The services conundrum

While vendors have become increasingly reliant on partners to resell their products to an ever broadening market, the provision of services has often seen the two clashing heads, especially at the top end of town.

"I think we call it co-opetition at the end of the day and try to work each account on its merits," Thomas Duryea's Andrew Thomas said. "Sometimes you agree but sometimes you just have to go head-to-head. It is frustrating but I don't see it changing too much."

Dimension Data's Steven Boi agreed that competing with vendors in the enterprise was a fact of life for integrators playing in that space. But while vendors will continue to hold onto those direct relationships, and provide services wherever they can, he said the growing importance of the mid-market was changing market dynamics.

"The best thing that has happened for integrators during the past three years is the growth of the mid-market space because we haven't found a vendor yet that can scale, or is interested in scaling, to deliver services to that space," Boi said.

"We are finding less and less intrusion from vendors wanting to deliver services into what we now see as our new heartland. That's great because if we don't have robust services revenue, we don't survive as an organisation.

"Vendors are recognising that and they are becoming more channel-friendly because they realise their growth will be on the back of the mid-market space. If they annihilate or ostracise their partners, their businesses will struggle. This is a quantum shift from tier-one vendors."

Responding to this shift, some vendors are now ring-fencing mid-market business in an attempt to build greater trust among their partner communities. CA now fulfills all of its mid-market business through partners, including services, and Juniper Networks will only deploy its services organisation in this space to support its resellers.

"We are there to provide additional skills where they are short, or to offer an expert on a particularly complex rollout," Juniper's Scott Janey said. "At the end of the day, we expect our partners to skill up."

VMware's David Blackman said the virtualisation vendor suffered from a fundamental lack of skills. This was partly responsible for the rapid growth of its local channel as the company tried to meet burgeoning demand for its technology. He also noted that customers often dictated who should deliver services.

"The vendor just wants to make sure their solutions are represented correctly so the customer feels they are getting the best value," he said.

For vendors with large service organisations, such as HP and IBM, it is more difficult to avoid competing with partners. HP's Corie Marinucci said the aim was to strike a balance and complement partner services wherever possible. However, he admitted there was significant overlap.

"The partner base in Australia is very mature compared to some other countries so we have partners coming to market with services that are similar to ours," he said. "That's a good thing because the market needs it. We can't be all things to everybody and are working with partners in pockets where it makes sense. In most cases we are complementary."

Fujitsu's Perry Delaney said it came up against vendors all the time. While this was painful, he said the reality was that there would usually be four or five companies going for any deal and it didn't really matter who those competitors were.

"We don't really get our nose out of joint because you just have to be as good as you can be with the solution you are trying to drive into any given customer at a particular time," he said. "You need to create competitive differentiation. If a vendor is competing against you, you need to come up with a value proposition that is yours and not theirs.

"Somebody is going to be competing for your business whichever way you turn. The most important thing is that you get price parity from a vendor on the hardware if you are going to compete for services."

In the mid-market, Dimension Data's Boi said co-operation with vendors was more common than competition. Some would even take an active role in the sales call and put an integrator forward as their preferred partner.

"That is what makes vendors valuable to us as resellers and there is nothing stronger than those partnerships," Somerville Group's Craig Somerville said. "We win the lion's share of those engagements when we go in as a team.

"We compete with some vendors at times but realise that it is our responsibility to improve if we don't win. We can usually be more niche and flexible to the requirements of our customer base."

Those preferred partner relationships were typically formed on a deal-by-deal basis, Boi said, and were increasingly respected by integrators that normally competed against each other.

"We will walk away if we get wind of a deal but find out that a vendor is already working with another partner and would prefer to retain that relationship from a customer-facing point of view," he said. "They have done all the work and we totally respect that."