Friend or Foe? The Channel Partner in the ERP World

Rowing in a boat like channel partner

“It’s a dog-eat-dog world.” And there’s no room for pussycats, or so they say. Channel conflict, changing terms, lack of support. These and so many more challenges are what you will hear and read about in the world of partnerships. Channels, partners, resellers, when it comes time for you and your once small and happy business to consider the pros and cons of becoming a Value-Added Reseller (VAR) for an ERP vendor, best if you weigh the odds before you raise anchor and set sail.

ERP systems have traditionally been sold as in-house solutions, where the partner is often not only the sales conduit, but the implementation and service provider as well. With so many different hats, some VARs tire out – and fast. What often happens next is that they mistake the vendor, or worse, the product, for a chameleon, thinking that it will miraculously change to conveniently suit the need new situation. Not. No. Never.

Different vendors have historically implemented different terms and conditions for the opportunity to participate in their partner programs. Some require substantial payments for the privilege of becoming a partner, some don’t. Some provide sales commission or leads but no commission, some don’t. Some expect their partners to make a profit only on implementation and service, and many employ a combination of any or all of the above and more.

It’s downright exhausting. But with the new opportunities brought about by cloud ERP, many of the implementation and service issues fall back to the vendor.

Many ERP channel partners are content on sticking with the partnerships they’ve been nurturing for years, while others are realizing that it may be time to broaden their horizons and try to make the most of the new offers that are now available. While there is a need to focus on a particular specialty or area of the market, both you and your market may benefit from more of a choice of offerings.

Friend or foe?

We’d like to believe that it’s friend by a long shot, or you’d have done something by now, but be it friend or foe, we’ve put together some valuable questions that you as a channel partner should consider when romancing a vendor:

Trust. Beyond the terms of partnership, possible channel conflicts and the way they are addressed, and initial and continuing support, the bottom line when choosing a vendor is trust. Can a vendor be trusted to be fair and to treat their partners decently?

Fairness. Changing realities, new technologies and options in the market will ultimately result in vendors’ need to restructure their price lists or partner terms. This is fair. But do vendors give enough advance warning to their partners? Are they willing to discuss the issues and explain the points and rational behind the changes?

Business Ethics. Channel conflict, where channel partner have to compete against one another or the vendor’s own sales teams, is another touchy issue between partners and vendors. Different options have been employed by vendors to address this, including deal/lead registration and providing direct support, but the jury is still out as to the effectiveness of these options.

And let’s not forget… lead registration has been touted as a protection device to ensure that a partner does not undercut the partner who initiated the deal, but has also been thrashed as helping some vendors sweep up the deals themselves. A vendor that is truly interested in promoting the success of their partners will ensure that lead registration is respected and maintained.

Cooperation. Some believe that if you have a captive market, then the partner working that market is at an advantage. As long as the vendor is looking out for everyone’s best interest, cooperation across geographic or even technical expertise lines can be bridged, making cooperation mutually beneficial for all concerned: customer-partner-partner-vendor, a win-win-win-win scenario.

Support. In terms of product support, one of the key indicators of a vendor’s willingness to work hand-and-hand with partners is the level of support provided. This fosters the growth of a foundation of strong partners that can be self-reliant and independent, allowing the vendor to concentrate on their own priorities.

Priority’s Take.
Ideally, vendors (that’s us) should be focused on getting the best product to market and providing the support and infrastructure necessary to allow their partners and VARs to flourish. By significantly expanding and maintaining a growing footprint in their market, sales will benefit both the partners and the resellers.

If you’re on the hunt for a channel partner or a vendor, it’s imperative you look for win-win scenarios when reviewing terms and contracts, not only from the partner-vendor point of view, but from the partner-partner-vendor and customer side as well.

Ah, did we fail to mention the customer here? After all, they’re the MOST important player in the game.

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The Author
Dan Aldridge
Director of Consulting, Priority Software U.S.

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