Channel Dynamics

Budget 2012: What Does it Mean for Partners?

Sun, 13 May 2012 00:08:00 GMT

The theme of the Federal Government’s 2012/13 budget is restraint. In order to turn a $47.7bn deficit from 2010/11 into a $1.5bn surplus next year and beyond, the Government was forced to put forward a fiscally restrained and short-term budget. In the CRN article, several industry pundits, including Channel Dynamics' Cam Wayland, weigh in on what this means for the industry and partner growth opportunities.

Budget 2012: resellers react

What Really Drives Channel Growth

Sun, 13 May 2012 20:59:00 GMT

Author: Cam Wayland
Recently we were engaged by vendor client to help them work through how they would achieve the growth targets they were given, and of course willingly and gratefully accepted. Therefore I thought it was worth taking a broader channel wide view of what drives growth, not only in resellers but across the entire channel ecosystem of vendor, distributor and resellers.

An ICT reseller cannot achieve strong growth in isolation, but needs the support of an aligned channel ecosystem, as well as good business skills, dedication, determination, focus etc as well as a great product portfolio from leading vendors.

Reviewing our recent consulting assignments I offer the following observations for our top tips that will drive channel growth. The first regardless if you are a vendor, distributor or reseller the number one tip is alignment.

1 Alignment

What do I mean by alignment, put simply it is the match of channel business requirements, suitable products and customer requirements in order to generate a sustainable and profitable outcome for all parties. Easier said than done.

Technology, markets and therefore customer needs move at an increasingly rapid pace and therefore the concept of channel alignment is one that is often transitory, and like the frog in the warming water, you don’t notice there is a problem until it is too late.

An example of this is where vendors introduce new products or technology where their existing channel does not have the skills or customer base to be able to profitably meet the customer expectations. This could be an SMB vendor “going up” with a more complex, higher priced mid market product that needs a reasonable amount of configuration, staging and integration into customers that are typically larger in size and more complex than the bulk of their existing customer base.

The vendor is pushing the reseller to take on this new product line (sometimes due to an acquisition) as they have targets to meet, but the (distributor) and reseller are not geared to be able to sell, support and service this type of product, regardless of training offered. It is just not a fit, but due to loyalty to the vendor or distributor the reseller agrees to take on the training and the product only to find that after months of effort the sales results are disappointing. Worse still there are the hard costs of training etc as well as the opportunity cost of not focusing on their core product/business that results in lower revenue and/or profit.

Therefore the first tip for growth is review the product/technology mix based on targeted customer or market requirements against channel capabilities. Do not try to stretch an existing business model or fit a square peg into a round hole as it will not work without the desired corresponding change in strategy at all levels of the channel.

2 Engagement, Trust & Understanding

One of the things that we have observed is that the vendors and partners that have gown the most spectacularly all have one thing in common, great trust and engagement with each other, regardless of partner program tier status.

This will not happen unless the first tip of alignment is in place, but alignment does not necessarily mean that this will happen either. The adage that “it takes two to tango” is never more apt than in developing an engaged and trusting relationship where the entire channel ecosystem is working as one. No one gets it 100% right 100% of the time; it is just not possible as there are so many variables, mainly people. However when it does work we have seen extraordinary success and growth as synergies are created that require less effort for larger gains.

An example of where this has worked in some of the larger partners and distributors are vendor funded heads, usually technical SE’s, but sometimes sales BDMs, depending on the circumstances. These funded heads will know the vendors’ products, process and people intimately and the productivity gains within the recipient can be significant when all this knowledge is effectively leveraged.

For this to work there are a couple of critical checks. The funded head has to be well selected and not just a one eyed vendor bigot, but can recognise and respect the independence of the best solution, which may not necessarily include all the vendors’ products all the time. Secondly this person is actively involved with a structured business planning and review process with both the vendor and the partner or distributor management team regarding targets, performance review and direction on a regular basis, nothing should be left to chance.

Finally having this person in the partner can help the vendor develop a much greater understanding of the partners’ skills, strengths and capabilities that they too can leverage, rather than just looking at the channel partner as a means to a quarterly number.

While not every partner can access a funded head, the same principles of better engagement, understanding and trust can deliver growth well in excess of double or even triple the market growth rate when working well.

