Will Dell’s channel strategy be successful…who gets the last laugh?

February 13, 2008

laughing-hyena.gifThe industry is all excited about Dell’s announced channel strategy. People are questioning whether its a shrewed move…well I think it is!

The fascinating thing as that people missed the signs two years ago. Check this out the article referred to is only 18 months old and the journalist was saying that the attempt was doomed, that Dell would never formalize a channel strategy  because it “owns the customer“.

I believe Dell are right and they will succeed, simply because they recognise that they can’t own all the customers. This is great news for the ICT Channel since it confirms in no uncertain terms that Vendors cannot access certain categories of customers without partnering with the Reseller community. How many predictions have we seen in the last ten years, announcing the end of the Channel, the end of the Distributor, and so on…in fact, what we are seeing is a real coming of age of our industry.

As technologies converge, the Channel is diverging. Today, channel partners have a much more precise understanding of their own business and are more selective when it comes to deciding what products and services they will provide to their customers. The Vendor is now just a supplier amongst others and if his products don’t meet the channel’s customers’ expectations, they will look for something else.

The added value provided by the channel is becoming increasingly important to certain categories of End Users who see their channel partner as an outsourced IT department and this is where Dell needs the channel. And guess what: that market segment is where all the growth is for the years to come.

I happen to know that Dell have done their homework, making sure there will be no conflict between a nascent channel and their existing sales organization. Agreed, they will be circumventing the Distributor, offering a full financing scheme directly to their channel partners, enabling the partners to absorb the complex payment terms imposed by customers in certain countries such as France, Italy, etc…

Dell have a solid range of products and a solid reputation they have built despite the initial criticism. They also have a solid determination: those of you that have been around long enough will remember…everybody laughed when Dell appeared and said they would sell direct!

As the French say: “Rira bien qui rira le dernier!” (The last one to laugh will really laugh)

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Why does the Channel think Vendors don’t care?

February 1, 2008

“Everything is just fine!”I just got back from moderating two interesting workshops at DISTREE XXL 2008 in Barcelona, an event where vendors from around the world get to meet distributors from 80 countries.

One of the workshops I ran was a discussion about how an increasing number of vendors, both manfacturers and software vendors are trying to convince their channel partners to sell Services as a Product. As usual, one of the participants was particularly outspoken and had strong opinions on everything, smothering the group with his views. In particular, he seemed convinced that the software publisher (whose name I will withold) represented by a young lady who had flown all the way from the northwest of the USA (get the clue?…) absolutely didn’t care about the channel.

It so happens the reason a significant number of representatives of this vendor were present was precisely to have discussions with as many channel partners as possible to find out how they should develop new Services sold WITH and THROUGH the Channel.

For having spent many years managing Channel operations with major vendors (and many additional years advising vendors on how they can better work with their partners), I know only too well that vendors don’t hate the channel! On the contrary, they seek their feedback, their partnership (and for once, that word really qualifies) to grow business in a mutually beneficial manner.

Pushing Vendors away results in the vendors having to find new solutions and if your Channel doesn’t want to work with you, there aren’t that many other solutions to sell your products to the end user than to go direct or build a new Channel.

At a time when large companies are looking at the financial world melt away like an iceberg (remember…90% is not visible), when emerging markets and countries are going to need to bail us out as we start sinking, vendor survival is becoming increasingly dependant on the Small and Medium Businesses of the world. SME and “Mid Market” businesses rely on their IT Partners, namely the Channel who are in this case their outsourced IT department. Vendors know this only too well and when they tell the Channel they want to work with them, the Channel should listen and not push them away.

Of course, there are clumsy vendors, of course there are stupid territory account managers, but it is too easy and too dangerous to blame a vendor with trying to cheat the channel. Exactly like with the world economy, we are all in the same boat and the channel should not ignore the vendors just because they are big…we all need each other, its called a symbiosis.