Vendor branches not in control of channel strategies

Vendor branches not in control of channel strategies

A report into distribution trends of Fortune 100 high-tech software firms has shown that local leaders of global software vendors are not in control of their channel strategies.

The research was conducted by US-based Technology Channels Group in collaboration with Channel Enablers in Australia and included feedback from the Asia-Pacific subsidiaries of the vendor respondents. Companies surveyed were broadly defined as vendors of software in the B2B space that offered solutions with a typical end-user price of $US75,000 and have an average of 20 per cent growth.

According to Braham Shnider, managing director of Channel Enablers, it was clear from the results that distribution strategies are driven from the top of organisations. In over 40 per cent of the respondents' organisations, the CEO was responsible for driving the strategy with the vice president of sales not far behind. The country manager was sixth on the list.

"This is clearly symbolic of the trend towards global distribution strategies," Shnider said. "It just goes to show that local branches don't have control over channel strategies as much as they would like. They only really have control over the execution of strategies that are determined in head office."

Shnider also said a clear pattern of the rising engagement of channel partners was evident in the survey results.

"While over 80 per cent of respondents indicated they do have some form of direct sales, the same percentage also said they use value-adding partners and just under 60 per cent indicated they use distributors," said Shnider.

"We are talking about relatively complex solutions here and partners are needed to get to the customers. Our survey showed that the overwhelming majority of respondents utilise their partners for integration at the customer site."

Shnider put this down to the understanding of the customers' needs and the existing relationships channel partners have with the end users. Additionally, most technology rollouts involve multiple products from multiple vendors, he said.

"It all has to be put together and integrated to deliver value for each individual business. Vendors don't have the resources to deliver that."

The survey also showed that demand creation (over 90 per cent of respondents) and partner training (75 per cent) were listed by vendors as being critical in their achievement of distribution excellence.

Increased revenue growth (84 per cent) was clearly the major driving force behind vendors engaging channels while a lack of focus on their product was the biggest issue vendors have with their partners.

Clear opportunities emerged for channels when vendors were asked what the biggest issues were for their end-user customers. If channel partners can deliver implementation success and return on investment, they will be delivering a clear value-add to both the vendor and the end user.

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