3 Vendor Resources

I would hate to think of the amount of vendor money that is wasted or unspent each year with poorly executed MDF programs. Vendors need and want to leverage the partners’ access to customers; however partners are typically great at building technology solutions, but poor marketers.

The end result is often funds get spent at the end of the quarter on quick fix template driven marketing campaigns with a “use it or lose it” mentality, or diverted to non new business generating but approved activities such as subsidised training and certification, but still don’t get fully spent.

As a general rule vendors have more resources than the channel they are looking to go to market through, however mostly the channel does not effectively ask for what help the vendor can provide, or come up with a reasonable suggestion as to how the MDF could be spent.

Vendors will fund a range of activities if they think that they a) will get a decent return, b) there is sufficient compliance and probity around the request c) their brand is protected.

It does not take a huge amount of effort to write a simple proposal or even sit down with the vendor and/or distributor rep to work up a plan, in advance, agree to the (aligned) objectives, what resources are required and then execute. If this is all done well the vendor will pay within the prescribed time and may even want to do another campaign, as so few partners are stepping up and asking for help and funding to do business development marketing activities.

In summary the key to growth is having regular open conversations both within your own business as well as those of your key channel partners or suppliers. If these conversations are looking to ensure continued alignment and engagement because of respect and understanding of each other’s business models, before the quarterly target is discussed then there is far more chance of achieving the quarterly target, and then some.

Social Networking: You Can Make Friends, But Can You Make Money?

Sat, 12 May 2012 23:53:00 GMT

Social media has emerged as one of the most disruptive trends in the technology industry in recent years. But what does it mean for the channel? In this CRN article, editor David Binning explores the relevance of social media platforms for business, and talks with Channel Dynamics' Moheb Moses about how best to get on board this runaway train.

Also in this article, David interviews Olivier Choron (CEO and Founder of purechannelapps) about socialondemand - a new content syndication application that helps partners leverage their vendors' content to increase their social media presence.

Socialomics: business opportunity or opportunity cost?

Getting the Enterprise Ready for BYOD

Mon, 23 Apr 2012 00:10:00 GMT

With the unstoppable growth of Android SmartPhones and Tablets in the consumer and/or prosumer space, there is further pressure on the enterprise to get their Android BYOD (Bring Your Own Device) strategy right. The enterprise cannot afford to be reactive with BYOD, as there are a huge range of benefits (as well as risks) around BYOD, which have been well documented.

Following is a recent white paper I read on getting the Enterprise ready for BYOD, and while it is sponsored under the Webtorials site, I think it is an excellent guide for the IT manager looking to manage Android devices that will be appearing on their network, whether they like it or not. Putting on our channel hat, these are great ideas that can be leveraged by the channel to help their customers in a BYOD world, especially the 6 baseline requirements for managing Android devices in the enterprise.

Five Steps to Android Readiness

State of the IT Channel: What the Numbers Really Mean

Sun, 13 May 2012 00:16:00 GMT

The ARN State of the IT Channel report (published in March 2012 ) collected data from 315 respondents about their observations and insights of the last 12 months, and what we could expect in 2012.

In this article, we sit down with ARN's Matthew Sainsbury and Patrick Budamar to look at the data and try to explain what this report is really saying about the industry.

State of the IT channel: Reading the numbers

ARN IT Industry Awards 2012 Launched at The Ivy

Tue, 01 May 2012 13:25:00 GMT

The time has come again. The sixth incarnation of the ARN IT Industry Awards has been launched with the 2012 Judges Lunch at the Ivy restaurant in Sydney. This year, ARN celebrates its 21st birthday at the Awards which for the first time will be a black tie event.

And once again, the venue is the Hilton Hotel Ballroom, Sydney; the date to lock away is September 19.

ARN Awards kick off for 2012

IN PICTURES: 2012 ARN IT Industry Awards Judges Lunch - part 1

IN PICTURES: 2012 ARN IT Industry Awards Judges Lunch - part 2

IN PICTURES: 2012 ARN IT Industry Awards Judges Lunch - part 3

Nominations open on 13 June, so make sure you get your entries in.

