Buying from the channel can work to your advantage

In October, I wrote a column about purchasing choices for management software solutions. At the time, EMA was conducting a survey to understand whether or not the dynamics of channel distribution had changed in light of evolving economic conditions.  This week, I’d like to share some of those results with you and discuss how they might impact your current buying decisions.

The results of the research – as it turns out – came largely from solutions providers with a few participants that were in the channel and IT buyer categories. The use of channels for distribution is in fact increasing rather than decreasing by a large majority of vendors (76%). This increase in use can be explained through the need for any technology provider to reach far and wide in its distribution strategy as well as the need to optimize costs in the sales cycle by leveraging external sources.

Participants in EMA’s research “Channel Perspectives: A Vendor Perspective” shows that of the participants surveyed, more than half (56%) use channels to reach more than 50% of their market.  For enterprise buyers, it simply means that you will be dealing with a middleman in your business transactions.  Services can be handled in a number of different ways.  Many solution providers are perfectly comfortable with the sale and service being handled by a third party (26%). Yet, there is an equal number that feel they need to handle service directly (26%). Either way should be fine for IT buyers. The key is to ensure that the service delivery is being handled by qualified staff. Generally speaking, those vendors that offer services through channels invest much more in training to make sure that QoS can be controlled and consistent.

There are many reasons why vendors choose to use channels for distribution. The primary objective is for market reach – either into new vertical segments, or company sizes, or access into specialized areas such as the government. This study did not reveal anything particularly new except that vendors are using channels more due to reduced internal operating budgets. The good news for buyers is that the top screening goals tend to fall into the area of market and technical expertise. That translates into better service for the end customer. 

Other findings that should put the IT buyer’s mind at ease involve expected investment by solutions providers. Of course, vendors do expect to provide their channels with sales and marketing support. Beyond that, 74% said they also provide first-tier technical support, 71% indicated they offer free training, and another 55% stated they give early access to new product releases. Channel partners now have more opportunity to offer many different products and build their own tailored solutions on top of these products while at the same time feeling well-supported in its sales and support endeavors. An excellent strategy for enterprise IT is to develop a solid working relationship with its channel partner and chances are the level of support and visibility provided will be superior. 

A closing thought came from an IT professional who participated in the research.  This buyer explained the core of how he looks at channel vs. direct buying decisions. It really is a trade-off and either direction can be right for you.  His experience shows that “the channel partner tends to have various solutions to meet a business need and are less biased … whereas a software vendor tends to only show strengths, but can often highlight capabilities better than the channel partner.” Of course, it does all boil down to the individuals that you are dealing with in a particular buying situation. The more you know about who you are buying from, the better off you’ll be in making the solution and vendor or channel relationship work to your advantage.