If there's anything that's not debatable, it's the fact that 2013 has not been an easy year for vendors or channel partners. Amid the mish mash of the dollar-rupee yo-yo and a host of other political imbroglios, one wonders whether partner programs--the bulwark of the terms of channel engagement--are keeping pace and staying relevant with the new realities of economics. Because if they aren't, then partner programs don't really serve a purpose. Here's a look at some partner programs and why channel partners love them or hate them.
Backends, Rebates and Rewards
Backends or the percentage of credit that a vendor doles out every quarter make for strong deal makers--or breakers--between vendors and partners. These backends manifest in the form of incentives, schemes, and rebates and can be worked out as a percentage of business done by the partner for a stipulated period. With changing times, many vendors have now sought to automate the process of backend tracking. And some vendors seem to have struck the right chord while others have not really risen to the occasion.
Cisco's partner program, for example, has scored well with its system of backends. For one, the program is transparent to partners as they can check it online. It is also well co-ordinated to allow amounts to be transferred without much ado. "The transparency of the Cisco partner program helps us base our business planning on the backend model since you know exactly what is expected of you--as targets and investments--and what you can recover from every deal," says Rajiv Kumar, CEO, Proactive Data Systems, a Delhi-based Cisco Silver Partner.
Proactive, which has been associated with Cisco since 2002, is confident of the kind of business it can cultivate through Cisco's backend (which is in the range of 3-5 percent). Cisco contributes to about 65 percent of Proactive's overall topline and though the wallet share has not really increased over the last year--and the fact that its solutions work with other brands--Kumar is likely to remain a loyal Cisco partner.
That's because, Cisco, as an organization, focuses on partner development and this has ensured that each partner is well qualified and trained. As a result, customers have a greater level of confidence when dealing with Cisco partners. Extensive trainings and certifications have laid a very good foundation to showcase the right technology in the most complex situations. "Focused programs like CUCM (Cisco Unified Communications Manager), BYOD, datacenter, and cloud computing have created awareness about next generation product lines and are also helping customers consolidate current infrastructure with the technology of tomorrow," says Tejas Mehta, director of Kolkata's Parth TechnoComm Solutions. The company is a Cisco Sales Expert (CSE) certified partner and one of the upcoming names in the eastern market.
However, Mehta feels that, when it comes to network storage, Cisco needs to do some more work from a strategy perspective. "I feel that deeper penetration in B and C-Class cities could reap higher benefits," he says.
Vasudevan Subramaniam, MD of Bangalore-based New Wave Computing, finds EMC's backends and rebates structure to be working quite well for him. With a neat 8-10 percent in his kitty, he believes the vendor's partner program is among the best, with rebates starting from $ zero of business and absolute backend protection. All that, with absolutely no interference from the vendor salesforce. Though in a relatively new partnership with the vendor, New Wave Computing has the confidence to aim for a double digit rebate. Also, EMC's latest promo for partners, wherein the first three partners to clock eight EMC boxes, are entitled to a car, is creating positive vibes among partners.
On the other hand, Arun S.G., director, 3in Solutions, feels that IBM as a vendor should look at grooming new partners very seriously. With about 10 percent of the solution provider's business coming in from IBM, 3in also feels that IBM's policy of not allowing partners to take charge of services will have to change. "We gather that IBM now has a team of services that is scheduled to work with the channels. We are yet to get more clarity, though we have been approached with certain bundles."
That's a sentiment partly echoed by V. Ananth Narayanan, MD of Chennai-based SBA Infosolutions. Narayanan falls in the bracket of a handful of IBM partners who have been permitted to do services as they are IBM Application Service Providers (ASP). SBA is trying to build its business astutely around its solutions so that services is a part of the deal. Narayanan admits that while software services have been opened to partners in a phased manner, consultancy is still a grey area when it comes to IBM business.
However, IBM's recent Management Training Program (for partners at IIMB) as well as its streamlined process of backend tracking--target incentives and quarterly rebates-- through statements gets a thumbs-up from both Narayanan and Jiten Mehta, director, Magnamious Systems. The company has a long-standing relationship with IBM, and lauds the fact that there are revenue commitments that IBM mandates and this help a partner to stay focused. "Our levels of engagement multiply and we remain vigilant when there are definite targets," says Mehta.
