Channel companies have a lot riding on the technologies they choose to sell and the manufacturers they decide to partner with. Navigating the sheer volume of technologies represents a significant challenge alone, never mind the need to identify new products and partners that make sense from both a technical and business perspective. Luckily, with some careful planning, solutions providers can overcome these challenges and mitigate the risks involved with vetting new products before adding them to their technology portfolio.
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"If I'm a vendor and I have hundreds or even thousands of channel partner companies, if one of them does not produce, I still have dozens of other circuits that I could be producing from. For an individual channel company, the stakes are much higher," explained Ryan Morris, principal consultant of Boulder, Colo.-based Morris Management Partners. He said that most channel companies have under $10 million in annual revenue and fewer than 20 major vendor relationships. A solution provider's technology portfolio is representative of just a handful of core offerings and a handful of supplemental offerings.
"If I evaluate and choose to sign a core technology offering and it doesn't work, based on the percentage of revenue it represents and the people and resources involved in that, if I make a wrong decision, the stakes are high. I could actually crash the business every time I choose a new core technology," he said.
While adding new technologies is a risky proposition, it is also a necessity given the nature of the business. "The market is moving. Customers are moving. It's a must. You must evaluate new technologies," Morris said.
Steven Reese, chief technology officer of Ontario, Calif.-based Sigmanet Inc., a value-added reseller and IT consultancy offering a variety of solutions and managed services, agreed. "We're constantly looking at the portfolio and looking for gaps, understanding where the relevant players are. It's a fluid motion. We have core players, and everyone else is an add-on," he said.
Ryan Morrisprincipal consultant, Morris Management Partners
"Don't tie yourself up spending too much time evaluating products but, at the same time, it is your responsibility to make sure you understand what's out there and are making the best recommendations to your clients," said Glen Jodoin, vice president of marketing and operations of GreenPages Technology Solutions, a virtualization and cloud consulting and integration company based in Kittery, Maine.
"I'd argue that if you don't have a process for evaluating and onboarding, then you won't be efficient. Time is incredibly valuable, and new companies and new products can suck up time like you wouldn't believe," Jodoin said.
Morris also recommends that channel companies adopt a formal methodology for adding new products to their technology portfolio. "It's mission critical and becoming more urgent because there are so many vendors, so many new technologies, so many product releases. On a simple statistical level, the odds of you evaluating hundreds of new offerings every single month and randomly picking the right one are astronomical."
The process by which channel companies evaluate potential technologies and manufacturers may vary, but Morris said evaluation criteria should fall under two separate categories: technical and business. "In the technical category, think of things like is it compatible with existing standards in the marketplace, is the provider established, does the provider have a good reputation and is the technology mature enough to be proven in a production environment," he said.
Business criteria include market size and/or readiness, compatibility with past sales messages, the complexity or composition of the sales process and the potential to make money off the technology, Morris said.
Jodoin said that technologies must pass muster with both marketing and technical teams at GreenPages. "Marketing looks at whether it fits into what we do as a business. If it fits, then we push it to the technical people," he said.
Sigmanet also has a formal process in place for adopting new products. "[Our process] incorporates go/no-go checkpoints so that we can evaluate products without spending a lot of time and energy to see if it makes sense to move forward," Reese said. Some of the checkpoints include serviceability, the potential to augment the technology, and margins.
As far as the impetus for looking at a specific technology, experts advise starting with what your customers need. "Today channel companies should only be adding products that support the solutions and business outcomes they choose to provide their clients. Be driven by market demand and what customers want versus what incentives or promotions are being offered by a vendor being considered," advised Tiffani Bova, vice president and distinguished analyst for Gartner.
Advice for vetting new technologies
Experts offer these suggestions for vetting new products before adding them to a line card:
- Stay on top of new technologies and vendor offerings.
- Look for products that fill gaps in your line card.
- Establish a process for vetting new products that includes both technical and business criteria.
- Let customer demand drive your choices.
- Consider the financial impact of adding a product to your line card.
"Customer need is usually where it starts," Reese said. "Oftentimes we watch different industry magazines for what's hot, what's coming around, but oftentimes it boils down to customer demand, what … customers [are] looking for." Sigmanet determines whether it already offers a product that fills this need. If it doesn't, the company examines how the product being considered fits in with Sigmanet's business and strategy, Reese said.
Occasionally Reese will run into a sales rep from a vendor who wants to bring his organization into an opportunity. "People don't realize the financial impact of putting manufacturers on the line card," Reese said. The cost of sitting through an hour of training and a marketing event can outweigh any financial gain to be had from the sale. "Part of it is understanding what we're doing, where we're going and whether it makes sense to continue going down that path," he said.
Similarly, one of the biggest challenges, according to Bova, is "saying no [to new technologies] and not trying to broaden a portfolio because you think it will actually help you win more business if you sell more things," she said. "The winners over time will be those who get really good at certain outcome-based solutions focused on a large horizontal play (like sales or marketing) or a more focused vertical play (like health care, manufacturing, retail, etc.). While counterintuitive, trying to compete against a very large VAR's product catalog and deep discounts is not an advisable or a profitable business model."
Reese said his organization is cautious about putting too many partners on its line card and is, in fact, working on scaling them back. "It allows a customer to know that they can trust us to do a good job with their technology because we're not selling anything and everything. We stand behind it," he said.
Bova echoes this sentiment: "You will be rewarded by saying no by clients who trust you are the most appropriate partner for them to work with to solve their business problems, because you don't say yes to sell anything and everything you can to them, no matter what they need."