In the course of writing an article on partnership etiquette for this issue of Irish Computer Channels, I came across an interesting cause of friction between vendors and their channel partners. Obviously the unpopular hybrid model where vendors seek to emulate Dell by selling direct as well as through partners leading to situations where they might end up in direct competition with channel companies ? is a great cause for concern, but there was something else on top of that which further annoys and frustrates the channel. Namely, when vendors start behaving like resellers.
At this point, it’s probably worth defining what aspects of reseller behaviour I’m referring to in order not to cause offence to channel partners or vendors. It’s not very difficult. What I’m focusing on is the one thing resellers do which vendors, typically, do not: sell equipment made by someone else.
There’s always been a balance to be struck by channel companies between being heavily identified with a single vendor and offering a range of products from a number of suppliers. Put simply, it’s about getting the right mixture of “loyalty” to a vendor and “choice” for the customer. Recent comments by HP CEO Mark Hurd that the vendor would seek to reward partners which placed a heavier emphasis on its products give an indication of the types of tensions this balancing act can create between suppliers and their channel partners.
Now, something else is threatening to make the job of attaining some kind of equilibrium even more difficult. An example is provided, again, by HP. One reseller points to the vendor’s agreement to supply Cisco routers direct. Channel partners might just swallow the idea of their vendor selling its own kit direct but once it starts to diversify into other vendors’ products, things can get very unpleasant.
“In instances where the vendor is providing third party equipment, the partnership comes under strain,” the reseller says. “If the reason for a direct relationship [between vendor and customer] is focus how is that served by selling another vendor’s products?”
Exactly the point and an argument, incidentally, which vendors often direct at their less loyal partners. The problem is that vendors are merely reacting to customer demand in the same way as their channel partners have in the past. If you build a direct and trusted relationship with the customer, there is going to come a point where that customer is going to ask you if you can provide extra products and services.
If you can’t, you run the risk of losing out to someone who can. In other words, if you seek to usurp the relationship between channel partner and customer by doing the channel partner’s job yourself, don’t be surprised if the customer starts treating you like a channel partner and expecting you to do the same kind of job.
What people forget is that dealing direct with a vendor can bring “headline” benefits in terms of removing layers from the relationship and reducing cost. But dealing direct with lots of vendors? That’s a much more complicated affair because it brings with it a multiplicity of relationships that need to be managed. Until now, that’s been the job of channel partners and third parties.
It’s obvious that once customers opt for the direct approach, many are going to try and pressurise vendors to broaden their portfolio to include additional products and services so that they can reduce the number of relationships they need to maintain. In a bizarre way, by going direct, they merely reinforce the value of the channel model.
Alternatively, customers might outsource the management of their vendor relationships to a third party. But this also only serves to reinforce the view of those who argue channel partners should try to be as close to “vendor neutral” as possible for their customers. Ironically, by going direct, vendors are often demonstrating the value of a channel business.
Ltd
