Channelsales Worldwide

ChannelSales Worldwide Says: The 10’s: Hello to a Bright Channel Future!

Last week, Time magazine published a summary of why the 00’s was such a disaster for America.  The article chronicles the unpleasantness that bookended a decade of downward spiraling: from the loss of US political and economic prestige (somewhat) to social change and weakening public infrastructure. http://tinyurl.com/y9mdt

Buried in Time’s analysis is their comment:

We (the USA) are the leaders in technological innovation. And we are still the nation that most others emulate.

Hurrah for that!  And what about innovations and the prospects for the channel?    In just the last week, several industry observers have written interesting articles on the bright future for the channel:

• Salesforce’s Force.com Development Platform Gaining Traction. http://tinyurl.com/yljwyt5
• Dell Channel Chief: Despite Q3 Declines, Company Exceeds Goals With VARs: http://bit.ly/4xf01k (ok Dell’s Channel strategy has come along away and has a long way to go)
• Tech Visionary Kim Polese: Cloud Spells Big Opportunity For The Channel. http://tinyurl.com/yef9qay
• Adobe says it will open up unprecedented reseller opportunities http://tinyurl.com/yflu28f

So, yes we can say goodbye to the 00’s and welcome the 10’s with a burst of optimism whether  SaaS, PaaS, on premise or hardware and even HaaS — hardware as a service — is becoming de rigeur.

At the B2B University in Palo Alto yesterday (sponsored by Silverpop),’profs and students’ shared their views on B2B customer buying process and implications for lead strategy, alignment and supporting technologies.

A few points for B2B marketers:

1. Content is King – I absolutely agree here; and I think the point is ‘fresh content’; it’s just not that hard to do
2. Email Delivery is #1…but the Wall Street Journal described just 2-days ago that Email No Longer Rules;  I do believe email is (and will remain) the primary digital delivery medium for B2B marketers; social  media may indeed replace email although the use of these SN tools  and relevance seems to be increasing quickly (almost by the minute!)
3. Scale the dialogue: select, deploy and optimize Marketing Automation solutions (mostly SaaS vendors) – agree here too.

During the classroom sessions, several of the participants agreed that the Marketing Automation industry’s focus  is largely almost exclusively) on companies with a direct sales model.  Many companies have to deal with the added complexity to create, deploy and measure demand generation with and for partners.  The complexity of analyzing partners sales productivity is just that much more difficult d in 2 or 3-tiered distribution model.  Moreover, it is very painful to do!

In response, Silverpop walked us through some great insights how some of their customers are using the B2B Engage solution to drive leads (and measure) them through and with partners.

It seems that marketing automation  is not just for the direct sales team but can be highly  productive for the indirect channel.  Kudos Silverpop!

You have to admire Dell; they’ve been the poster child for the direct-sales only model since their beginnings.  2 years ago, Michael, the Board and a handful of execs embarked on radical approach to add the channel to their sales and delivery model.  Everyone was skeptical to pull this off on a large scale:  analysts, investors, employees and most importantly, IT solutions partners.

Well, fast forward 2 years and Dell has made some progress.  Dell reported today that has lowered its registration fee from $50k to $15k for partners; this is a remarkable step. http://tinyurl.com/ycwsc5m It doesn’t seem like a big deal, but it is.  It means that Dell has committed to use (new) tracking systems that on the direct side didn’t exist before; not just systems, but new policies to incentivize and monitor sales rep behavior, really, the whole go-to-market model.

In August, Channelweb reported at its annual conference in Washington DC, Xchange 09, that Dell was making positive and significant progress to creating and managing an effective, global standards channel program

But the animosity and skepticism of the channel vs. Dell is real and was readily apparent at Xchange.  When Dell’s Channel VP, Greg Davis got up to make his keynote speech, my immediate reaction was to make sure my program guide could be used as battlefield armor as I felt sure there was going to be a fiery exchange.  I was not disappointed.

