By Craig DeWolf, VP, Strategic Development, CCI
Normally I like to start these entries on a positive note, though this title seems ominous for channel marketers. But there is a positive spin: The good news is that if none of the items listed below will keep you up at night, then you can consider yourself lucky. Conversely, if you expect that any of these items will keep you up at night, you can take comfort in knowing you’re not alone. In any case we hope that you feel free to add to it.
Lest you think I’m just making this stuff up, the list itself comes from a recent advisory board meeting of a prominent annual channel conference (per the terms of the advisory board, I am not allowed to give names or details—but trust me, you know of it). The advisory board was attended by senior channel leadership for vendors in the software and hardware space, as well as telecommunications services and cloud providers—in other words, a good cross section of channel leadership in the B2B technology industry. The following topics are listed in order of the passion expressed by the members when sharing their issues, as well as the consensus of those issues as echoed by others in the room.
The channels’ migration to managed services was at the center of many of the topics. Many marketers are talking about the impact of “the cloud,” but it seems that any issues related to that are a subset of the broader managed services model rapidly adapted by the partner community as of late. For reference, “Managed Services” as represented here refers to a dramatic change in the business model for your channel partners and how they earn fees from their clients (from VAR to Managed Services Provider, or MSP). This change manifests itself a number of ways, chief among them being the continuing shift from sales to service, from one-time revenue to recurring revenue, and from on-premise to hosted solutions. By and large, “Managed Services” considers the growth in Software as a Service as well as Hardware as a Service, in addition to other services offered by the partner as part of an overall fee structure. Using that understanding for context, the following list will surely make more sense.
Let’s begin with the specific issues related to the MSP migration:
Growing channel conflict between channel partners and the vendor’s own professional services group: Both of which are now in the business of providing services, but how do vendors manage conflict between the two competing groups for the same client?
The vendor’s role in migrating current channel partners to a managed services model: Specifically, to what extent should vendors be involved in helping their partners adapt to the new model versus simply finding new partners who are more adept at applying an MSP model? This question is even more relevant for hardware vendors who now may have to lease or finance their products to adapt to a recurring revenue model versus a one-time sales transaction.
How do hardware vendors adapt to the shift in sales reporting? Since sales have traditionally been reported as one-time revenue, how do the vendors themselves adapt to a recurring revenue model? The shift can have a dramatic impact on income reporting to the finance community if suddenly the traditional “big bump” of an initial sale is replaced by “small bumps” for the same deal size that spans months or years.
The shifting division of responsibilities between vendors and partners: For instance, under the cloud or MSP model, who owns the client? Who is responsible for invoicing? What additional responsibilities must a vendor take on to support the model and the transition into it?
Of course, there were also issues discussed that are NOT related to the MSP topic. Not surprisingly, these issues are not necessarily “new” in that most have plagued channel marketers for years.
Technology partners as an emerging sales channel: The growth in this trend seems to span all categories as vendors partner to offer a comprehensive solution, yet how should the programs and incentives be designed to optimize these strategic relationships…do they leverage existing channel program offerings? Or, do they require unique programs?
Best practices for designing and managing global channel programs: What decisions and responsibilities are centralized versus decentralized? While all channel marketing is “local,” just how much autonomy should regional managers possess to design and manage programs within their region while providing the controls and insight headquarters requires?
Optimizing incentive strategies: Which programs are most effective and why? Should MDF be dropped in favor of rebates, or visa-versa? The quest for incentive ROI seems ever-present.
Best practices for Joint Marketing Planning: While the promise of JMP works in concept, for many the process is too inefficient and doesn’t necessarily result in the promise of more aligned sales and marketing practice.
At CCI, Craig manages all marketing efforts, engages with key business partners, and works with clients to optimize their programs based on proven best practices. Craig’s extensive channel experience spans more than 25 years across a variety of industries and distribution models including technology and consumer products companies alike.
Craig’s relationship with CCI spans more than 9 years as a result of several mutual clients beginning when DeWolf was General Manager of J. Brown/LMC Group, a Channel Co-Marketing agency and Division of Grey Worldwide. Prior to joining CCI, DeWolf was a Vice President at two divisions of Grey Worldwide: Grey Direct, and J. Brown/LMC Group.