Dealing with Big Vendors Will Always Be Difficult
Management and channel executives at the Cisco Partner Summit in New Orleans were explicit: The networking giant isn’t getting a fair share of the small business market. In fact, Cisco’s small business and consumer-oriented products only capture a faction of the multi-billion-dollar small business marketplace, and part of the reason is the difficulty small VARs have in dealing with companies the size of Cisco.
Hewlett-Packard is dealing with this issue, too. The world’s biggest technology company has products that span the consumer to large enterprise segments. Yet, its vast size and predominantly enterprise orientation and corporate governance as a large publicly traded company results in policies and procedures that are not conducive to interactions with small businesses.
Both Cisco and HP this week unveiled new programs designed to make it easier for small business solution providers to deal with them. The goal is expanding market share and revenue in the lucrative small business segment. While each is bringing valiant programs to the channel, they will likely fall short of solution provider needs and expectations.
At the channel confab, Cisco announced the creation of Cisco Partner Advisor, a call center established specifically to expedite the onboarding of small business resellers and their orders for customers. The call centers staffed by Cisco specialists will help partners acclimate to the Cisco procurement system, select the right products for their customers and receive approvals for orders faster.
Andrew Sage, vice president of worldwide small business sales, said the expense of staffing call centers is worth it given the return in business through small business partners. “Our partners are the center of our business at Cisco, and we will do whatever we can to help them succeed,” he said.
The challenge Cisco is attempting to overcome is daunting on both sides of the partnership equation. In the aggregate, the small and midmarket business segments are huge, representing tens of billions of dollars in sales annually. Cisco currently receives roughly $8 billion of its revenue from small business.
Expanding that market and revenue share isn’t easy, though. Individual small businesses aren’t very attractive to large vendors because the deals are smaller and the cost of sales is higher. The only cost-effective way of reaching this market is through direct automated sales or through the small business channel.
In a Q&A session, Cisco worldwide channel chief Keith Goodwin admitted Cisco has a blind spot in the small business segment and is working to recertify gaps. Correcting deficiencies is critically important as other market segments and product lines are under increasing pricing and competitive pressure.
The Cisco Partner Advisor program aims to short-circuit the obstacles small business resellers have in doing business with the vendor. Edison Peres, head of Americas channels at Cisco, said the company is recruiting 30 percent more partners than last year, but is having a hard time making them productive. The call center will ease new partner assimilation and eventually graduate them to not needing support.
HP is taking a similar tact with its new SMB Central Web portal, a repository of all things small business within the HP channel community. Through the portal HP solution providers get access to one-on-one sales support, marketing materials and funding programs, and sales leads. Additionally, the portal will be home to peer networking tools, enabling HP solution providers to share experiences and team with their colleagues.
In an interview with CRN, HTG Peer Group Founder Arlin Sorensen praised HP’s effort: “This gives us one place to get information, program and product updates, and it creates a platform that makes it simpler and more efficient to do business with HP. The more the interaction is streamlined and refined, the better we are able to service SMB clients,” he said.
These are both fine examples of the great lengths vendors are going to capture a greater share of the small business market, but ultimately both of these tools are bound to fall short of expectations of solution providers, and it comes back to share-of-wallet with the partner.
A channel truism is that small businesses like buying from like-sized companies, which is why Logicalis doesn’t sell servers to Main Street stores. But local, small solution providers are as price-sensitive as their customers and more exposed to economic fluctuations than their larger counterparts. As many live and die on transactional sales, they have to carry products that meet their customers need and price point, and this means they often carry as many as a dozen or more vendors – and often times competitive vendors.
It’s hardly unusual to have a small solution provider carrying HP and Dell, Cisco and Netgear, Symantec and Kaspersky. It’s not just about choice, but being able to react to customers’ ability and willingness to spend. Since most small solution providers aren’t consultative sellers, they rely on price as the lowest common denominator. Of course, this is an over generalization, but it doesn’t detract from the truth that small solution providers are hooked into multiple vendors.
And here’s where programs like those from Cisco and HP will run into trouble: Small solution providers with large line cards don’t have the resources and bandwidth to search through multiple vendor portals to get the information they need. Cisco may have a consolidate support call center and HP an automated Web Portal, but so do all of their competitors – in some form, at least. This means solution providers must still hunt and peck for answers, and this slows them down.
This isn’t an unknown problem in the channel. Everything Channel attempted to resolve this dilemma a couple of years ago through a partnership with Exalt Solutions, which markets a “solution configurator.” The idea behind Exalt is that solution providers could shop for products and see how different technologies integrated with other products in a virtual environment. The configuration wouldn’t just flag conflicts in solution designs, but show comparative pricing, incentives and rebates.
Exalt is just one example of numerous attempts to consolidate all vendor product, program and pricing information into a centralized portal. These products and services aren’t bad, but they often fall short because they rob the vendor of what they crave most: exclusivity and partner loyalty. Cisco wants solution providers in their Partner Advisor because they will push more Cisco product; same is true for HP’s SMB Central. If these two resources were combined in a public portal, solution providers would have choice based on – you guessed it – price.
Cisco Partner Advisor and HP’s SMB Central will undoubtedly solve part of the problem these vendors are facing in the SMB market – namely low sales conversion rates and high cost of sales. But these programs only go so far in resolving the fractionalized nature of information and resources in the channel.
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Lawrence M. Walsh is CEO and president of The 2112 Group, a technology business advisory service that specializes in optimizing indirect channels and partner relationships. He’s also the executive director of the Channel Vanguard Council. He is the former publisher of Channel Insider and editor of VARBusiness Magazine. You can reach him at lmwalsh@the2112group.com.
