At a recent roundtable 'Channel Voices' event at the Gherkin sponsored by IT infrastructure vendor Vertiv, a group of invited partners stressed the need for transparency and honesty between vendors and their channel to avoid relationships breaking down. We share the top takeaway points to emerge from the discussion covering a diverse range of topics
The channel is a volatile industry, driven by fast-paced technology changes, and also ever-moving goalposts when it comes to vendor and reseller engagement. Partners are under more pressure from both their vendor partners and their customers to stay ahead of the game and on top of all the latest technology developments. But what are some of the key issues that are really affecting channel players, and what should vendors be doing to resolve these issues?
Before diving into the full write up, check out this video from the event, which gives you a taster of some of the points covered:
Back to the full write up:
Trust is still a major issue
It may be an often-talked about issue, but many vendors seem to be failing to get the message that trust is something that is earned from their partners, and this includes making sure their channel strategy is supported and championed throughout the business. Just as soon as it is built, trust can be taken away in a matter of minutes through careless actions, as two of our delegates explained.
Sandrijn Stead, CEO of CView Technologies said it was vital to not keep changing rules of engagement. "Trust is the biggest problem at the moment. It doesn't matter if you look at vendors who have a history of selling to named accounts or not," he said. "As a reseller you also have to consider the things that aren't clearly defined or written in a contract - such as future renewals or engagement. Many vendors that have built their business on service engagement are now asking partners to buy a service pack and make 10 points on it - but these same partners if they sell their own services, they can make up to 45 per cent on that. That causes trust issues."
Annabel Berry, CEO of Sapphire agreed that trust was a serious issue in reseller/vendor relationships.
"Trust is the pillar of everything. It only takes a couple of bad behaviours in an organisation to undermine everything. Quite often [at vendors] the rules of channel engagement don't filter all the way down and things are overlooked when targets need to be hit," she explained.
"A lot of the suppliers we work with don't have the capability around services delivery, yet they have built it into their sales people's direct touch commission plans to sell more services. They are then sub-contracting those back to partners at a lower rate because they can't deal with it. "That to me seems crazy. I want to be involved early on in the project - that is my business model - value. I'm not about volume, I don't want to come in at the 11th hour with a purchase order to put through because I'm not going to be able to build the relationship with the client. I want to be involved early on and prove my value. Clarity around this is important - it is what makes a channel partner trust a vendor and want to sell your products in the first place."
People are the most important thing in a business and the skills gap is an issue
Another issue that raises its head time and time again during discussions is the importance of both retaining skills and also attracting the next generation of talent.
Jonathan Wagstaff, group business intelligence manager at Exertis, said his firm, and many others are building up specialist skill sets through careful acquisition. "Consolidation is the theme of decade," he said. "We have all seen recent private equity backed deals such as Tech Data, Annixter, Exclusive - it is happening at all tiers of the channel - skills are being bought. From [an Exertis] point of view we are buying specialist businesses, with very specialist people with specialist skill sets. It is all about people power. "The challenge the channel has always faced is to get big, get specialist or get out. I think you can be big and you can be specialist - but you are highly dependent on your group of skilled people. That is how things are evolving and is one of biggest challenges. The value gained from people is as important as the technology," he added.
Michael Keane, managing director of Ajar Technology, said he was working hard to both hold onto existing talent, but also develop skills through apprenticeships.
"We have recruited three people in the last month and I'm trying to recruit more. We are thinking about the future and are taking on apprentices," he said. "We as a company understand our clients' pain points and want to make their lives easier, and this is what our employees buy into and is where our value add comes into play. As our staff stick with us, they will grow alongside us. As there is a talent shortage out there, rather than looking for people that are already specialists, we try and create our own. "
Berry added: "Culture is a big thing. We are very careful with how we look after our staff and they are excited about what we are doing. The market is moving in our direction at the moment with a need for specialists, so we have people coming to us because they know they can be more influential in their position."
The channel is lacking in innovation
One controversial point that was raised during the discussion was that the channel hasn't really changed the way it works for decades, and it was crying out for a vendor that can come along and really innovate in how it engages with the channel.
Paul Barlow, managing director of Servium, said this becomes painfully obvious when introducing new employees to the industry. "For an industry that is based around innovation and all the latest and greatest emerging technology - I think we are pretty poor at innovating internally. There has been no innovation in how the channel works," he said. "You sit there and ask ‘where do I start?' when it comes to explaining the channel to new employees. In banking, for example, you can have all your accounts in one place, but you can't do that for HPE, Lenovo, Cisco, Palo Alto etc - they all have different schemes, different ways of working. "I think there is a real opportunity for vendors that can do something differently" he said.
Sapphire's Berry agreed. "There is a huge opportunity to do something different and really stand out from the crowd. Everyone is doing things the same way," she said. "We work with 12 strategic vendors, and each one thinks they are the most important to us and bombard us with all sorts of information. But our sales guys are trying keep on top of that as well as the other products and services we do and it is very difficult. It would be great if a vendor approached the channel differently - kept things succinct but relevant. They will stand out head and shoulders above others if they can do that."
Most vendor partner portals are not fit for purpose and their marketing strategies are lacking
So many vendors proudly boast that they have launched a new partner portal, but how many of them have actually taken the time to ask partners what they really want from the portals. Not enough according to this panel.
