Not Your Father's Partner Programs: Growth Opportunities For The Channel

By John DeSarbo, ZS Principal

Information technology channel partner programs used to be so simple. For years, most partner programs had a straightforward structure. Channel partners, which were typically traditional resellers, participated in “reseller programs.” If partners met sales thresholds and invested in product training, then vendors provided financial and non-financial benefits. Partners that achieved higher performance tiers received richer product discounts and rebates, and in some cases earned co-op or market development funds (MDF). High-performing partners earned a logo and plaque to display their status. Some vendors created special program tracks for their non-reseller partner types, such as independent software vendors and managed service providers.

Unfortunately, while most IT partner programs were easy to understand, they frequently did not produce the intended results for either vendors or partners. Vendors poured millions of dollars into partner programs to add new incentives and support only to see a decline in partner participation and sluggish channel growth. CFOs questioned why so much was invested in the partner programs with no clear return on investment.  

Meanwhile, partners — many of which did not fit neatly into rigidly defined program tracks — complained of cumbersome processes and requirements that did not align with their business strategies. Programs originally intended to improve collaboration between vendors and partners often had the opposite effect. Partner programs became a point of contention and fostered mistrust, particularly in areas with high potential for conflict such as IT services. Many partners viewed vendor partner programs not as tools to help them grow but as obstacles to overcome. One solution provider executive bragged to me recently, “I never met a partner program that I couldn’t crack."

Today, IT vendors are scrambling to jump-start their channels and capitalize on growth opportunities in cloud computing, mobility, security and big data analytics. Not surprisingly, leading vendors are overhauling their partner programs to keep up with the times. Over the last 18 months, many of the largest vendors, including Cisco, HP, Dell, EMC, SAP and Microsoft, implemented major changes to their partner programs. 

So what are vendors changing, and what will these changes mean for solution providers in 2016? When you review recent changes to leading vendor partner programs, three themes emerge.

Investment In Partner Competencies

IT buyers demand integrated solutions and cloud services that enable business transformation, and vendors need channel partners that can meet customer needs. In response, leading vendors are restructuring their partner programs to reward partners that adapt to new consumption preferences and reach new buying centers. Cisco, Dell, Microsoft and others have introduced new specializations in their programs to differentiate partners with competencies in areas such as cloud services, software development, and business intelligence and analytics.

Further, program incentives are tied to these specializations. In some cases, vendors require partners to invest in specializations to advance in the program. For example, Cisco now requires Gold partners to demonstrate competency in at least four cloud or managed service offerings to maintain top program status. 

Increased Program Flexibility

With business models increasingly blurred in the channel, leading vendors are moving away from force-fitting partners into program tracks that correspond with static labels such as “VAR,” “systems integrator” or “service provider.” Some vendors such as EMC now allow partners to participate in multiple program tracks to account for the fact that some partners will play different roles depending on their customers’ needs. SAP has gone so far as to eliminate traditional partner types from the lexicon entirely. It organizes its PartnerEdge program around four flexible engagement models: “Build,” “Sell,” “Service” and “Run.”

Streamlined Collaboration

Channel partners choose vendors that make their lives easier. Consequently, many vendors have eliminated program elements that create unnecessary complexity and inefficiency. Last year, EMC combined all partner programs into one umbrella program. Cisco consolidated three disparate deal registration incentives into one and eliminated its Silver program tier entirely. Microsoft and others streamlined certifications to make it easier for partners to demonstrate technical competencies.

Many vendors are introducing tools to better facilitate engagement with the channel and are taking steps to improve partner-to-partner collaboration. HP Enterprise Services, for example, recently introduced the Partner Ready International Program that makes it easier for partners to find alliances overseas. Cisco recently introduced a program for technology and ISV partners to encourage collaboration between channel partners through a Cisco-managed marketplace.    

These partner program changes create growth opportunities for channel partners. Solution providers must understand these changes and take advantage of new program bells and whistles. Solution providers should also proactively engage vendors to discuss their business strategy and goals. If solution providers focus on the hottest opportunities in the IT industry, then there are likely incentives and resources available to help them build their businesses.

About The Author

John DeSarbo is a principal at global sales and marketing firm ZS and the leader of the firm’s sales channel strategy and management practice. John has 20 years of consulting and industry experience focused on sales and marketing strategy and operations. His expertise spans sales channel strategy and operations, channel analytics, partner program design and sales force design. He helps companies develop and execute multichannel go-to-market strategies to scale coverage, improve customer acquisition and retention, and accelerate revenue growth in target markets. John works with companies across a variety of industries, with a particular focus on technology.