Opportunity Registration and Conflict
While the backend score card is being set, vendors and partners alike know that a good opportunity registration (OR) system seals the deal. While it is believed that on paper most vendors do have some form of an OR component for partners, the real story is that very few have mature systems of actually enforcing the OR.
EMC scores again or so says 3in Solutions' Arun and New Wave's Subramaniam, who believe that EMC's opportunity lock-in system protects their deals in a significant way. So much so that once a partner locks a deal, even if a prospective customer tries to influence who they might want for the project, the system is quite fool-proof to prevent what is due to the partner, who first locked the deal. "This has been amply demonstrated in the important deals New Wave has closed in recent times," says Subramaniam.
On the other hand, Ravi Putta, co-founder and MD of Alliance Prosys, a Microsoft Large Account Reseller (LAR), believes that Mircosoft's cloud story is strong, and that the Partner Network has a strong annuity model for Azure and Office 365 solutions. This enables partners to make about 8-10 percent. The targets and timelines are set and once an LAR locks his deal, he is in it for good. Being an LAR, Putta admits, is an added advantage to get the creamy accounts, and devote more bandwidth to focus on customers. "Being an LAR, we don't have to talk to other partners; we just look at the customers and what we need to deliver," he says.
Through this, Alliance Prosys has been able to close a few important MNC accounts and its business has grown by 30 percent over the last couple of quarters, with Microsoft contributing to about 48 percent of the overall topline.
However, discussions with non-LAR, namely the Enterprise Agreement (EA) partners do throw up the fact that Microsoft's partner program has to ensure a few things for them. Currently, as per the rules, if an EA partner has to make a quote, he has to route it through an LAR, without any credit for the license. All the quoting partner gets is a reward on the solution sale. Also, LARs wield enough power to influence which partner gets a reward or who doesn't. These aspects constrain the non-LAR partners. Microsoft partners are also expecting key changes at the program level to be announced the coming month. So, as of now, it is a wait and watch game.
Citrix partners (Citrix Solution Advisors) have for long been asking for OR mechanisms that will secure their deals better. Mehta of Magnamious Systems feels that structured OR can prevent larger partners from eating into the deals of smaller partners. And also, maybe prevent conflict between whether a smaller partner gets the full project or is outsourced only a portion of a larger deal. "We have observed that these conflicts happen and we can't do much to prevent them," says Mehta. Keeping this in mind, Citrix has slowly brought in OR for partners in India as well (post the Synergy Summit that happened at LA). "We are yet to see how this pans out for us in India," he says. Partners such as Mehta also feel that Citrix has to streamline the number of Citrix Solution Advisors (CSAs), since the inactive members could eventually eat into the active partners' margins. Magnamious says it has witnessed flat growth in the last two to three years, because of constraints and the fact that till recently, Citrix hadn't put in any revenue mandates on the partner. "All this will change soon we hope, with recent announcements about revenue commitments," says Mehta.
Putta of Alliance Prosys seconds that. He also feels that apart from the absence of revenue commitments from partners, Citrix's focus is more on services and consultancy (with AMCs) and less on products and solutions. Also, market opportunities for solution advisors is limited. As a result, Alliance Prosys hasn't been doing extensive Citrix business. "We are open to and can consider enhancing the Citrix business only if the existing partnership model is tweaked a bit and if Citrix opens up more direct business for us," says Putta.
Cisco's pricing structure has come for a little bit of criticism. Partners such as Proactive's Kumar and Peak XV Networks' MD Deepak Hoskere--a Cisco partner since 2002--believe that the pricing (a variable of the list price) is the weakness of the system and is hugely dependent on account managers. This, in turn, has long-term ramifications in the form of conflict, with different partners quoting different prices and some getting competitive advantage based on that. "As a result, we identify our own clients; we don't rely too much on the vendor," says Hoskere.
It seems like Cisco is paying heed to partners' problems. In fact, it now has a system in place through salesforce.com, wherein leads are blocked and recorded. Also, Cisco has recently opened its commercial accounts and made them more partner-led. About 100 large accounts, which were till now Cisco account manager-led, have been reportedly thrown open to partners. It remains to be seen what this would translate into for solution partners.