Challenge Your MDF Program Design

Tue, 27 Mar 2012 00:39:00 GMT

Author: Cam Wayland
Recently we were asked to review the MDF program for a vendor who was concerned that they were not getting the best return for their marketing dollars.

Part of the brief was to look at ideas that were “outside the box”, but could still be implemented rapidly across multiple regions. In addition, any solution had to be able to be measured sufficiently at senior executive level, as well as at a field or line manager level, because they felt that part of the problem was the current program had an internal disconnect of objectives.

In order to understand how we went about solving this issue, it is worth firstly taking a moment to review some of the general MDF programs issues that we have observed over the years (and this vendor was no exception to many of these).

MDF often remains unspent resulting in under utilised or funds lost from the financial period, which starts the process of some people questioning the value of MDF
Goal misalignment i.e. vendor vs partner objectives often don’t align leading to a potential standoff, animosity or poorly executed program that just misses the mark
Administrative overhead by both partner and vendor required to manage the program efficiently. Sometimes the overheads or cost gets too great for partners to want to engage
MDF is often too small compared with other channel initiatives or rewards such as deal registration, stretch rebates etc thereby gaining limited channel engagement/buy in
Quarterly spend & activity requirements of a lot of vendors where everything related to a MDF campaign has to neatly fit into a quarter can stifle innovation for campaigns that need more time (or money) to gain the desired result
Limited partner marketing capabilities. It is often difficult for partners to execute activities that align or drive desired results as they don’t have the required skills or the resources
Program rules abused by channel, often because they either do not understand or the rules are so complex the partner will look for ways around the rules can end up with funds wasted or potential collateral damage to vendor brand or program
ROI often not able to be easily quantified. Senior executives want hard numbers, but at a partner level often they are just happy that the campaign or activity has been completed.

Some of the ideas we came up with to solve the above problems were different from the rules around the majority of MDF programs we see, but not that difficult to implement as most did not require significant investment, just a commitment to change and improve.

Here are three of the main ideas that can be applied to most vendor MDF programs:

Instead of having quarterly goals for the MDF program have 12 months overall goals, but if required break down into quarterly reports with KPIs to satisfy management, accounting or compliance requirements. Partner MDF activity needs to be aligned and complement with the overall corporate marketing plan and activities. Therefore with key partners where a vendor conducts business planning process the vendor goals and partner activities should align and complement each other to create a synergistic message to the targeted customer. The end result should be more creative and well thought through activities where MDF spend is far more likely to generate a positive return.
Automate as much as possible. Every time a person has to do something manually it adds time, cost and potentially complexity or errors. There are numerous in house server based or cloud based applications available today that can log, track and report on the key processes and metrics required to manage and maintain a productive MDF system.
Communicate regularly clear and simple program objectives, criteria, eligibility, payment mechanisms, and performance metrics that partners can understand, use examples and reward excellence. If the partners can clearly understand what the rules are, and have relevant examples that they can reference, they are more likely to be able to replicate to their customer base. Finally if a partner does a great campaign, recognise their effort appropriately.

Many vendor MDF programs we see have become stale, rigid and complex resulting in partners that are either not taking advantage of the funds available to firstly and fore mostly help promote their own business, as well as the vendors product, or funds are being spent in a reckless manner damaging both brands and reputations in the process.

Take the time to review the existing rules and outcomes of the MDF program you are running as a vendor or participating in as a partner and challenge the status quo to deliver a better outcome for all.

Channel Dynamics Proudly Supports Earth Hour 2012

Wed, 21 Mar 2012 22:32:00 GMT

On March 31, hundreds of millions of global citizens, from 135 countries, will unite once again in the action of "lights out".

Channel Dynamics has pledged its support to be one of them.

Earth Hour was conceived by WWF (The World Wide Fund for nature) and The Sydney Morning Herald in 2007, when 2.2 million residents of Sydney participated by turning off all non-essential lights.

Following Sydney's lead, many other cities around the world adopted the event in 2008, and today, millions of people from over 5,000 cities celebrate this event to protect the one thing that unites us all - the planet.

We are once again proud to be a supporter of this global event in 2012. If you are interested in participating, you can sign up at www.earthhour.org.au

Does The Perfect Vendor Really Exist?

