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December 20, 2006
The State of the Channel: Perspectives
The eWeek State of the Channel report for 2006 is out. Continuing a trend established last year, IT channel partners are alive and well. Despite the fact that many large corporations are desperate to establish "direct to customer" relationships, the complexity of the challenge of solution delivery to diverse customer requirements continues to drive vendors to work with channel partners.
The robust SMB market for IT is perhaps the most signficant force driving the channel's strength. Millions of SMB businesses are more dependent on IT than ever...meaning millions of customers needing local support and service.
As channel's go, the IT channel is among the most sophisticated. Both the manufacturers and the VARs are technically-savvy, smart business people. That the IT channel structure remains so robust despite the myriad technologies that enable direct-to-customer relationships should be a signal to dozens of other industries going through painful shifts in strategy and contentious channel relationships.
No industry depicts this conflicted world better than the printer/office machines industry, where giants like Ricoh, Canon, Konica/Minolta, Sharp and Toshiba continue to try to build significant direct sales operations while often alienating crucial channel partners. It is a fascinating struggle to watch as these massive manufacturers work to sustain growth while rebalancing their foundational sales distribution strategy. Unfortunately, often caught in the middle of these channel conflicts is the customer.
Channel relationships are all about trust, mutual respect and a collaborative approach to building business. Many manufacturers continue to treat partners as if all they want are "sales commissions" and "incetive trips." In sophisticated channels like IT, VARs like the commissions, but they crave the support needed to grow their businesses. True VARs are not just "sales partners" -- they deliver real value of their own through their professional services. They augment the base manufacturer offering to create a "whole product" offering that is greater than the either piece individually. It is painful to watch some large corporations still not understand that value-creation logic, and subsequently deliver ineffective support to their channels -- resulting in disloyal partners. And therein lies the vicious circle...disloyalty leads to the desire to "go direct" which creates greater disloyalty, etc...
It really isn't that hard. Just look at IT for a lesson.
Posted by jcioban at December 20, 2006 7:39 PM
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