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Channel Wars – The battle for customer ownership!

Is this the final frontier of the channel where all forces battle for ownership of the customer? Is there such a thing as shared customer ownership or is that just the opening act for a brutal tug-of-war? As multiple channels collide in battles across many front-lines, who will ultimately win the war?

I was at yet another channel conference (CompTIA’s ChannelCON in Florida) and was able to have several conversations with a variety of channel warriors. The net feel was that the current IT Channel is under tremendous attacks from all angles. New channel players coming from the SaaS World (Jay McBain shared some insights on some of the other emerging channels); Increasing attacks from the Telcos and POS channels; Direct vendor models still bombarding the market; Cloud vendors are infiltrating the market with surgical attacks and some vendors are still competing with their channel in a fragile coalition. As if that was not enough, one keynote pointed out that the younger generation are not entering the IT channel.

“In war, truth is the first casualty!” (Aeschylus)

Many people at the conference were steadfast on defending their piece of the channel ground. Distributor advocates were touting that they are still the best go-to-market strategy, but getting Cloud into their model seems like fitting a square peg into a round hole. SaaS vendors are saying they do it all – make IT easier, faster and cheaper with automatic maintenance. Even hardware vendors were pitching their “as-a-service” solution. New Cloud distributors and other managed services vendors were saying that they are the catalysis to build the next generation of channel partners. Everyone had convincing sales pitches but some may be bending the truth to fit their game.

I also interviewed several vendors. You can listen to exactly what they had to say at www.ecntv.tv (Found a few interesting solutions that VARs and MSPs may want to check out). I was especially interested to speak with VARs and MSPs to get their take on the channel. As I suspected, their comments reflected much of what my recent article outlined from feedback I got from other channel partners over the past year.

One more interesting bit I got from the conference came from a panel discussion by mid to large end-user buyers. They said that the majority of IT investment is still a capital spend – especially for large deals. I asked the panel about the split between direct vendor and indirect channel partner sales. Their best guess was a 50/50 split. They also indicated that vendors are wrapping renewal versions of the solutions with new terms and conditions that may not favor their channel partners. This is a good example of the type of subtle profit bleeding of the channel by vendors.

It’s probably high time for a reality check. I suggest that you do your own investigation and verify the facts. Get to know what you do not know and take the appropriate action. In reality, even if traditional channel partners are forced to abandon their current business model and set up a new company, life will still go on! The actual cost and barrier of entry to be a solution provider today is at an all time low! Many channel partners are adapting and reinventing themselves, by the thousands! You can read some articles related to this topic at www.varcoach.com.

Channel partners can gain strength by understanding their weaknesses and improving. Good leadership with the right business strategy is also necessary to make the transition successfully into the next generation channel!

We are doing our small part to help as many as possible to make the transition with the first online business assessment test for best practices. VARs, MSPs and ITSPs can take it for free and get a free report. But be warned, it will take some effort to complete this 200-question test and you need to be honest to get the proper results. With this report card, you will know what needs to be fixed.

After every conference, I get mixed feelings. I find some cool and innovative products which excite me. I see channel partners doing their best to improve and build their business. That gives me hope. Then I see some looking to drain profitability from the channel and I get upset. The channel is an important ecosystem so instead of finding ways to bypass, why not find ways to leverage and sustain? Make it bigger, better and stronger so everyone wins!

My advice to vendors is to support the channel 100% and put as much profitability as possible back into your partnerships. Don’t play conflict games. Remember to reward your partners for doing the right behavior. Get to understand the challenges facing your partners and support them to overcome. Making it a bit fun to do business with you will also not hurt.

My advice to channel partners is to take more time to work ON your business instead of IN your business.  Know your weaknesses and improve a little every day. Only best-run businesses will win the battle. Be loyal to the vendors who support you and build a strong team. If you get up every morning and think how you can help your customers succeed today, then YOU will win the channel war!

Julian Lee