In fact, I was quite worried when Greg opened up the discussion for channel partners to ask questions (which they did, in numbers).  I really admired Greg for getting up there and taking this heat.  His peers from Cisco, HP, Juniper, all of whom had spoken  the prior 2 days had a cake walk with Partner of the Year trophies, fancy videos, lots of laughs and enjoying advantage of their channel success.    Greg really had a tough draw to speak after all of that fun stuff and just before lunch on the last day.

The tension in the crowd was palpable; I was expecting a few tomatoes from that mornings breakfast buffet to go flying; seriously, I really thought it might come to blows.  But Greg took the heat graciously and sincerely.  He talked about how Dell is ‘walking the talk’:  sales reps that don’t follow new indirect policies are put on a performance plans and in fact have been fired for protecting direct deals.  Dell is serious about the channel.  They still have a lot of work to do but I concluded that they couldn’t remake the eggs they broke with a direct-model only and so instead, are putting together the ingredients to make a fine omelet.

As Dell moves more heavily into the Data Center, I think they realized that they couldn’t go anywhere without partners; so they had to unbreak some more eggs and make a omelets that is going to take several years before it is ready.

And what is happening with the large ISVs, SaaS and channel partners?  Traditionally, the large software companies have thrived with their complex, on-premise solutions that lead to mutual washing of the hands, with their long time companions, on premise SIs.  But now with SaaS, how do these large ISVs ‘break’ the eggs with their, almost in bred channel partners, SIs?

Large ISVs players are adding robust SaaS applications as I write this.  Just look at SAP, SAP Business Objects, Informatica (Ok, Salesforce fans they are behind but they are catching up).

I’m ravished and I can’t wait to see the recipe that the large ISVs are  creating to co-opt their on –premise SI partners, come SaaS ‘delivery’ partners.  It’s going to be a great brunch to enjoy when  ISVs follow Dell’s path to break some eggs and create a SI-base frittata for their SaaS solutions.

Roman Stanek in his October 1 blog, Please Don’t Let the Cloud Ruin SaaS, http://bit.ly/wRKCD thoughtfully took issue with the emergence of so-called “SaaS” applications (notable Amazon’s AMI) that are really a throwback to the on-premise/enterprise software  heyday of develop software a little bit and let customers take on the operational risks.  Roman clearly states this is this type of Cloud computing can have a backlash effect on true SaaS-based services, and I agree.

Roman’s assessment’ brings up the subject of what to do if a customer doesn’t know what they don’t know.   And specifically, what’s the role of a traditional, on-premise SI integration partner as they try and embrace SaaS as part of their portfolio of services?

Here’s a scenario that I’ve encountered.    When a client has a need to build a SaaS-based business intelligence application, as part of their SaaS offerings, what should the SI do to help?

• Does the SI advise its customer (a SaaS vendor) to solve the subscriber’s problem for one specific project (as in the on-premise world).  Typically, even in SaaS environments, subscribers /endusers have legacy systems (and maybe to other SaaS apps) that want to integrate with. The SI knows that they can probably deliver the project but does that serve the SaaS vendor the best?  This is a single discrete project so how can the SaaS vendor scale the project and offer the solution to all of its subscribers?

• Or, does the SI tell the SaaS vendor to start small, address a discrete piece of the subscribers’ (note the plurality here) problem in the SaaS environment and build on it incrementally?  Overtime, this incremental approach expands and all SaaS customers can enjoy of this solution available to all in the SaaS application.

These are two very different approaches and can form the basis for how a SI can effectively embrace SaaS.  As you probably know, there is quite a bit of consternation out there among SIs that SaaS takes their business away.  I propose that the SI’s business doesn’t go away in a SaaS model, SaaS just adds a new flavor to what they are used to.

