Editorial: Rules of engagement

Editorial: Rules of engagement

According to vendors and distributors alike, software licensing represents a major opportunity for resellers to accrue ongoing revenue streams. Larger wholesalers have specialist teams dedicated to helping their reseller partners wade through the myriad of variations to be found in the licensing offerings of major vendors. Express Data, which set up an annuity team to help its resellers keep track of an estimated $50 million in renewable business earlier this year, has identified software licenses as one of the most important categories to be monitored.

But while Microsoft has undoubtedly been the leader of the vendor pack to date as far as licensing is concerned, there are still some aspects of its set-up that leave a lot to be desired. This has been highlighted by the predicament that Brisbane-based reseller, AfterDark, finds itself in.

How can it be that a company services the IT needs of a customer for three years, helping it to almost quadruple its number of users during that time, only to be rewarded by having the customer handed over to a competitor on a plate by the vendor it has been representing? Hardly sounds like something you would base an incentive program on.

Microsoft has defended itself by saying it is simply looking after the best interests of its customers. Nobody can blame it for wanting to do that.

But a vendor that is so reliant on a partner model to get its products out to its customers — and no IT company fits that description better than Microsoft — needs to apply the same best interests approach to its resellers.

The software giant’s other defence, that large account resellers only provide the licensing component of a deal where poss­ible while leaving the services and support component to the original reseller, leaves too many grey areas where the little guys get trampled on.

At the end of the day, resellers of all sizes are in business to make money and a large outfit cannot be blamed if it uses its powers to offer cheaper licensing as a foot in the door to offer a full range of products and services. After all, up-selling and cross-selling are the lifeblood of the channel.

The responsibility for making sure that smaller resellers are not having sand kicked in their faces by the bigger players lies with the vendors they are representing on a daily basis. In an ideal world, vendors should not be allowed to contact end-users directly and undercut their business partners. If that is too much to ask for then maybe vendors should be paying compensation to the partners that get cut out of the equation.

At the very least, resellers have every right to expect to be treated with a level of respect that would not see a vendor approaching established customers behind their backs.

Some clear rules of engagement are needed. AfterDark’s managing director, Peter Davies, is calling for a change in the Trade Practices Act that would allow him to take action against any vendor acting in a way that was detrimental to his business, and those of other resellers, regardless of intent. While this could well be a solution to the problem, a more even-handed approach to the business of partnerships from major vendors would be just as effective. This shouldn’t be too much to ask. What do you think?

Brian Corrigan is Editor of ARN. Reach him at

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