Last week's iPad exclusive story shed light on the pet peeves channel partners have about their IT vendors. This week it's the vendors' turn.
Ask vendor executives what frustrates them about solution providers, and many will -- at first -- profess to love their channel partners and say all is right in their channel universe.
"We generally feel good about our partners," said Red Hat CEO Jim Whitehurst, when asked in an interview about any frustration he has with the company's channel partners.
" 'Frustration' is too strong a word," said Kevin Gilroy, channel chief at SAP, when asked the same question. "I'm not frustrated with the channel."
But probe a little deeper and the frustration comes out: Partners that just resell products without adding value. Partners that fail to take advantage of market development funds and other vendor-offered assistance. Partners that don't prospect for new customers. And partners that just refuse to change with the times.
Here's our look at some of the most common complaints IT vendors have about their solution provider partners.
10. THESE STRENGTHS SHOULD BE SELF-EVIDENT
Somewhere between 10 percent and 15 percent of all channel partners "are ahead of the curve" when it comes to adopting new business models, selling new technologies, and even just understanding core sales activities such as demand generation, said Gilroy, SAP's senior vice president of global channels.
"For their sake, they should be more highly valued in the ecosystem," Gilroy said. While he acknowledges that that equation includes better rewards and recognition from IT vendors, he said partners should be doing more to promote their strengths. "We'd like to recruit them; we'd like to partner with them."
9. LANGUAGE LESSONS: LEARN HOW TO SPEAK 'BUSINESS'
"Too many solution providers go right to the IT department when they're trying to make a sale," complained a channel executive at a New York-based software company, who asked that he not be identified for fear of being seen as criticizing the company's partners.
While the IT department is still responsible for a lot of technology infrastructure spending, line-of-business managers have an increasingly bigger say in information technology purchasing decisions. Gartner has forecast that by 2017 CMOs will be spending more on IT than CIOs.
Many solution providers are more comfortable talking to technology people rather than business people, the channel executive said. And that's a problem. To compete, he said, channel partners really need to learn how to speak "business."
8. TOO MUCH FOCUS ON MARGINS
It used to be that margins drove the channel. But with the commoditization of computer hardware, and software and services becoming a bigger component of most IT deals, the pressure is on solution providers to go beyond reselling products.
Many are making the transition, developing services, content and other intellectual property around IBM products, said Mark Hennessy, general manager, global business partners and midmarket at IBM. "But some will remain focused on remarketing," he said, noting that some solution providers will likely never go beyond reselling products and making a living off the discounts.
Hennessy's comments came earlier this year in an interview at IBM's Partner World Leadership Conference where he and other IBM executives pleaded with partners to move into higher-value businesses.
7. WHERE ARE ALL THE NEW CUSTOMERS?
It's all well and good to keep your existing customers happy with red-carpet service, maybe even boosting sales with cross-sell and upsell opportunities. But that's all some channel partners do, and that drives IT vendors crazy.
"You'd think they'd want to find new customers to grow," said the executive at the New York-based software company.
Some vendors offer financial assistance and marketing resources to help identify new customers. That makes sense, since it takes time and money to hunt for customer prospects. But some solution providers are content to just serve their existing customers and don't take advantage of those offers.
6. THAT OLD WAIT-AND-SEE ATTITUDE ON TRANSITIONS
For one channel executive, the biggest thing a solution provider can do to strain a relationship is stagnate. With much of the industry pushing toward new business models built on the recurring revenue model of cloud services, some partners are still hesitant to move toward the cloud.
"Don't fight the trends. My business is usually on the bleeding edge of things … I see partners from my point of view losing significant business opportunity," said a channel executive from a large Silicon Valley technology vendor, who asked not to be identified. "[Our philosophy] is to get there early so no one can catch you. I would like to see more of that DNA in our partners."
Some partners are slow to move because they don't believe the market is really in transition, the executive said.
"I attribute it to [the attitude some partners have]: 'My model has been working great for 10 years, I'm not convinced it's broken, I'm not convinced the market is transitioning. I think it's the economy … I'm going to wait and see.' [My] fear is if they wait too long, they won't catch up."
As technology vendors move to transition from a box-based sales model to a SaaS- or cloud-based model, it's crucial that partners move with them, the executive said.
"If we together don't make that transition, it's going to be painful for everybody," the executive said.
He isn't alone in his disappointment. Only about 25 percent of Microsoft's partners have expanded into cloud computing, Microsoft channel chief Jon Roskill told CRN at the vendor's Worldwide Partner Conference earlier this month. Microsoft executives have been prodding partners for five years to expand into cloud computing and they were clearly disappointed with the 25 percent adoption rate.