So for example, instead of plain chocolate ice cream (that I crave) I recently discovered Chocolate with Ancho Chili (that I had recently at San Francisco’s Humphry Slocombe ice cream shop).  The first bite was a bit unusual, I knew it was chocolate but there was something else I couldn’t quite identify and then the Ancho chili exploded (arriba!).  After a little bit, things mellowed out and the chocolate and chili seem to blend into a great flavor and so I said to myself…”hmmmm that was pretty good, I think I’ll have some more!”

The same is true in a SaaS world for SIs.

The initial dialogue the SI approaches a SaaS project is a business unusual. There is the sense of familiarity (the chocolate):  the IT setting and the customer.   So far so good.

But then there is something unusual (the chili).  Sure enough, there are other folks in the room in a SaaS environment, folks that want to talk more about the value of the data; the workflow, the domain expertise in lieu of just how the systems connect. The experience rattles the bones for the SI (that’s the chili working) but soon, the SI discovers that he/she is still a trusted advisor;  it’s just that now the conversation goes deeper than just the nuts and bolts.  The SI concludes that the experience was ok-to-pretty-good so they decide to go back for seconds. And,this time with a bit more confidence and a little bit more of that chili.

A good SI in a SaaS environment will know how to coach the customer (trusted advisor here) and can interpret what AMI and other tools can be used (and which ones should not).  This is a good example of the how the SI can bridge the gap to SaaS, steady the course for SaaS (away from enterprise software) and enjoy the chili.

In yesterday’s article, Bracing for Change, Ovum’s John Madden, thoughtfully describes the challenges that Cloud Computing impose on (threatens?)  SIs.   John cleverly proposes several steps that SIs can prepare for, even implement today, to help them bolster their Cloud business. http://tinyurl.com/ycpy9wg

I certainly agree with John’s analysis but not so sure if the SIs need ‘Bracing for’ as much as ‘Embracing of’ the Cloud.  The former implies upheaval that is both unpredictable and potentially destructive.  Indeed, for many S the Cloud is seen as less of an opportunity and more of a threat.  And in that sense SI’s do need to ‘Brace for’ a ‘Cloudy day’.

John suggests SIs should innovate (presumably like crazy) and create an ‘ecosystem’ as two important cornerstones to Cloud success.    His wise prescriptions implicitly describe this notion of ‘embracing of’.

A good analog is when swimmer encounters a rip- tide at the beach (Ok, this is one I’ve NOT experienced!)…but the sage advice goes something like this:   swim with the current until the current dissipates and then you can make your way as opposed to try and fight and it you’ll just exhaust your resources and put yourself in a more precarious situation.

While I haven’t had a life threatening rip-tide at the beach, I do have experience with clients that have encountered (more likely present tense, encountering) how to make a profitable Cloud business with the resources and expertise they have.  I’ve discovered and encourage my clients to Embrace the Cloud.  The more that SIs can embrace the Cloud (less ‘bracing of’ and certainly not in lieu of on-premise) the more likely it is that they’ll create a compelling Cloud value proposition for their clients.

Short answer:  No.

Longer Answer:

The job doesn’t go away, in fact, we are at the beginning of a transformation of the CIO which the role will align more closely with the Line of Business executives and teams (even more than they already have).

The (SaaS) CIO role will be one of anticipation, facilitation and involvement (even lead) LOBs and not operate as merely the data connector or protector.  Ultimately, SaaS applications help company’s make important data visible in a timely manner.  All of us connected to the IT industry need to see the opportunity that SaaS give us to understand the data and operate in a more timely manner.  See my blog from yesterday:  Weapons of SaaS Destruction and Neutralize the VARs’ Neutron Bomb.

