On Growth

For Partners, the Cloud Keeps Getting Cloudier

The fight for market share is intensifying, and as a result the costs for a share point of growth are getting frightfully more expensive.

• By Mike Harvath
• January 03, 2012

We've been getting more requests of late from the partner community asking us to help them rethink and rework their relationships, both with their vendor network as well as within the broad partner network -- that is, working and collaborating with other partners. It seems that the constantly evolving IT industry is causing some angst among channel partners as they look for new ways to compete in the future.

This level of concern was brought home by a presentation I attended recently given by Peter O'Neill of Forrester Research. O'Neill spoke about some research the company conducted in which they identified an affliction they called "cloud identity disorder." This was defined as "the confusion and fear about their (and their partners') place in the cloud computing demand chain and doubt about tech vendors' abilities and intentions to help them transform their business."

It seems that the "the vast majority of channel partners are confused, disoriented and fearful about how cloud computing will impact their business." Of concern to the partner community is their belief that "they're not getting much help or guidance from their vendor partners."

What intrigued me about this research is our experience that this confusion and fear on the part of partners goes well beyond whatever they think they're getting or not getting from their vendors about cloud computing. There's a broad-based and legitimate concern about their ability to work with their vendors in general.

We're constantly asked by our clients, how do we manage our vendors going forward? How do we manage up in working with Microsoft and others? How do we better optimize our relationship with these folks? How do we get more out of them? What's the best way to work with them? How do we get our fair share of leads?

The research they did put some numbers behind these issues. For example, to the question, "What would you value most from your vendor partners?" Forty-eight percent said "protect our company's territory from other partners"; 45 percent said "finance some of the cost of infrastructure"; 34 percent said "business model training"; and 31 percent said "marketing training."

What this research reveals to us corroborates what we're hearing as well, and that is, the fight for market share is intensifying, and as a result the costs for a share point of growth are getting frightfully more expensive. This explains the desire for territory protection, business model and marketing training and, of course, financing.

It also explains why many partner firms are actively looking to extend their reach by enlisting new partners themselves, or creating a new network of their own to sell their new IP product or service. What was most revealing in the research was the finding that more than 70 percent of channel partners indicated they collaborate with other channel partners. Of these 70 percent, what many are asking of us is how do we go about finding, evaluating, recruiting, managing, supporting and incenting new channel partners? How do we find the fewer, better partners that will work on our behalf with the same focus and intensity as our own direct sales force? How do we help them become better at what they do? How do we bring value to them?

Channel management has been a staple growth strategy for IT companies from the beginning. However, like most things in the IT world, the partner ecosystem is constantly evolving, which makes managing current and new channels all the more challenging.

The old rules for channel management are just that … old. The blurring lines, the shifting priorities, the emerging new relationships are demanding new rules, new models and new ways of managing your partner network, upward to your vendor and outward to your partner network.

The partner community is quite right to be expressing these sentiments, surfacing these issues and asking these questions. As Yogi Berra is purported to have said, "The future ain't what it used to be." And, from Peter Drucker, "The best way to predict the future is to create it." It seems like some partners are heeding this advice.