Programs and Engagement
Walking the tightrope was never tougher. Channel engagement is not merely about putting a program in place, but something that is simple to understand and execute for both partners and vendors. Also, it is about the constant interaction, exchange of ideas, expectations, commitments, and investments. And also, ensuring customer focus. HP gets both bouquets and brickbats from partners. Shaishav Singh, director of DotCAD--a long-standing HP partner--enjoys exclusive Premier and Enterprise partner status. Singh is of the opinion that HP has too many programs that create confusion and that these programs need to be rationalized. Also, that the rules of engagement which began with a bang when launched in 2008, have lost steam along the way.
As a result of multiple programs, account conflicts become inevitable, and a lot of subjectivity seems to have crept in, in the strategic calls taken by HP. "Simplification of the program has to be addressed by the vendor quite objectively," says Singh.
These views are echoed by Girish Madhavan, MD, Quadsel Systems. Quadsel, who, like DotCAD, has been a staunch HP partner right from the time the vendor was looking at setting up its channel line in India. These companies, have over the years, sustained their profitability and topline through at least 50 percent of their businesses coming in from HP. Madhavan is of the opinion that it becomes increasingly difficult to keep abreast of the certifications that HP mandates, and these keep changing every six months.
With huge investments at stake, Madhavan feels HP has to take note of and make sure that partners are not hard pressed periodically to upgrade specializations. Also, partners feel that account manager targets should match with partner targets so that a partner can be profitable on a sustainable and realistic basis.
Another sore point was dollar recognition. Till now, HP had been giving in the range of 50-80 percent on every dollar earned. Singh and Madhavan are optimistic about some of the important changes that got effected in this regard. That came after HP CEO, Meg Whitman, announced that partners are going to be incentivized for every dollar of business they get HP. This, slated to come into effect from November 1, 2013, will translate into a sweeping change in backends. Quadsel, for one, has diversified into software services as well and believes that it's a matter of time before the announcements take positive shape for partner profitability.
Nevertheless, both Singh and Madhavan concur that HP as a vendor, is extremely mature in handling channels besides also doling out generous amounts of the Market Development Fund (MDF) to partners for promotional activities, and schemes in the storage and networking space. Madhavan observes that these schemes are designed to help sales personnel at partner organizations as well and is quite interesting that the vendor has the foresight to think on these lines. "My sales people are able to earn on the Itanium servers. But, what is lacking is adequate monitoring," says Madhavan.
Partners feel that a local HP contact must engage with them and review these schemes every fortnight, and also talk to partners about any other hassle that they may have."The practical aspects of HP's partner program, by and large, work without hassles.
All that remains is to refine and rationalize it further," says Madhavan.
Dell and Citrix have apparently got the stick for poor levels of channel engagement. 3in Solutions' Arun laments that Dell doesn't have a very good understanding of the channels, and its incentives are not too well thought-out. This can be explained by the fact that Dell has a huge catch up game to play, being a late channel entrant. However, it does manage to get around 6-8 percent on Dell's EqualLogic boxes, the only hitch is that the vendor's insistence on partners to look at enterprise business to stay profitable can boomerang. A lot of partners get a chunk of their toplines through client or end-user selling. If they have to abandon that and look at something else, then Arun feels the value proposition better be strong.
Citrix, on the other hand, needs to step up the ratio of partner-to-vendor coverage teams. These teams need to engage more effectively with partners when closure of deals happen. "The vendor has promised to take a look at these aspects; new people have been appointed at the helm and at the mid level. It is early days, so change is still some distance away," says Mehta.
Cisco's partner program audit has got a bright score. It has outsourced its audit to an agency--based out of Singapore and the US--to validate its partner program initiatives. Partners get strong feedback post audit.
The last audit, which was carried out on video, helped Proactive assess its capabilities and competencies in the domain. Also, in August this year, Cisco has decided to dedicate one-fourth of its system engineers time to partners to help them as account managers. This, if implemented in essence, can change some portion of the Cisco partner program in a big way.