Very Long Answer:

Yesterday I addressed the notion that Richard Levy (Sandhill.com) raised in his article Weapons of SaaS Destruction.  Specifically, Richard dispelled 3 myths that on-premise supporters use to discourage SaaS adoption.  Consequently, many of the on-premise supporters believe SaaS is an IT Job Killer and by implication, the traditional IT-based VAR is a dinosaur.  That is where I come in because I’m an indirect/VAR/partner guy.  I hopefully dispelled this notion as well and am hopeful I provided a concrete example of how a VAR can leverage SaaS to their advantage.  http://blog.cw2clients.com/

Similarly does SaaS spell the end of the CIO?  Is SaaS a CIO Job Killer?

Ask my colleagues and friends, they know me as the all-around-nice guy, (thanks everyone) but when something strikes me so obvious…I have to take off the nice guy image and say, ‘HELL NO’, particularly when (I think) the answer is so obvious.

The rapid and broad adoption of SaaS applications in the marketplace is disruptive (in the sense SaaS apps provide nearly immediate value at low risk for customers — this is the way life should be, non?)

But the emergence of SaaS doesn’t mean that on-premise is going way; au contraire, SaaS amounts for less than 10% of IT spend. Yes the future means there will be more SaaS applications but it doesn’t mean on-premise goes away and “oops, sorry Ms/Mr. CIO there goes your job”.

Instead what we see emerging is a type of company that has hybrid systems:  systems that are ‘intra’ and ’interconnected’:  on-premise-to-SaaS and SaaS-to-SaaS.  One might argue that SaaS introduces more complexity; I think not.  SaaS and on-premise living side-by-side is probably made easier by SaaS.  But the interplay of how (and why) SaaS and on-premise systems work together is a critical CIO leadership role.

SaaS is not a CIO Killer.

This CIO role is not going away.   The role just embraces a new voice, a new dialogue and perhaps a new persona to lead.  What excites me that most is that SaaS means the CIO role will change or transform to another level not that it will NOT go away.

The CIO in a SaaS world means the CIO must work even more closely with the Lines of Business (LOBs). The emphasis will be on a proactive role.  These new SaaS/on-premise CIOs will understand the dynamics of what the businesses must face, even more acutely than they have had to in the past.

Take for example, Social Networking.

Here the CIO has an option to lead, guide and implement company Social Networking policy (as well as the traditional roles of secure and protect data).  SN tools are mandatory (ok at least getting there) for today’s HR (recruiting), Marketing and Sales functions, whether the company has SaaS or not.

So here is a viable opportunity for the CIO to work hand-in-hand (and lead) with the LOBs to create and implement a Social Networking policy.  There may not be a roadmap to create one.  When you think about it, who really has a ‘roadmap’?  Did anyone of us a roadmap we could pull from a powerpoint when we confronted the impact of last year’s financial crash on our respective businesses?   So just like everyone else, the CIO has an opportunity to create a new roadmap and invigorate the professional as SaaS adoption gathers more steam.

Is SaaS a CIO Killer?  No, the CIO role is just at the beginning of a whole new era.

Posted by Brian Anderson, VP Partner Outcomes, Channelsales Worldwide

www.ChannelsalesWorldwide.com

There is a Fourth Weapon:  The Neutron Bomb Created by VARS and Partners

Richard Levy from Sandhill effectively addresses the 3 myths that detonate as a massive weapon against SaaS adoption:  Security, Inflexibility and Cost.  These three myths create an impenetrable blast force  encouraging companies to defer (i.e., flatly reject) adoption of SaaS for their operations. http://www.sandhill.com/opinion/editorial.php?id=271

There is a fourth offensive weapon we can call, a ‘Neutron Bomb’ and is launched strategically by the traditional IT VARS.  These partners fear (unnecessarily) the demise of the hefty discount (the same partners are loath to admit that the hefty discounts aren’t so much these days, particularly for hardware) and value added services from the on-premise world.  While it’s always awkward talking about Money Matters among friends, there is a lucrative silver lining for VARS in the SaaS world.

