves working with many times more than that when it comes to sourcing the licences for their customers' software, particularly at the more specialist end of the market.

Saturation in the software supply chain is costing resellers every day, but given the complexities of software licensing and the significant costs of sourcing the wrong licence, the stakes are much higher when it comes to sourcing software.

The saturation of software suppliers is affecting resellers in a number of ways. Having too many suppliers is a distraction; just as with hardware, having the optimal number of strategically important suppliers is better.

The sheer volume of lower-tier software vendors out there can be daunting. They are often better sourced indirectly, through a third party, so you can focus on those suppliers that matter most.

Price transparency is harder to achieve when you have too many suppliers. The price for a software licence can vary a lot between suppliers, and with so many distributors of the same software, finding the best price can be very difficult. How can you be sure you paid the best price?

The commercial terms under which software is sold are complex, and every vendor adds its own variations on the theme. Yet when it comes to selling software to your customers, you really need to understand the vendor's specific commercial terms, licensing complexities and SKUs.

This is as true for Microsoft resellers as it is for those specialising in niche vendors. Many software resellers have built their entire businesses around a deep understanding of a particular vendor's commercial terms.

Do you really want to force yourself to learn the licensing SKUs and commercial peculiarities of so many low-margin vendors?

And then there's non-compliance and piracy. With so many licence variations for the same piece of software it can be easy to buy the wrong one. The software licences of smaller vendors are no less complicated than those of Microsoft or Oracle – there are just far fewer forums to help you find your way – and there are just as many variants.

If you are not an expert in that software, you must find someone who is, or you risk exposing your customer to the wrath of the Business Software Alliance and a costly software audit, if you unintentionally provide them with the wrong licence.

You could say that the buck for compliance ultimately stops with the customer, but is that really a conversation you want to have?

Just like with your hardware inventory, it pays to consolidate the number of software suppliers so you can focus your attention.

Too many suppliers of hardware can be a distraction and a drain on margins, while too many software suppliers can be detrimental to the long-term success of your company and your customers. Don't leave it to chance; only supply software you understand.

For everything else, find suppliers who can be the experts on your behalf.

Irvin Shillingford is software channel manager at ASM Technologies