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Larry Walsh:@lmwalsh2112| Channelnomics: @channelnomics
8 Responses to “Dealing with Big Vendors Will Always Be Difficult”
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I agree with the consensus expressed in everyone’s responses. I think its really hard for SMB VAR’s to filter and track each vendors programs and still run a business. Not to mention the tacked on required certs needed to stay in the programs. They may say “They are Free”, we all know nothing is free.., time and travel costs can make them cost more than the programs are worth.
I think having Vendors bring in SMB VAR’s may really open some program managers eyes. Its hard to envision what SMB VAR’s want from those big glass offices, it may do them good to come down and spend time with the masses.
I agree with the general view that SMBs and large vendors think differently and act differently, and why wouldn’t they? They have different drivers, different priorities, different cultures. I also think Karl is spot on – businesses are most comfortable doing business with others of a similar size, precisely because they have the same drivers, priorities etc.
When large vendors want SMBs to become smaller versions of them, or when SMBs try to act like large vendors is a starting point for problems. Likewise when SMBs hope to get the same support and access from a corporate that they get from a smaller partner they are on the highway to frustration.
What the industry needs to do is celebrate diversity, and value the differing strengths and opportunities offered by different sections of the community. This should be underpinned by a standards based approach to quality, which is available to all businesses regardless of size and which is relevant to them all. This would allow businesses to select partners based on known levels of performance, commitments to quality and standards. Shared commitment would encourage shared learning and development and ultimately help us all provide improved services to those most important to us all -our customers.
Vaughan, very well said. I couldn’t agree with you more about the need for channel segmentation and the celebration of that diversity. We preach that thinking all the time with our clients on the consulting side of the business (The 2112 Group). With that segmentation should come right-sizing of not just programs but expectations and communications. With proper alignment, the whole channel would work better — but that’s just me being Utopian.
The idea of a Partner Advisor seems to be a good start. Assisting with onboarding new partners is only the birth of our relationship. We need help growing and developing the relationship. We need a Partner Advocate who’s purpose in life is to facilitate the many aspects of our relationship with the vendor. This would include training, marketing funds, sales support, securing funding for large transactions, acquiring demo equipment, etc.
One pain point I have experienced is the rotation of reps!! Maybe we’re in that mid-area where our reps get training to handle the major accounts – we don’t get the newbies, but our experienced reps are transferred to a higher level in about a year. That sucks!! In our business it is people-to-people, not B2B, but people doing business with people. The relationship matters, in my opinion.
Lastly, Jay said it well regarding our lack of time and resources to spend on mounds of paperwork and the like. We need a simple system to configure your products and make the purchase, just as we make it simple for our clients to buy from us.
Well said! Smaller VARs like us simply don’t have the bandwidth to put up with the bureaucracy. We can’t stand calling one rep, only to be referred to another department and then another. Ease of doing business and single point of contact are extremely important, until we can grow to afford a dedicated vendor relations specialist.
As Jay mentioned, distribution offers real value in helping smaller VARs sort out the details of these programs. However, we are still more likely to choose vendors that are as flexible and easy to do business with!
Agreed, that is the role of distribution. But even distributors aren’t doing a good enough job in navigating these programs. Distributors also make money selling targeted marketing services to vendors, meaning that they’ll give preferential treatment to some vendors over others, and that gets in the way of program navigation and product selection.
Here is the bigger issue: How many of these programs have both sides put together for SMBs? Granted, they may have called it something different over the years. However they put together programs, within 30 days the start changing the rules, then again at 90 days, and before you know it, this program looks just like their other programs.
How is a small company of 5 to 10 people to keep up with all the changes? And it’s not just from one vendor, but from 3 or maybe 6? We can’t.
I do not have the resources necessary to do everything our top 3 vendors want. So how are we to keep track of changes of programs from companies like HP, Cisco or even Microsoft. All of these guys do not get it. We cannot afford to have one person track their programs. We do not need another program, fix the ones you have.
I know that neither HP or Cisco understand our business. They have not been in the trenches, dealt with their support lines, tried to find something on their Web sites, had to jump through 20 flaming hoops to do co-marketing, or try and take one of their cookie-cutter marketing programs and make it fit our business. Let alone the five hours of paperwork to fill out for these funds.
However I will give Cisco credit of having feet on the street to help resellers. I believe we have two or three reps from Cisco that have been helpful in getting through a lot of the obstructions.
Word of advice, go to your distributors, get 5-10 SMB resellers from each, not the $5 to $20 million dollar resellers, and put the program in front of them. Let them go into the site with out any instructions and see what they can do. If they understand it, then it has a chance. If they have issues navigating or getting the correct answer from a phone call, then fix it.
This is a great article – and a great topic. The fundamental problem is no one’s fault, and boils down to this: Business are most comfortable doing business with other businesses their own size.
Cisco, HP, Microsoft, etc. have a very difficult time understanding the small I.T. Consulting business. They lose more in paperclips that fall behind desks than my company makes in a year.
All too often they have complicated programs, high “entry” requirements, and no real alternatives for people who just want to sell a piece of equipment now and then. Again, it’s no one’s fault. But the two sides speak different languages.
The hardest difference to address is volume. If an I.T. show does $1 million in sales and has 50 clients, they just sell many firewalls or security devices. So when a vendor comes and says they want to push 100 units a year, that’s impossible.
At the same time, direct sales to end users is a deal killer for many of us. Why compete with my “partners?”