5. IT'S ABOUT MORE THAN TECHNICAL IMPLEMENTATION
This could be a subset of the "avoiding cloud computing" issue, but several vendors say some solution providers focus too much on technical implementation services at the expense of other services, such as business process consulting, they could provide to customers.
The problem is most acute with SaaS applications that don't need nearly as much implementation work as on-premise applications, said Doug Dennerline, CEO of Alfresco, a developer of open-source content management software. Alfresco offers both cloud and on-premise versions of its product and Dennerline thinks the problem is that some solution providers just haven't figured out SaaS -- so they fall back on the implementation skills they know.
4. CERTIFICATIONS KEEP PASSING THEM BY
Most of the major IT vendors, including Cisco Systems, Hewlett-Packard, IBM, Microsoft and Oracle, offer partners the opportunity to become trained and certified around specific technologies. And vendor executives routinely implore solution providers at partner conferences to take advantage of those offers, touting the certifications as vendor "Good Housekeeping Seals of Approval" that help partners promote their expertise.
"There's a lot of money to be made by [partners] by leveraging all the capabilities we're putting in place," said Rod Adkins, then head of IBM's Systems and Technology Group, talking up the vendor's partner certification offerings in an interview at the PartnerWorld Leadership Conference earlier this year.
Several channel executives interviewed for this story expressed bewilderment that more channel partners don't take advantage of the certification opportunities.
Certifications, as a pet peeve, seem to work both ways. Solution providers interviewed for the prequel to this story cited them as one of the annoyances they face when working with vendors. There are too many certification programs to keep track of, they say, certifications cost them time and money, and they require commitments to vendors that border on de facto vendor lock-in.
3. MDFs, SPIFs, GO UNUSED
"I just don't know why partners don't take advantage of these," said Matt Smith, marketing director of HP's Solution Partners Organization, in an interview. He estimated that only between 40 percent and 50 percent of HP's channel partners regularly take advantage of the company's marketing development and demand generation assistance offerings.
Only 36 percent of the IT vendors that applied for this year's CRN Partner Program Guide said that all the market development and cooperative marketing funds they offer is spent on a quarterly basis. Another one-third said between 1 percent and 10 percent goes unspent. And a handful said between 10 percent and 50 percent goes unspent every quarter -- that's a lot of money for channel partners to be leaving on the table.
Smith is quick to acknowledge that some of the blame for low MDF utilization rates falls to vendors that can do a better job of making partners aware of what partner programs have to offer. "Some of this has to do with communications and training," he said. "Some of this is on my shoulders."
2. THE DEMAND GENERATION GAP
"Frankly, just like we have sales guys that are fulfilling orders and not necessarily selling, we have partners who are doing that," said Red Hat's Whitehurst.
Likewise, Alfresco's Dennerline cites "the investments [partners] make in generating their own demand," or the lack thereof, as first on his list of things solution providers could do better. That includes partner spending for marketing, sales and demand generation overall.
Too many partners, vendors said, take a passive order-taker/order-fulfillment approach to their business, instead of proactively generating demand through investments in sales and marketing.
Nevertheless, vendor executives are quick to say those sentiments don't apply to all solution providers. "There's a good percentage of channel partners who understand demand generation at the top of the sales funnel," SAP's Gilroy said.
1. WHAT ABOUT THE FULL PRODUCT PORTFOLIO?
Perhaps the most frequent complaint from vendors is that too often solution providers limit their sales efforts to just one or a few of a company's product line -- a problem for vendors such as Microsoft, Oracle and HP with expansive product offerings.
"I'd love to see [more] of a strategic view from more of our partners, to invest a little more across our product portfolio," Red Hat's Whitehurst said. Most of Red Hat's partners resell Red Hat Enterprise Linux, the company's flagship product, and perhaps a few others like the popular JBoss middleware. But other products, such as the company's Enterprise Virtualization, SOA Platform and Enterprise MRG Grid, not so much.
"In Linux, we're the market leader. It's an easy go-to-market motion," he said. "I'd love to see some more muscle helping us actually drive some of these more nascent [product] categories."
Nothing drives HP's Smith crazier than when a partner sells an HP product, such as one of the company's servers, but misses the chance to expand the deal to include other products from the vendor's product portfolio. "They trip over opportunities," he said with some exasperation. "Do it, or turn it over to another HP partner."
Solution providers will probably never see eye-to-eye with their vendors and vice versa. But their goals will always the same: win-win relationships and a thriving channel.
PUBLISHED JULY 22, 2013