Wed, 21 Mar 2012 22:32:00 GMT

Author: Cam Wayland
I recently had the privilege to attend the ARN roundtable discussion where Dell and Intel were the key sponsors, and so much was discussed about the development Dell’s channel engagement and program.

While there was robust discussion amongst the participants about Dell’s (and other vendors’) engagement, the conversation actually began with the changes in customer behaviour and therefore what changes the partners had to adapt to.

Our core channel framework - the DynamicDSI model - reflects our belief that everything begins with the customer, and that a successful partner is a reflection of the needs of the customers they serve or are targeting.

Sounds simple, but in reality this is much more complicated. Two examples that may explain this concept a bit better.

Partner 1 is targeting mid market customers (250-1000 seats). Typical business issues these customers are facing (according the group attending the roundtable) include things such as being able to access and analyse corporate or customer data more efficiently, improving productivity with mobile or cloud based applications, pressure from the business around BYOD expectations and of course, a range of security issues that these pose. All in the context of reduced IT capital and operating budgets.

When Partner 1 is looking to engage with this customer around solving these business issues, there are a range of technologies that they could look to deploy or implement that can help solve these problems, such as virtualisation, cloud in any of its variants, analytics, storage, archiving and de-duplication solutions, as well as security around web, UTM or even DLP etc.

Partner 2 is also targeting this same customer but they see the customer in a completely different light. They see the customer as an informed consumer of IT hardware and software that, due to operating cost and profit pressures, are looking to purchase selected IT products at the lowest possible price. Notice I did not use the word cost here, as the overall product cost would need to include a range of other services such as installation, support etc, which someone still has to do.

Simplistically, Partner 1 is essentially a differentiated VAR, and Partner 2 could well be a low cost e-tailer (or even Dell).

Choose Your Strategy

Both partners’ views of the customer are of course valid. However before engaging with the customer, each partner needs to make a number of critical business choices about their own business first, and then stick to it. You cannot be a low price reseller with high operating costs.

These two choices of corporate strategy were first put forward by Michael Porter in 1985 as being low cost or differentiated. Fast forward to 2012 and from what I heard at the roundtable, this is still being played out today by both Dell and its partners.

Use this simple tool to map/plot where your business is as well as where you believe your direct competitors are on either of the two arms of either creating Value Add or Low Operating Costs. What can you observe or publicly obtain information that provides clues to their position?

However Porter was also clear that you can’t be both low-cost and value-add on a sustainable basis, as they are competing strategies requiring very different structures and brand positioning. This is when you are “stuck in the middle” with no clear strategy but end up with a mishmash of competing value propositions and unaligned costs.

In short we would argue business strategy first, vendor selection last, not the other way around.

Therefore if you were Partner 1, first start by identifying the target customer and how will you create a differentiated or value add position, what services will you offer, which leads to the necessary skills required, then onto the basic business model (cost/profit) and then lastly selecting the vendors that fit into this vision and the business model requirements.

This also applies to Partner 2, but their internal discussion is primarily about reducing costs (to keep margins and prices low). The focus here would be about gaining efficiencies around automation from the customer facing web site through to integration with their supply chain, as well as what services they will not offer, to build a compelling position in the customers mind of what to expect. Therefore distributor selection will be more critical to support their low cost business model with the required range of vendors and products, than just vendor selection alone.

Vendor Alignment

There was also lots of discussion about Dell still selling direct to the (read “the reseller’s”) end customer. No partner has an unending or exclusive right to sell anything to a customer - it needs to be earned and continually reinforced by customer engagement that is consistent with their expectations.

Another way of looking at it from a Channel Dynamics perspective is:

Price willing to be paid by the customer = Cost of Goods + Perceived Value

Dell has been selling direct around the world for many years. However in more recent times they have started to embrace the channel and invested heavily in people and programs to grow the volume and value of products sold via partners.

Customers know Dell will or can sell directly to them, therefore any partner looking to work with Dell should be under no illusion that Dell immediately ceasing to do this is never going to happen, even though Dell has committed to developing its channel.

A number of the partners present were leveraging Dell’s low cost hardware supply chain model, but maintaining good margins by adding value around services and integration within the customers’ environment to create a solution that was a differentiated customer value proposition. Their competition was not (always) Dell, but usually alternate resellers with alternate vendors.

