Chasing the Impossible Dream?

Is the future of the solution provider channel in doubt? Is it still possible to start a channel program for packaged software products? Should channel managers at high-tech companies be preparing for retirement? These are big and important questions that manufacturers and software developers who take it for granted that the channel will always be there to resell their products. Maybe they shouldn’t be so sure.

Based on the comments received about Dave Stelzl’s video (The History of VARs or Are VARs History) and my previous blog “Is it too Late to Start a Channel Program”, there are lots of experienced partnering professionals who think the glory days of solution providers are in the past. And for lots of good reasons. Here are a few that have been mentioned.

• The lack of discontinuous innovation on the product side makes it more difficult for resellers to sell services profitably.
• The owners of reseller companies are aging out and ready to retire. They are not in a good position (mentally) to reinvent their companies – as SaaS providers or single vendor specialists.
• Many technology products are commodities and cut-throat price competition means many unprofitable sales.
• Vendors have new options for getting their products to market and the traditional solution provider is not as important in their distribution mix.
• The economic crisis has restricted access to credit, making it difficult to develop new lines of business(plus customers have less money to spend).
• Vendor consolidation is eliminating weaker or redundant channel partners, and forcing many resellers to make tough choices about which product lines warrant ongoing investment.

With all these issues, it is no wonder that partnering professionals are not enthusiastic about starting a new channel program for packaged (software) products. Or any products for that matter!

Is it too late to develop a new channel for a new product?

We conducted a LinkedIn poll on the subject, and the results were not surprising. Almost nobody thinks it’s impossible to start a new channel, but most say it is very difficult and a lot harder than it was just five years ago. One prerequisite for success – the new product must be very unique. The channel doesn’t need another storage or security product unless its different enough to create net new opportunity for channel partners. And brand names matter because they are one source of differentiation.

Big companies are more confident about their ability to create new channels than small companies, Younger channel managers are more focused on the product attributes and think great products will still attract customers and resellers. Almost everyone thinks it’s going to be expensive and take time to build a new channel.

If you have any additional insights, leave them here – especially if you don’t agree with this pessimistic assessment of the value-added channel for technology products. Otherwise, it’s time to start defining the channels of the future if you want to meet your sales objectives in 2015.