The traditionally close relationship that exists between large vendors and their resellers is beneficial to the channel in a number of ways; it helps to promote strong sales for both parties and typically provides reassurance to the customer that what they’re buying is tried-and-tested. No one wants to be the guinea pig, so best to stick with what you know.
However, as is true in life, it is important to have your beliefs and preferences tested every once in a while. It can be beneficial both to yourself, your customers, and for the innovation of the IT industry as a whole for resellers to look beyond their circle of friends for something new every now and then. Providing the arrangement is still commercially viable for everyone involved of course.
The status quo
All vendors worth their salt know how important it is to maintain good relationships with their resellers, and no one knows this better than the largest vendors. Large VARs and SIs have been courted by the major vendors for years; they know their product sets inside out and know how to implement their solutions successfully. This closeness is self-perpetuating too, resulting in that vendor’s products being favoured in most of the reseller’s projects.
So how has this situation come about? While you could argue that the human trait of ‘sticking to what you know,’ (otherwise known as brand loyalty) is the main factor, remember that loyalty has to be earned in the first place. The large vendors are successful because their products are good. Simple as that. VMware and Cisco did not become global leaders by building bad products. Instead they built good products that people wanted, and crucially, continue to want to this day. While the significant sums that these vendors invest into their channel goes some way to maintaining their lead, it is their continual innovation in their products to stay ahead of the competition that really maintains their fortunes.
Is there room for improvement?
While the success of the major vendors is not a bad thing, there is something to be said for occasionally moving outside of your comfort zone. The IT industry is widely regarded as one of the most innovative industries in the world, but the market which distributes this innovation to customers is not always as efficient as it could be.
It is this imperfection that prevents some new vendors from being as successful as they otherwise could be. While in most instances it is the best products that sell the most, this is not always the case. While no market will ever be perfect, there are some things that resellers, customers and vendors can do to ensure that the best products are always the ones that find their way into real world deployments.
- Resellers: Conduct a market review on a regular basis. If you happen to find a new product that could help your customer, don’t be afraid to take it to them. But do your due-diligence first. Make sure it is commercially viable to work with this vendor. Check they have the credibility to deliver to the scale that your customer may require, are financially sound and have plenty of customers operating in a live environment that you can speak to. It is all well and good doing your bit to support British innovation, but if the figures don’t stack up…
- Customers: Don’t be afraid to look at products from unfamiliar names. Be adventurous! If your reseller suggests a product that costs half as much as the leading brand but delivers even more functionality, you’d be mad not to look at it. After all, all of the world’s best known brands were young once. Encourage your reseller to do the same. Ask them to justify each vendor choice.
- New vendors: As a vendor you must recognise the commercial aspects by which large resellers operate. The major vendors bring more to the table than just a good product, they also bring any number of factors that specifically benefit the reseller, from more favourable commercial terms to product training and joint marketing funds, etc. If your commercial terms don’t stack up against the major vendor, your product won’t get sold, no matter how good it is. Commercial terms aside, new vendors should also spend time building their direct sales pipeline before even approaching a reseller. You will need a good track record of success for a reseller to take you seriously. If you’re only turning over a few £100k then expect to be turned away (unless you really do have a niche). Building up sales in your direct channel will prove that your product is credible and that you have the financial stability to deliver on bigger orders.
With these points aside, there is no reason why smaller vendors cannot build a successful business through the channel. Besides, the global leaders earned their position by doing just that. Resellers can play their part too. By questioning more and settling less, they will not only validate why their chosen partners are so important to them, but they might just find a new hidden gem along the way.
Iain Tomkinson is director at ASM Technologies