Which Vendor

Vendors generally are very clear of what they offer a prospective partner in terms of products, programs, requirements etc. However choosing the right vendor to partner with is a big decision and should be made by more than just assessing the current “hot” product offering.

Therefore again we would suggest the starting point for a partner selecting a vendor should be to have a clear understanding of how they fit into and complement your selected value proposition.

Vendor Check List

The market is constantly changing with IT products continuing to move though the product lifecycle and becoming more mature. Therefore what was once a complex high margin product that required configuration and integration can now be “self installed” with little value add from the partner.

Finally vendor selection and product alignment by the partner around their chosen vendors should be a continual review and assessment process to see if there is still alignment between the partner’s business strategy, vendor/product portfolio and the target customer’s needs.

Here is a quick check list for partners to assess vendor alignment:

Vendors targeted customer sweet spot
Brand positioning and customer perception
Technology maturity (product lifecycle)
Vendor channel strategy depth vs breadth
Program benefits and requirements
Profit opportunity after program requirements
Complementary vendors, products or services already in place
People and processes to support the partner

Stay Game, Stay In The Game

Tue, 01 May 2012 12:41:00 GMT

It would be a stunning understatement to say that much has changed since the first issue of CRN was published in Australia in early 1998. Today, for its 300th issue, editor David Binning talks with some of the leading consultants in the industry, including Channel Dynamics' Moheb Moses, about how companies need to get better, not just at looking to the future, but also to the past.

Stay game, stay in the game

How to Give a Killer Product Demonstration

Mon, 26 Mar 2012 23:15:00 GMT

Anyone who has attended a great product demonstration knows how powerful they can be in creating demand. When you see a product at its best (or more importantly, see yourself using the product at its best) you can't wait to get your hands on it. Apple knows that, Adobe knows that, Microsoft used to know that.

Now I know at this point, I expect some of you are shaking their heads and saying "well of course that's true for a sexy product like the iPad, but no-one is going to get excited seeing my accounting system or my firewall or my storage device".

And here's where I disagree. Because the iPad isn't sexy - Apple make it sexy. If you don't believe me, have a look at other tablets that can't get anywhere near the same level of excitement. Because demonstrating a product is not about showing all the features to prove that the advertising is correct. A product demo is about creating desire and showing the customer how their life will be better with your product. It's about creating an emotional connection to the point that they want it, not just need it.

And if I'm an IT Manager who has my boss breathing down my neck that staff are complaining about not getting access to information they need, or performance is slow, or they want to use their own devices, then absolutely, if you can demonstrate a solution that solves my problem, I want to see it.

I've seen some dud presentations, and I have seen some killer ones, and this article from Geoffrey James beautifully summarises the attributes of the latter.

6 Steps to Giving a Killer Product Demonstration

Photos from the Channel Dynamics End-of-2011 Party

Wed, 14 Dec 2011 23:44:00 GMT

Once again, the industry braved a cold and wet Sydney night (we just seem to pick rainy nights) to attend the Channel Dynamics End-of-Year party!

This wonderful networking event provided Vendors, Distributors, Resellers and Press the opportunity to mingle in a casual, friendly atmosphere, while sampling a delicious selection of wines and canapés. And this year's cover meant that attendees could venture out a bit and enjoy the magnificent views from the Andrew (Boy) Charlton Pool. This might become a regular feature given our luck with the weather.

We hope you enjoy some of the photos from this fabulous night:

Photos from the 2011 ARN IT Industry Awards

Sat, 17 Mar 2012 06:35:00 GMT

The 2011 ARN IT Industry Awards have been announced and presented at a glittering event at the Hilton Hotel in Sydney. Attended by 630 IT industry leaders, the Awards recognised the very best in the channel for 2011.

We hope you enjoy this selection of photos from this fabulous event.

Treat Your Vendors Like Customers

Mon, 19 Dec 2011 08:40:00 GMT

Author: Moheb Moses
Look up the definition of “customer” in pretty much any dictionary and you’ll get a definition that goes something like “a person or organisation that buys goods or services from you”. But smart resellers understand that their customers include another definition, namely, “a person or organisation that SELLS goods or services TO you”.

I’m talking about Vendors.

