Why buying from channel partners could be a good deal

* Buying from the channel or direct - what are the sources for mgmt. systems, services?

User organizations have lots of choices when buying management solutions. Many prefer to work directly with the vendor that created the management technology -others choose to work with a channel partner that offers many products from different vendors, simply because they understand their customers' needs. There is no right answer to which is the better choice. The best source for any product is generally a matter of individual needs and preferences.

Channels are a key distribution strategy for many management software vendors.  In fact, they are the ONLY strategy for many companies. The value is obvious when looking at it from a vendor or service provider perspective. Channels represent a means to reaching a market and some software vendors maintain a core group of dedicated sales reps who are essentially chartered with building and supporting relationships with channel partners. For the company, this approach leverages a finite investment in sales to enable compound growth.

User organizations win in this scenario because channel partners often have intimate knowledge of a particular vertical industry or niche. Channels partners are often small and midsize businesses with a local or regional presence making them more accessible for many IT shops. In 2002, Enterprise Management Associates (EMA) conducted a survey of channel partners and found that two-thirds of respondents focus on a vertical industry. Many channel partners will focus exclusively on one or two industries and put together a multi-vendor solution, integrate it, and provide services to ensure that it is effective. Channels partners are successful in this endeavor because they are able to develop closer relationships with customers than the larger vendors.

Though there are many positive reasons why small and large enterprises would want to buy through channel partners, there are also business considerations. Some of the more common-sense considerations include:

* Assessing the stability of the channel partner.

* Weighing factors that determine the value of the cost structure - essentially are you getting enough "value" out of those value-added services.

* Does the pricing model and actual cost make sense in comparison to other sources for similar products.

* Ensuring that product support is available in a timely fashion. In some cases, channel partners provide front-line support, while other support needs are provided by the vendor.

One of the stickiest situations for vendors that sell through channel partners is channel conflict. Channel conflict occurs when software vendors are essentially competing with themselves. Vendors could have one or more channel partners selling into the same account or even worse, the vendor's own sales team could be competing with the channel partner. The burden of resolution rests with the vendor and in most cases, customers and prospects are buffered from this type of activity. Of course, the flipside is that IT executives can use this situation to their advantage in order to obtain better product pricing. However, care should be taken to ensure that the conflict is not representative of a broader problem in the relationship between the channel partner and the vendor. 

Channels offer a variety of services covering virtually every aspect of IT management. To give you some perspective on this, respondents to EMA's 2002 research indicated that they were frequently involved in hardware and software sales (92%), network integration (59%), network design (56%), and remote network monitoring and management (21%). Other areas of coverage included various technologies such as storage, Web applications, and security as well as functional services such as training and business strategy planning.

Times do change though and product and service offerings must change right along with current market needs. EMA is conducting another survey that looks at business practices for channels in the management software market. We are conducting a Web survey to explore this subject from the point-of-view of vendors, channels, and IT buyers. If you could take a few minutes to share with us your viewpoint, the survey can be found here. You will be provided with the final paper when complete. This survey should take no more than 5 minutes of your time.

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Copyright © 2005 IDG Communications, Inc.

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