Levy discusses the perception held by on-premise supporters that view SaaS as IT Job Killers.  IT Job Killers and their supporters are only doing (to a degree) what their IT-based VARS are suggesting them to do behind the scenes:  define when and where to detonate the myth of the Neutron Bomb:  SaaS means no VARS as trusted advisors  and therefore, e SaaS is a VAR Killer.  The  VARs’ Neutron bomb perpetuates the 3 myths that Levy suggests and in turn, makes it that much more difficult to separate myth from fact,  when engaging in enemy fire in the SaaS vs On-premise debate. Without an effective offensive tactical ordnance,  SaaS suffers in defeat and On-premise is named the Battlefield Victor (SaaS supporters know this is just a single campaign and not the war).

The Neutron Bomb is a fourth myth created and perpetuated by partners out of fear.  There IS a robust model SAAS model for traditional IT VARs.  Let’s just look at one aspect of SaaS:  its maturation level.  SaaS is maturing AND it means that SaaS must be integrated to legacy and to other SaaS systems.  In fact, in June 2007 (2 years ago!), Bill McNee, Saugatuck Technology, confirmed that SaaS was already deep in the second of three phases of adoption, noting that (SaaS is).. increasingly integrated with on-premise application in the IT business portfolio”.  http://www.sandhill.com/opinion/editorial.php?id=141

Not only are there requirements to integrate SaaS to legacy systems, today companies require integrations between SaaS to SaaS (see the Amazon/Cast Iron announcement of just 2 weeks ago, oops time flies so quickly in the ‘flat’ is the ‘new growth’ of 2009, it was actually announced nearly a month ago, September 1^st!   http://blogs.zdnet.com/BTL/?p=23530

Voila…traditional IT-based VARS, you have a great model to build and transition your business.  The model is not so much transition to SaaS as it is creating a new hybrid model:  on-premise/on demand Levy  calls for a truce between those who support SaaS and the internal naysayers (on-premise hold outs).  Not only can companies diplomatically create a truce,  they can deploy a reconstruction policy BEFORE the destruction begins by helping partners understand SaaS is not a weapons-hugging battlefield.

SaaS is very friendly to IT-based VARs!

Channel Web reports that mid-size companies are increasingly looking to embrace SaaS applications to run their business.  So, if you are a successful IT-based VAR (and scared to death about SaaS) here are some quick and easy (but very meaningful) steps you can take to help transition your business.  http://www.crn.com/software/220100314;jsessionid=XLQRA2YXDYCQPQE1GHPSKHWATMY32J

3 Action Plans You Can Implement Today as a Trusted (SaaS )Advisor:

1)     Help the CIO refine (define, in some cases) its security policy.   Hint:  most companies are grappling with opening up employee use of social networking, citing loss of productivity concerns.  Indeed that may or may not be the case.  But CIOs are struggling with giving Marketing and Sales (and HR) access to Social Networking to run their businesses while cutting off or limiting these tools across the organization.  Help the CIO figure out the policy (and technology mix) that will help them with this seemingly impossible task.

2)     Identify and study the relevant SaaS applications that your clients have considered and rejected.  Take your client to lunch and understand why these SaaS applications were rejected and what has happened since then.  What has changes with your client since then?  What about the marketplace. Are there new vendors to discover that might meet their needs today?   Be neutral but at the same time educate, counsel and stay close.

3)     If your experience has been strictly on the IT side of life and selling (oops there is a non-IT word) SaaS applications to Marketing, Sales, HR, or Finances is not in your comfort zone, take heart.  There is a proliferation of IT-based SaaS and Managed Service applications that have come to market in the last year and it looks like we are on the launch pad for growth at nearly light speed; particularly for security related apps.  Get to know the security-based SaaS applications that your current IT vendors are talking about or promoting.  Help the CIO be a hero.

So with one or all three easy steps, you’ll find SaaS plays right up the proverbial VAR’s valley: a sustained dialogue with the CIO/CTO and technical expertise that showcases your IT skills and experience, bar none!

How do you make your partners productive in a Sales 2.0 world?