Look at most successful resellers and you’ll see that, amongst other attributes, they have very strong vendor (and often, distributor) relationships.

“Those relationships have resulted in more leads, better support, greater engagement, protection in key accounts, and recognition that has helped that reseller generate more business. I know … I’ve worked for, and with, vendors, and I can tell you how much we’re influenced by resellers we have a strong relationship with.

But those relationships aren’t developed by accident - they are nurtured as carefully as resellers nurture their customer relationships.

So what should you do.

Let’s begin with some of the key stages in a typical customer sales cycle, and see what that means when you apply it to a vendor.

Build a relationship
Uncover Needs
Talk their Language
Determine the budget
Develop a compelling value proposition

Build a Relationship

When you see reseller sales people at an end-user event, they are always close to their customers, paying attention to their needs, and generally being protective. But watch them at a vendor event, and there’s not nearly the same level of engagement. If you want to build a relationship with a vendor you should make the same effort that you do to build a relationship with a customer. Seek them out at vendor events during the breaks. Comment on the presentation content. Assess which customers you have that might be a fit, and encourage discussion with the vendor. Let them know about recent wins. Get to know them - people like doing business with people, and vendors (like customers) are no different.

Uncover Needs

Just like you ask your customers what their pain points are, you should do the same with vendors. Different vendors have different needs. Are they trying to launch a new product, or are they trying to target a new vertical market, or are they struggling with one segment of their product offering? Just like customers, vendors respond to resellers who they believe genuinely want to understand their needs and help them solve their problem.

Talk their Language

Vendors talk revenue and resellers talk profit; your language is different. And like with any customer, we need to talk their language first, before we get them to understand ours. Make sure your language touches on the things that are important to them (eg. new customers, increased revenue, winning market share, etc). Make sure that whatever you say has some relevance to them. For example, “our margin is being squeezed, what can you do?” is reseller-centric language. Whereas, “the margin we’re making on your product is below what we need to stay in business, and if we’re forced to consider another vendor, then that is not good for either of us. What can we do about our margins to make sure we win this together” lets the vendor know you see them as a partner rather than as an adversary.

Determine the budget

You wouldn’t sell to a customer without determining if they have a budget first, and you should adopt a similar philosophy with Vendors. Vendors have money set aside to help resellers grow their business. It might be called Co-Op, MDF, BDF, or a myriad of other names. The important thing to realise is that some of this is pre-allocated, and some is discretionary. Sadly, with prices coming down and margins decreasing, the available funds have also decreased over the years. However, because so many resellers don’t take advantage of their accumulated funds, vendors sometimes have funds that need to be spent before the end of quarter otherwise they disappear (not unlike your Govt customers). Find out what funds your vendor has, and come up with a proactive suggestion to utilise those funds to grow your joint business.

Develop a compelling value proposition

Most resellers have a very generic positioning statement that sounds something like “we’re a value-added service provider, focussing on people, products and processes to deliver best-of-breed solutions that increase productivity while minimising risk blah blah blah”. I don’t mean to sound overly harsh, but most are instantly forgettable. Find out why your customers buy from you (that means you have to ask them) and make sure you incorporate that into your value proposition. Find out if you have an area of expertise (in a specific technology like cloud for example or in a vertical market like health) and incorporate it into your message. If you can’t differentiate yourself to customers, they won’t buy from you, and if you can’t differentiate yourself to vendors, they won’t remember you.

Summary

If you’re looking to grow your business, vendors can be your best friend or your worst enemy. If you ignore them, they will ignore you. But if you nurture and support them, they will nurture and support your business. So don’t think that just because you are the one that buys from them that they aren’t your customer.

Treat a vendor like a customer, and they’ll help you find more customers.

The 8 Most Crucial Sales Skills

Sat, 17 Dec 2011 07:59:00 GMT

An interesting article from Sales Machine blogger - Geoffrey James - on the 8 Most Crucial Sales Skills.

Although it's based on a consolidation of inputs from various sources, the key skills identified here absolutely resonate with everything we teach in our Dynamic Solution Selling workshop.

Do you agree? Are there any others missing?

http://www.cbsnews.com/8301-505183_162-28556664-10391735/the-8-most-crucial-sales-skills