Weak Partners Need Not Apply

Dissatisfied partners - they're part and parcel when dealing with the channel. But, during tough economic times, their numbers grow and their voices get louder. The complaints resellers register against vendors resound: unachievable sales levels, difficult certification requirements, limited sale leads, poor tech support, and competition from direct sales forces. Some grievances are legitimate, others aren't.

Spotlight On Proactive VARs
Personally, I'm a little tired of the whiners. That's why it was refreshing to meet with upbeat resellers at HP's Americas Partner Conference (APC). More than 800 resellers attended the February partner event in Orlando, FL. I talked with a number of them - none complained about the HP partnerONE program. This was a noticeable difference from the program's launch in the fall of 2002 when dissenters lined up to be heard (see articles in January and February 2003 issues). Instead, the HP partners I spoke with rushed to attend sessions on growing their sales with emerging technologies or new business strategies.

Charles Tsoi, president of Sudden Service Technologies, is one example. This Canadian reseller hopes to grow his HP storage business and reach $20 million in sales this year. Another example is Richard Wedel, director of sales at Micro Systems Engineering. Wedel and HP signed a six-year, multimillion-dollar deal to meet the outsourcing and computing needs of the Dallas Independent School District. At the conference, HP also announced its next set of quarterly incentives for partnerONE. Some of these incentives included rebates for sales of OpenView software and HP servers running Linux, and the ability to resell HP Care Pack services to customers with ProLiant servers. The most notable partnerONE announcement came from Kevin Gilroy, HP's VP and general manager of commercial channels for the Americas. He publicly responded to partners' requests to add another status level to the three-tiered partnerONE program. Presently, a small percentage of HP resellers qualify for the benefits offered at the platinum and gold levels, while the remaining resellers are business partner status. Gilroy says HP will give partners an answer on the possibility of a new status by May 1, 2003.

Attrition: Natural Within Channel
Although they prefer not to discuss it publicly, HP execs admit that partnerONE may lead some of its 21,000 resellers to leave their ranks. This is a reality that companies like IBM, CA, and Cisco have faced when they've changed their channel programs. It's the Darwinist nature of business. And survival is not getting any easier. Resellers will continue to face more competition from the Internet, superstores, and direct sales representatives of their vendors. HP's Chairman and CEO Carly Fiorina stressed the importance of the channel, which accounts for 2/3 of HP's sales, during her speech at the HP APC. However, she also noted that "one size does not fit all" for HP's customers and they will pursue all venues - not just channel - to bring HP products to market.

Faced with tough challenges, it's VARs like Sudden Service Technologies, Micro Systems Engineering, and the resellers featured in Business Solutions that survive - and thrive. They're also the same type of partners that vendors strive to maintain relations with. Why? These channel companies constantly re-evaluate their value proposition and profit from it. What new technologies can they provide to customers? In what new applications or markets can they apply these technologies? What new business strategies would be ideal for their company? These are subjects addressed in Business Solutions' VAR feature stories every issue.

But, true to form, channel dissenters continue to materialize. Two days after HP's partner event concluded, a group of resellers filed a complaint with the Federal Trade Commission (FTC). They allege HP misappropriated their trade secrets in an effort to expand direct sales. HP categorically denies these claims. Some things never change.