Sales 2.0 (http://sellingpower.typepad.com/gg/2009/09/the-sales-20-movement-accelerated-in-chicago-part-ii-.html) has many facets, one of which is the discipline of more science in sales, that is, there is more measurement, analysis and predictability of the sales forecast.  In addition, Sales 2.0 encourages (almost mandates) a tighter level of cooperation and participation between Marketing and Sales.  HP’s Kevin Hooper reports that Sales 2.0 in his environment means that Marketing takes 15% of his quota — Get ready Marketing for the next forecast review!

But what is happening externally with Sales 2.0?  Almost by tradition, partners are recruited and trained (and in the non-SaaS they typically pay a fee as well) and they are off and running.   They are then left on their own.  Partner metrics (if there are any) are usually one-sided (vendor only); they are rarely shared or co-developed.

What’s been the result?  Well, you can’t treasure what you measure; more often or than not, everyone is disappointed and well angry.   Partners feel deserted and see nothing for their investments.  On the flip side, the partner management team reflects their disappointed by not reaching out and instead hunts for new revenue with other NEW partners to try and make their quota.  All of that ‘feel good’ goodwill at the beginning of the partnership has faded.   No one is surprised, we (partners and vendors) just take it in stride; it’s what we always done (in the Sales 0.0 and 1.0 worlds).

Sales 2.0, however, give us a new start to address an old problem:  how do you make your partners productive, now in a Sales 2.0 world?

Although a great deal of the emphasis of Sales 2.0 is about Inside Sales; partners do and can plan a key role in joint success.  After all, part of the Sales 2.0 philosophy is building and sustaining a meaningful dialogue with the customer.  Who else knows your customers as well?   (even better?)  Who else knows the ‘gotchas’?  Who else has a finger on the pulse?

• So, first off, do you measure Partners?
• Do they know the metrics?  (Are they aware they are being measured in the first place?)
• Describe the partner’s sales roles; is this common knowledge with the partner?
• What measurements are jointly developed?
• What investments are both sides going to make to realize these goals?
• What’s the process to review the results and tack a new course?

Sales 2.0 is both a dialogue and a process (and in many cases. technologies).  There is a viable, if not critical role for partners in a Sales 2.0 world (yes, for both SaaS and On Premise).   A successful Sales 2.0 dialogue means shared metrics with partners.

Last week at Sales 2.0 several vendors described how they track and measure disqualified leads in the sales funnel.  It is an interesting concept because it implies that the company understands what a qualified lead looks and feels like in the first place.   It also hints at the growing convergence between Marketing and Sales but that is another subject.

On the channel side, how many vendors proactively qualify their partners (meaning are they actively culling partners that aren’t productive)?  This may mean a conundrum for SaaS companies, particularly those in the early stages of selling and deploying their applications.   How do you convince partners to invest time and resources when the sales model isn’t clear?

Most early SaaS companies take a more reactive approach and recruit partners with the HOPE of recurring revenue.  After a few months or maybe after the first year  of sales (multiple by 7 to get the equivalent in dog-years for premise solutions), early stage SaaS companies often find that their ecosystem is full of partners recruited because they were ‘friendly’ or ‘family’ but have demonstrated limited ‘sell through’ momentum and success.  They are left with the unfriendly and less than fun topic over the phone (not even over coffee or drinks) to politely ‘disengage’.

It is true that SaaS applications are easy to deploy and derive early value for customers.  It is certainly logical to have a low-barrier to entry from a partner model perspective.  It does, however, make some sense to at least develop the profile of the ideal partner.  Not only based on their geography or reputation but take a closer look at their business model, how they provide value to their (yours-to-be) customers and the shared domain expertise. The profile of the ideal partner is a recipe of some blend of these 3 elements.

Some up front, thoughtful work about aligning the vendors’ SaaS application, domain expertise and the partner’s capabilities will save some grief on the back end of partner ‘disqualification’.