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Experts Say Outdated & Complex Channel Programs Are Relics Vendors Should Retire

The channel is evolving, but many say OEM partner programs aren't keeping up.

Last month at the annual Channel Partners Evolution conference, hosted by Channel Futures and Channel Partners Online, one of the hot topics of discussion was how most large, born-before-the-cloud vendors are still using partner programs designed for another time. Digital transformation, it seems, has not yet reached indirect sales programs.

In many cases, corporations with complex ecosystems of products, services, and software solutions have equally complex channel programs, with too many barriers to entry and performance KPIs for many small to midsize channel shops to navigate and still see an ROI.

In addition, many vendors have built their current partner ecosystems on the backs of legacy programs originally created to specifically target traditional resellers and service providers. As revenue from cloud, software, and services continues to dramatically grow, these OEMs often tack product- or solution-specific incentives on top of these outdated traditional programs. 

So says Brad Pace, VP of customer success at Impartner, a SaaS provider specializing in channel management. Pace says that many suppliers tend to rely on current revenue attainment to evaluate, rank, and prioritize partners—a KPI he says is a lagging indicator useless for predicting partners’ future success.

“Over the past several decades. channel programs have primarily existed to sell hardware solutions to IT specialists. Meaning vendors only really needed one type of channel partner to meet their customer’s needs,” Pace told Channel Futures. “This was effective because channel partners didn’t need to scale across hardware, on-prem, and cloud-based software solutions.”

Partners of yesteryear also didn’t have to accommodate the line of business (LOB) buyer and the highly specific pain points these buyers bring. All of these factors worked together to create an ecosystem where vendors could treat all partners the same: They all received the same sales and marketing materials; they all were required to take the same training and achieve the same certifications.

But the channel is rapidly outgrowing these legacy incentive structures. According to research from industry analyst firm SiriusDecisions, the result is that many vendor programs only meet the needs of 10 or 20 percent of channel sales teams, the ‘superstar’ partners that often have full-time staff dedicated to navigating the nuances of complex programs. As the traditional channel gives way to a crowded ecosystem of new partner types, OEM programs need to evolve in order to service each type of partner.

Pace says that OEMs don’t have the organizational bandwidth to truly meet partners’ needs if they’re trying to manage their partner programs on spreadsheets or dated, disparate systems that make sign in difficult and frustrating. Simplification, flexibility, and customization should be the goals, giving partners more power to decide which structure is right for their particular business goals. In short, vendors need to make it easy for partners to do business with them.

“The best partner relationship management solutions provide a custom experience that scales as their network grows. From the very first digital handshake, these tools provide a front door that makes it easy to do business with the vendor – easy in sign in and easy to access what they need to drive business.”

Granted, most large vendors today provide portals, app stores, and other platforms, but just installing these on top of an outdated, complicated legacy program is not a permanent solution.

At CPE this year, Brocade’s Sandra Glaser Cheek spoke candidly about OEMs’ need to revamp their partner programs, a sentiment repeated both by partners and channel chiefs in attendance.

“We have to wrap our heads around what we define as the channel,” said Cheek. “We’ve pigeon-holed it into reseller or service models, but we need to expand the idea of what the route to market means in the channel. A lot of programs we’ve developed as vendors won’t have legs for much longer. We must embrace new partner types.”

 

 

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