The objective of a channel partnership is to maximize success for both parties, but it should not prevent either from attempting to maximize individual success. Last fall, I participated in a panel discussion at Ziff Davis Enterprise’s Channel Summit. The panel focused on best practices in managed services, but another topic was how the channel can manage service delivery.
Afterward, this led to a fascinating talk with Klaus Ittner, principal at The Taylor Group, a consulting company advising software vendors on developing channels and engaging with channel partners. I quizzed Ittner at length at the event, and a couple of weeks later, he graciously agreed to a follow-up phone call. The subject of our discussions was common mistakes made when setting up a channel.
Ittner said missteps include the assumption by software vendors that the channel is merely an extension of a direct-sales force. “Channels have their own objectives,” he said. Vendors that forget channel partners need to be able to build viable revenue streams don’t do well when negotiating channel relationships.
Vendors also need to invest in the channel to ensure success. It isn’t enough to just have a product, especially in the software world. Complex applications almost always require a properly trained channel partner. The vendor must invest in channel training and support.
Another blunder, Ittner said, happens when vendors and VARs tend to engage in channel relationships too quickly. He recommends a fair amount of deliberation. A channel relationship “is like a marriage,” he said. “Each partner needs to understand that a channel should be a long-term arrangement and that when a channel partnership fails, damage can be done to both parties.”
Ittner said taking time before engaging in a channel arrangement allows both parties to decide who will drive the relationship. Depending on the extent to which direct customer support is given, it could be either party. “It is important to determine during the dating period who does what and how each can leverage the strengths of the other to achieve a maximum return on the relationship,” Ittner said.
Finally, another gaffe channel partners make is to assume that a channel arrangement constrains each from competing with the other, Ittner said. Ittner preaches a philosophy of “co-opetition” under which partners accept there will likely be times when they compete for the same business.
Channel agreements need to provide for such circumstances, Ittner said, but should not attempt to prevent them. The objective of a channel partnership is to maximize success for both parties, but it should not prevent either from attempting to maximize individual success. The important thing is to predefine rules for engagement and disengagement when conflicts arise so that they can be resolved quickly and out of sight of the customer.
According to Ittner, a channel arrangement is a flexible relationship that benefits from preplanning and due diligence. Preplanning allows partners to build a solid foundation for a continuing relationship and helps avoid some of the more common mistakes associated with channel partnerships, he said.
Check out The Taylor Group’s Web site (www.taylorgroupconsulting.com) and drop Ittner a note if you have any questions.
Mike Jude is an analyst at Ptak Noel Associates and a co-founder of Nova Amber, a business process virtualization consulting company. He can be reached at mjude@ptaknoelassociates.com.
