The "fundamental conflict" between vendors and partners, according to Canalys

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The "fundamental conflict" between vendors and partners, according to Canalys
Steve Brazier, Canalys

The channel is marching headlong toward the managed services model yet vendors continue to judge partners based on sales targets that are fundamentally opposed to annuity revenues.

This was the challenge highlighted by Canalys chief executive Steve Brazier on the opening day of the analyst firm's annual conference in Macau, where some 170 Australian and New Zealanders have joined IT folk from across the Asia-Pacific region.

"What is the number one issue in the channel today? The number one issue is that the market has changed and it is no longer growing. The vendors are telling you to go more into services and managed services, which includes device-as-a-service as well as data centre infrastructure and managed print," Brazier said.

"And yet the vendors want you to be their top-tier partners and they measure your qualifications and your rebates based on how much resell business you do. There is a fundamental conflict between the program they set up and how they are telling you to do your business.

"This has not been resolved, no one is best practice and vendors need to do a lot of thinking about this over the next 12 months to get programs in line with business trends."

Matthew Moncrieff, managing director of Perth-based Moncrieff Technology Solutions, said there was a disconnect where vendors were still centrally focused on the buying and selling of equipment.

"The consumption model is changing but the vendors have not come up with the programs that support that change in the way customers potentially want to consume," he said.

"The issue you have got is that, other than the software vendors, they have not really got to that model where they can come out with monthly billing. You still have to buy the cloud platform upfront and lease it over five years then resell it off to the customer."

The Perth company made a significant investment in its own private cloud earlier this year, based on the Cisco VersaStack architecture.

Moncrieff added: "Even the software you are buying to run that is still sold upfront on an annual basis and you have to make that upfront commitment. You as a reseller have to take on all the risk."

David Hawley, chief executive of Brisbane-based reseller Aliva, agreed.

"The perfect model is device-as-a-service, but you need to find a way to make that work to support the consumption model," he said.

"We have targets. We have certification requirements and they drive incentives. How vendors drive that back into a consumption model, I don't really know. A lot of the vendor reps are driven on quarter-to-quarter and month-to-month. It is not a consumption model – it is a deal model."

Angela Fox, head of the ANZ commercial team at Dell EMC, said the vendor was looking at this as part of its new partner program, and admitted "there is no one size fits all".

"How do you design a program that is broad enough that it meets the needs of the diversity that is out there? The reality is many partners are still on a resell model and there is plenty of resell business out there. There are plenty of clients still buying in a traditional manner," she said.

"At the other extreme, some partners are leading the way and completely changing their business models to 'as a service' – desktop-as-a-service, storage-as-service, on demand etc."

CRN is a media partner of Canalys. The journalist travelled to Macau as a guest of the conference organiser.
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