Archive for January, 2009

Let’s give credit where credit is due

Friday, January 30th, 2009

There’s one really good reason that the use of managed services contracts will increase dramatically this year, and that’s because right now it is way easier for businesses to justify some sort of finite, predictable operational expense that might squeak under the radar of their individual department than it is to push some massive P.O. up to the finance department.

The credit and financing situation across the channel is becoming a matter of gut-wrenching discussions.

I ask every single VAR or reseller that I interview how their books are faring, and to a person, they admit their deep worry over how to shepherd each potential deal to closure. For many, getting paid is a challenge, as customers juggle their own bank accounts. Payments are extending way beyond 30 days, which in turn makes it difficult for solution providers to meet their own obligations up the foodchain.

Others have seen the sudden, unexplained shut-down of their credit lines, if for no other reason than that they are a small business and the bank is afraid to lend money. Um, actually, wasn’t that why we gave financial services BILLIONS of dollars, so they didn’t keep taking out their problems on companies and people who have played by the rules?

It strikes me that one really impactful thing that any channel program manager could do write now for his or her partners is figure out how to help make the transaction happen, whether it’s by coming up with great leasing options or ensuring that distributors and others are able to keep extending credit.

I had not heard much about what people are doing until yesterday, when I caught wind of two new zero percent financing programs that Hewlett-Packard has introduced to inspire some spending on the part of small businesses. One covers a 12-month promotion to buy the equipment outright, the other relates to a 36-month lease. The types of products covered are limited, but they do cover the gamut of HP’s technologies. Both promotions are available through April 30, 2009, in the United States and Canada. You can read more about the services introduced by HP this week at this link.

OK, sock it to me: If you’re a distributor, a vendor or a VAR who has an answer or a program to address the channel credit crunch, I’m all ears. Let’s get the word out so that everyone can benefit. Because if your partner can’t get the deal done, neither can you.

You can reach me at the following e-mail: hclancy@swotmg.com.

Mythbusters: No company can really be 100 percent channel-centric

Friday, January 23rd, 2009

I am about to commit blasphemy in the eyes of channel model purists who tend to be suspicious of any (and I mean ANY) interaction between vendor salespeople and prospective/existing customers. Here goes: The concept that a company, ANY company, can be 100 percent channel-driven is a myth.

No, before you go rallying the lynch mobs, let me explain.

Over the past few years, there’s been a lot of talk about the role of VARs as “trusted advisors” to their customers. (More on that in a future blog; a great VAR/solution provider executive that I know is actually publishing a book on this subject.) Let me suggest that we take the role of trusted advisor one step further: the job of any vendor channel account manager (CAM) is to be a trusted advisor to his or her partners. That means helping communicate the overall vision of the company they represent (this is a two-way dialogue by the way, since CAMs really should be feeding partner perspective back into their companies). It also means helping partners engage better with the person who REALLY matters the most: that would be the person who ultimately will use whatever stuff it is that’s being sold.

How can a CAM possible represent the customer’s point of view if they never call on existing or prospective customers?

Wendy Petty, vice president of North America sales for storage virtualization company Falconstor, says that in the current economy it’s more important than ever for VARs, CAMs and vendor sales teams to talk to potential buyers so that they can understand the same paint points that Falconstor and its partners are collectively trying to address. She personally spends half her time with partners and half her time with customer accounts. (You’ll notice that there is no “channel” in Wendy’s title.) “I believe that I need to understand what’s going. The heart of our business is the end user,” she says.

Sure, she gets plenty of other feedback via her partners, but this is straight from the horse’s mouth, so to speak. Mind you, many of the calls she makes to customers are WITH Falconstor partners, which makes all the difference from a trust perspective. By the way, Falconstor just hired 7 new sales people to support its field engagement efforts (there are about 30 or so total).

The key to making this work is transparency, some well-established ground rules about account ownership, and a little blind faith. It also helps if you have a discrete number of partners to manage. (Falconstor is focused on about 120 or so).

Personally speaking, especially in the existing economic climate, the vendors and partner ecosystems that will do the best are the ones that keep sniping and subterfuge to a minimum and keep focused on what the buyer needs. In that sense, you can’t just rely on either a vendor sales person OR a channel partner to get things done. This environment will test the notion of partnership and I’m betting we’ll come out the other side with a vastly reconstructed view of what it means to be “channel-centric.”

Gartner: IT spending trends flat in 2009, but outsourcing will grow

Thursday, January 15th, 2009

I am sure the last thing you want to hear out of me right now is bad news about IT spending, so in the spirit of being constructive, I’m going to latch onto two tidbits out of market researcher Gartner this week that are (relatively speaking) positive for all members of the high-tech channel. (Vendor and VAR alike.)

So, yes, IT spending will not grow this year or, just barely. Surprise! Not. But at least budgets haven’t been slashed into oblivion (yet), and there ARE 10 technology areas where Gartner’s worldwide survey of 1,527 enterprise CIOs provides a brighter outlook, because they are seen as helping businesses overcome current economic conditions. (Here’s the press release for the Gartner Executive Programs Report, “Meeting the Challenge: The Top 2009 CIO Agenda.”)

The priorities cited most often were:

  1. Business intelligence
  2. Enterprise applications (ERP, CRM)
  3. Servers and storage technologies
  4. Legacy application modernization
  5. Collaboration technologies
  6. Networking, voice and data communications
  7. Technical infrastructure
  8. Security technologies (look how far down on this list!)
  9. Service-oriented applications and architecture
  10. Document management

And here are ways that a technology partner can help grab a CIO’s attention:

  • Help them set priorities
  • Make the budget for the project by finding some way to save money through the investment
  • Help them do things faster
  • Help them modernize, by showing the savings in operational costs

This brings me to the next positive bit of news both for vendors that use channel partners AND channel partners themselves: Gartner sees the practice of outsourcing technology needs as increasing in 2009, although be prepared to rejustify your existing contract if you’re a VAR or integrator that has any kind of long-term agreement in place.

The Gartner research also underscores rising adoption of managed services and software as a service, as well as the research and experimentation going on with infrastructure utility services and cloud computing.

Here’s Gartner’s outsourcing press release. It may help you prioritize where some of your investments should go over the next six to nine months.