Australian channel heavyweights last week presented a blueprint for the channel working to come to grips with the maturing of the IT market.
Participating in the Channel Panel at the IDC Directions conference in Sydney, MDs of six of Australia’s largest channel outfits challenged vendors to better utilise their channel partners while reminding resellers of the need to hone their core skills if they were to successfully adapt to the changing business environment.
Vendors and their partners need to keep to what they do best if they were to succeed, warned managing director of Australia’s number one distributor Tech Pacific, Kerry Baillie.
“The market is now very segmented and very mature, so vendors have to take a more sophisticated approach to the channel, rather than treating the channel like a customer, as in the old days,” he said.
“It’s to the vendor’s advantage to treat the distributor or whoever is involved in the channel, as a virtual part of their organisation. If you see a channel partner who can do what you do or better, at the same cost or less, make us a part of your virtual organisation.”
Customer ownership was up for grabs in the new market, in which old selling hierarchies had been broken down and a number of parties were involved in influencing sales, MD of Sydney-based systems integrator Logical, Stuart Hendry, said.
“It’s a fairly complex situation involving all types of organisations who want to influence the customer,” he said.
In the maturing market, Hendry said the role of the resellers as a “translator” between the vendor’s technology offering and the customer’s business needs was changing the sales climate.
“We’re moving away from fairly aggressive transactional sales approaches to much more value approaches, based on trust built up over time,” he said.
Resellers also needed to assert themselves in the face of “the marketing clout of vendors”, Hendry said.
The reseller’s vendor-independence, customer knowledge and ability to offer best of breed solutions was valuable to customers, he added, explaining that resellers who built reputations as “trusted advisors” could become powerful members of the sales cycle.
“If you’re a channel, your job is to utilise technology to deliver business benefit to customers,” he said. “That’s the value we add, and there has been a huge change in attitude from vendors who are realising the value [this] brings [to their business].”
Ultimately, however, the onus was on the channel to prove itself to customers as a responsible advisor capable of identifying their customer’s needs, according to Lan Systems MD, Nick Verykios.
“To have a continued transaction relationship with that customer, you need a proactive understanding of their business,” Verykios asserted.
This was particularly important in light of recent IDC research showing that 94 per cent of IT managers and CIOs now had no discretionary spend. Verykios pointed out this indicated a drastic change for channel marketing and sales.
“Historically, a lot of the channel sales resource has been targeted at that discretionary spend, and that’s evaporated and moved to a lot more project-related spending and driven around the business needs of the customers,” Verykios said.
“One of the key changes when you have a customer base that is looking at getting a faster ROI and reducing costs, is that you’re starting to deal higher up in the organisation. A lot of CIOs are now reporting to CFOs, rather than CEOs, so you really need to spend some time up front qualifying who is going to be significant in the decision-making process.”
And with IT purchasing decisions moving away from IT managers and into the realm of CFOs and CEOs, the challenge for the channel and IT community was to gain customer trust, according to Logical’s Hendry.
“We’re seeing that decision makers aren’t clearly defined and often you have transient situations — for particular buying decisions, someone owns that decision,” he said. “In the end, it’s the individual or organisation that the customer trusts who will own that decision.”
Hendry said that as the market matures and customers became more knowledgeable, their decisions were increasingly based on the perception that the process was more transparent and offered them more choice.
“We see that in outsourcing, in the trends to break up clusters and shorten contracts, and in trends towards standardisation and customers encouraging different vendors and partners to address their opportunities,” he said.
As a result, intimate customer knowledge was crucial to be able to address the changing needs within the market. Verykios said vendors were starting to understand the channel was best placed to achieve this.
“With IP telephony, those vendors who chose to use the channel to sell saw their product getting sold, those who didn’t saw their product stagnating, because they were presenting a return on investment [ROI] sell to the end user,” he said.
IP telephony became a compelling sale when resellers applied its capabilities to solve the business problem of dissatisfaction with carriers, Verykios asserted.
Although customers’ new-found sophistication and tough economic conditions were putting the squeeze on IT purchasing, Volante Systems’ managing director, Hugh Bickerstaff, thought such a market could be a blessing in disguise.
Bickerstaff said that market trends such as rationalisation and consolidation in the channel, moved towards strategic sourcing and project based procurement, and lowered cost structures could work in the channel’s favour on several fronts.
“There’s a huge move in a maturing market towards lower costs and better service,” he said. “The channel has always had a strong customer service focus and connection with the customer.”
“The channel is still 50-60 per cent of the go to market model and as it consolidates and channel partners get stronger, they will increase their influence.”