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Tough market to trigger direct vendor push?

Tough market to trigger direct vendor push?

Tougher market conditions are raising questions about whether vendors could snatch more top-tier accounts off channel partners to help bear the downturn.

Resellers and system integrators talking to ARN agreed vendor attitudes towards the channel are cyclical and often depend on the vendor's product line-up, position in the market and level of maturity. Opinions on whether the looming economic slowdown would trigger a broader transition towards direct business were mixed.

"The reality is vendors can't afford to do it," managing director of ASX-listed integrator Data#3, John Grant, claimed. "They're all experiencing hire freezes and can't bring on more people - and every customer you take direct means you've got to bring on managers, have more processes in place.

"It's a game vendor who'd go direct for short-term gains. Everyone thinks it will happen and you might get some deals going different ways at the coalface, but we won't see vendors take this short-term view."

Grant pointed to HP's direct sales push a few years back as an example of the negative effect such decisions had on a vendor's channel.

"HP took millions of dollars out of the channel and damaged it enormously. It took years to get that channel healthy again," he said. "Customers have expectations around levels of service. We're much valued by customers and by the vendors that understand a channel model and who realise you can't just relocate business."

But while the channel's superior service and customer skills should prevent vendors from taking back business direct, ComputerCorp eastern sales manager, Tony Heywood, wasn't convinced this argument won out every time.

"Vendors like HP and IBM continue to push the message that they can't get to market without channel partners, but most of that today is about the SMB market, which they clearly can't get to," he said. "There's nothing stopping them from taking business direct but I would be surprised if they did.

"HP did this three or four years ago and they're now pushing business to the channel because they can't scale their own teams to offer integrated services - they have to rely on certifications in the channel. But all it has to be is a change in management or sentiment for this [switch] to occur."

In the US last week, Symantec's COO, Enrique Salem, created a stir when he announced it would take more customers deals out of the channel to cut goto market costs. The security vendor has since moved to reassure Australian partners of its commitment to an indirect model. Red Rock Consulting director, Jonathan Rubinsztein, was concerned more vendors could start reinvestigating going direct as the market gets tighter. The software integrator specialises around Oracle's product suite.

"We've seen both cycles - where an economic downturn or upturn has caused a power shift [between direct and channel]," he said. "When times are tough, vendors may go direct because they think they can do the job better than the channel.

"Partners are closer to customers and market trends, sells solutions not just technology, get coverage and are a lower cost sales model.


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