Through the fog… Vendor-channel relationships

Vendors have plenty of partners in IT. Here, Quocirca analyst Bob Tarzey advises on what to make of a supplier’s chosen bed fellows...

We all need friends, even technology vendors. That's why they invariably have partner programmes. Go to any vendor’s website and there will be a button marked partners, alliances – or something similar. And with tens of thousands of potential partners to choose from across Europe, vendors have a huge choice.

So how do you know that the vendor’s chosen partners can really add value to the solutions you are considering? How do you know a given partner’s advice can be trusted? Do these partnerships - that the vendors are so keen to tout - matter at all?

For some vendors it is deadly serious. Take 3Com - all its European revenue comes from some 30,000 partners, with around 3,000 in the UK alone. Without its partners, it is dead. For other vendors it is more a case of tinkering at the edge of their direct sales operation, looking for partners that will influence users to choose their products.

Many vendors have a dual sales strategy with a clear distinction between when they sell to you via partners and when they sell to you direct. A direct sales force is often used to target the blue chip companies while resellers are reserved for the smaller ticket small and medium-sized businesses. Some vendors do not make this distinction so clear, leading to bloody battles between their partners and their sales forces – which can make them very frustrating to deal with.

Quantity of partners does not guarantee quality. Indeed, the reverse may be true; some vendors will sign up anyone – and then boast about it. Most vendors try to help by having different levels in their partner programmes. Some vendors award stars to partners to mark their importance. Others use metals, often sticking to plain bronze, silver and gold. Some venture on to the more exotic – platinum, titanium – gold being assigned to those at the bottom of the heap. Partners can be premium, strategic, advanced, elite or some other flattering label.

In some cases (but not often enough) partners are helpfully classified by the service they offer leading to labels such as software development partner, service partner, technology partner, support specialist or educational specialist. Unfortunately, whether three stars, gold, titanium or premiere, the highest levels do not always guarantee the best services – partners are respected more for the revenue they produce for the vendor than the service they offer the end user.

Partners are not only there to sell a vendor’s product ‘off the shelf’. Often a vendor’s products are sold bundled with the partner’s own product. Take BEA Systems, for example. It has hundreds of partners who are independent software vendors (ISVs). These ISVs embed BEA’s products in their own offerings, helping to create a huge source of revenue for the vendor.

IBM has a massive ISV programme, which it uses not just to sell embedded software components, but also to shift large volumes of hardware to run the ISV’s software on. Many of IBM’s partners actually have targets for the percentage of their solutions delivered on IBM hardware.

Some partners are not even interested in selling a vendor’s product ‘off the shelf’ or embedded. These are organisations that influence the sales of products in the pursuit of service contracts. Service partners include some of the largest consultancies and system integrators. They are revered as demi-gods – all vendors want them as partners, believing that end users generally trust them more than the vendor themselves. A vendor, with a sales target to hit for software licences or hardware units, will be well aware that a E500,000 enterprise sale can drive many multiples of this in service revenue – much of it going to service partners.

The partnerships a vendor establishes will vary greatly depending on their product range. Boring commodities may be best shifted invisibly, embedded in more glamorous offerings. An attractive partner makes a useful front. If the vendor has a sexy product in the first place, it might still look for a dating agency. A vendor that has a low value product - which they need to shift in large volumes to turn in a profit - will be more promiscuous, courting tens or hundreds of partnerships. It will usually appoint a distribution partner to help them manage this and build a sales channel. With such a sales channel, resellers may not have a direct relationship with the vendor, so removing themselves from the user feedback chain.

If you are being advised by a systems integrator or ISV to use a certain vendor’s technology, how do you know they have selected good vendors? ISVs will select based on cost, reliability, support, reputation of the vendor and their perception of how easy the product will be to shift. But assessing the weightings they have given these is difficult, and using the one hat has gone for the offering with the greatest margin to them will not necessarily help you. System integrators will often have strategic agreements with vendors to focus on certain industry verticals, which can lead to the virtual exclusion of the vendor’s competitors, reducing your choice.

There is, of course, a certain schizophrenia to all this. One man’s partner is another man’s vendor – and not all partnerships are entered into expecting 100 per cent co-operation. Oracle is listed by IBM as both a Developer Business Partner and Hardware Business Partner. But, so much as mention databases or application servers and these two are deadly adversaries, which can lead to interesting discussions around the likes of SAP and Siebel software from IBM Global Solutions.

When making technology selections check out the partnerships of the organisations you are talking to. Is your system integrator really recommending the best product or is it getting a backhander? Why did a software supplier embed a certain component and how well will they support it? How many certified engineers does a value added reseller have for a given product?

The amount a partner pays to be part of a programme will reflect commitment to the product – ask them. At the end of the day they are all in it together, so look at the total offering and consider how well the different partners are likely to co-operate to provide for your solution. And remember, some vendors are so ubiquitous that everyone has them as a partner - even their enemies!

**Quocirca is a leading, user-facing analyst house known for its focus on the 'big picture'. For a full summary of its activities see www.quocirca.com, or reach the company's founding directors by emailing quocirca@silicon.com.