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Forget it Mr Vendor

Forget it Mr Vendor

These are funny times. In one sense, the channel has never been more in vogue. Vendors are tripping over themselves to formulate channel strategies and sign on key resellers and integrators.

On the other hand, an increasing number of vendors are going direct to the end customer. Or they are launching their own professional services organisations.

So typically, when a vendor launches a services division, the spiel goes as follows. Customers are demanding solutions that the channel has not been able to provide. So to pick up the slack, the vendor is forced to offer those services to customers. They are likely to defend the services organisation by claiming it is complementary to the channel, because the reseller still gets to make the sale on that particular piece of hardware or software they sell.

Well thank you very much, Mr Vendor. So what you're saying is the reseller will do all the tough work, the cold calling, the pitch and then make the sale. And at that point, the reseller is expected to be satisfied with the skinny little margin on the hardware or software and call in the "expert" vendor who creams off all that delicious services revenue.

What a crock! Why do you think the vendor isn't selling direct? It's because it doesn't make economic sense for it to do so. Why would you, when you can have all those poor suckers in the channel do all the hard yakka for you? And why are all these vendors launching services organisations? Because that's where the money is, of course.

Each-way vendor

Well I'm sorry Mr Vendor but you can't have it both ways. The channel mustn't stand for such business models. If the vendor insists on taking a piece of the services revenue, then the reseller has to be given a nice healthy margin on that revenue. In this week's paper, security vendor Secure Computing (page 30) offers just that to resellers who introduce its professional services organisation to its customers.

Instead of whining that resellers don't have the services expertise, vendors should do something to help. I guess that the rash of certification programs being rushed onto the market are a good start, although one always gets the feeling that many vendors simply launch these as another revenue gathering exercise.

A good example of a vendor who is doing it right is Madge Networks, which is soon to launch video networking kits. Realising that this is a complex technology many resellers have not skilled up on, it is going to offer its integrators training and partner with them on the design and sale of the solution, until the integrator is capable of doing it themselves. Token ring competitor Olicom is also taking the approach that it needs consultants who work with the reseller, not compete against it.

That is, both these vendors are not attempting to make any money from the value-added services they offer.

In general, though, resellers and integrators need to understand that vendors are increasingly going to come after their services revenue. You need to make sure you can do it better than they can.


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