The Courting Begins
Technology giants spent 2002 revamping their channel offerings. Will these changes be enough to reenergize partners in 2003?
2002 was a year of reckoning for technology companies and their channel partners. Many technology giants reexamined their channel programs and asked their partners: What worked? What didn't? The end result is that in 2003 VARs and integrators have new offerings to help grow their businesses.
CA Continues Channel Courtship
Computer Associates (Islandia, NY) is a great example of a company striving to secure channel loyalties. CEO Sanjay Kumar dramatically changed the company's sales model last spring with a channel-preferred compensation program for its BrightStor storage products. Under this program, CA's direct sales force is compensated for pushing deals through the channel. It was dramatic posturing, but CA's overall channel sales saw slower-than-anticipated progress during the next two quarters.
By fall, CA brought in George Kafkarkou as the new senior VP of worldwide channel operations. Kafkarkou, who last managed CA's indirect sales abroad, is a well-connected, 20-year employee of the company. Industry insiders say Kafkarkou has the influence necessary to grow BrightStor's channel sales and open up channels for CA's eTrust security product.
But, CA did more than just make executive changes. It launched a road show to attract former VARs and new resellers as potential partners. Kafkarkou says CA will continue in 2003 with initiatives that court channel partners. His end goal is to make it easier for VARs and integrators to sell CA products and do business with the company.
Cisco Addresses Partner Problems
While CA tried to build its channel in 2002, Cisco Systems (San Jose, CA) worked on repairing theirs. More than 90% of Cisco's sales are through the channel. Last year, some Cisco partners were disgruntled and voiced their opinions at the annual Partner Summit. Margins on some of Cisco's products were minimal, and partners faced stiff competition from telecommunications giants. Cisco execs listened to partners' concerns and talked with them about potential solutions.
Paul Mountford, VP of worldwide channels, and Chuck Robbins, VP of U.S. channels, responded by unveiling the Cisco value engagement model. With the model, Cisco account managers work to "engage" reseller partners with potential customers. Cisco also provided partners with research about vertical market and technology opportunities for their specific sales territories. Cisco next launched its online partner satisfaction tool to allow resellers to evaluate interactions with Cisco and address issues with the company. Headed into 2003, channel partners should see more changes like these. However, Cisco does need to answer a looming channel question: What is their market and channel strategy with respect to storage products? Cisco insiders say we'll hear some news during the first quarter of 2003.
A New Program For The HP Channel
For Hewlett-Packard (Palo Alto, CA), 2002 didn't start out so great. The company was embroiled in legal battles over the potential Compaq-HP merger, and many channel partners of both companies wondered about their futures. It took awhile, but the answer came in November 2002 with the introduction of partnerONE. This new HP channel program took the place of 40 different HP and Compaq programs, according to Kevin Gilroy, VP and GM of North America commercial channels. The program breaks HP's 21,000 partners into three categories by sales volumes: gold, platinum, and business partner. partnerONE also rewards partners with rebates for new HP business that displaces competitor's products, such as Sun's and IBM's.
While the plan does simplify HP dealings for partners, it has been criticized for the sales minimums required for the gold ($10 million) and platinum ($75 million) statuses. Most resellers have been relegated to business partner status. The channel is also riled about HP Chief Executive Carly Fiorina's decision to increase direct business. With the partnerONE program barely out of the gates, 2003 is wide open for HP to improve or worsen its channel position.
Revamping channel programs is a regular activity among technology vendors and distributors. But, with technology sales still struggling, changes need to be significant to help VARs' businesses rather than hold them back.