Servium's Barlow said: "With all the greatest respect to marketeers and vendors, the portals for vendors are not easy to understand and if I'm honest I'm not going to put my brand name to something ten or fifteen other companies have done. Our customers trust our brand. They trust Servium. With marketing I want bespoke. I know that is hard, but I don't want to be a me too.
"Also less is more. With most portals within about three to six months of it going live marketing get hold of it and there is so much information on there you can't find anything or see the wood for the trees. People don't want to wade through reams of information, they just want succinct bites," he said.
Berry agreed: "I roll my eyes when people say ‘it is on the partner portal'. What works for a vendor doesn't always work with a reseller - I need some signposts we can hand our message on, such as case studies and some sort of competitive analysis. It is not about slating the competition, it is about differentiating against the other people we are likely to come up against, and giving us partners some ammunition. Vendors will often have that information, but it is internal only. Their teams are trained around it, but they won't allow us to go out and use that information.
"Also paying some attention to the reseller's business would be helpful. I hardly ever get asked what we are actually doing - yet I hear a lot about what the vendors' objectives are and what they are doing. We should be helping to drive success together, otherwise it is not going to work.
Ajar Technology's Keane said: "The main thing I want from a portal is case studies. I want to print one on the latest deployment and show it to customers as an example of where someone else has done it. People will always ask ‘where has it been done?' ‘what are the problems?' ‘Where has it been deployed?'"
Channel account managers are absolutely key
Sapphire's Berry said it was important not to underestimate the importance of a good channel account manager (CAM).
"A CAM can make or break a relationship," she warned. "We have had successful long-term relationships where we've worked with vendors for many years, but then revenues have taken a nosedive because we had a CAM that wasn't engaged, or didn't show up. We didn't feel they were fighting our corner. You need to feel someone has your back when going into battle, and also who are recompensed directly as a result of the success of the reseller. Don't overstretch them either, if I know my CAM has 50 resellers, I know I'm not going to see them. That is not a relationship."
Exertis' Wagstaff said this was a priority for distribution. "If you look at the large global distributors that have moved organically into new regions through acquisition, many pulled out because they did not have the success they thought," he explained. "You are not just buying specialist skills, you are buying vernacular language skills and someone who understands the markets and cultures. As long as there is complexity not just in products, but also within different regions, the CAM is going to have a place. Our CAMs pride themselves in having that close relationship and sitting down with the right people."
Keane agreed a CAM was a deal-breaker. "We interact with a lot of different technology partners. If we don't get on with our CAM, then that transaction will be the last one. We will actively find a replacement technology and actively tell our client if we feel we don't have the confidence in that partner."
Barlow added: "If you change CAM either from distie or vendor perspective once every six months - you have lost that trust. We would rather people came into office and got to know us and got that relationship going. But if vendors change that CAM - and it is always the good ones that get promoted - then you have to start over again with account mapping etc. When you are working with multiple vendors it can feel that we are not actually selling to customers, but dealing with the back end of the business all the time."
Automation and 5G are technology areas to watch
In an industry that is has been talking up the cloud for nearly a decade, it was generally agreed that the hype of ‘new' technologies such as artificial intelligence and IoT can prove a turn off for customers, but all those sitting round the table agreed that 5G and automation would be key areas to watch in the future. However that comes with its own challenges, namely how to monitise those areas effectively.
Ajar Technology's Keane said his customers were demanding three key things at the moment: Simplification, consolidation and upgrades. "There are a lot of legacy systems still around that is not really compatible and also with simplification, people could have six servers because they put in a CCTV system ten years ago and as they upgraded they added more servers rather than scaling what they already had. So customers are looking to redesign crowded areas and get rid of legacy systems," he said.
Keane added that technology such as biometrics and AI has different meanings dependent on who you speak to.
"Some people see AI as data mining, gathering intelligence - some see it as automation. There is a lot of process automation going on."
Servium's Barlow said customers are fed up with buzzword marketing. "Is it Internet of Things or Internet of Everything? Customers are fed up with it - they already refer to the cloud as the ‘c word' - cloud is everything but it is not for everything. From an industry level we have to be careful with the hype - it fell over with Y2K and that has dented the IT brand in the eyes of end users. There is a general malaise towards the latest and greatest," he warned. "However we are seeing interest in voice and video from customers, some stuff around 5G - but it is more about preparations for 5G, particularly in the automotive industry and gaming. The capacity issue will be interesting as there is going to be a requirement for bandwidth to drive 5G - but I'm not sure what the benefits to the channel will be just yet."
Wagstaff said Exertis has seen the smart home as a real success story with voice being a game changer. "Voice control is where the smart home starts," he said. "It is already generating return and we are seeing growth. I do agree on the point about 5G - some analysts have said it is the fourth revolution - but there is a big infrastructure challenge around 5G, anyone who leaves the Square Mile of London struggles to get even 4G. Also with gaming, there will be a shift in the way content is delivered which will affect more of the retail side - but there is still going to be a need for a client device to receive. Remote gamers will still want controllers and a headset."
Watch: the five panellists each recorded a short video covering key topics facing the industry. To see those videos, click here.