Ranking the vendors

Maybe you haven't noticed, but solutions providers these days are relying more than ever on vendor partnerships to keep them competitive. What's more, they are teaming up with a greater number of partners than in the past. Those are among the key findings from our exclusive vendor/partner survey.

Based on 150 online responses as well as follow-up telephone interviews with many of the Smart 100 Companies (see May 8, p. 39, www.smartpartnermag.com/issues), the survey indicates that many solutions providers, integrators, consultants and VARs today typically are partnering with at least five or six technology providers and, in some instances, have relationships in place with a dozen or more.

In addition, while marquee players such as Cisco Systems, IBM and Microsoft remain at the top of the preferred-partner list, many respondents to our survey also are teaming up with numerous lesser-known vendors, many of them New Economy companies.

Some other significant findings:

• The highest-ranked vendor, Microsoft, also has the biggest share of alliances in place. Slightly more than 50 percent of the respondents cited Microsoft as a partner.
• The rest of the major vendors (including Cisco, Computer Associates and IBM) that received high ratings registered smaller market penetrations among respondents, indicating that the vendor-partner arena has become fragmented as solutions providers team up with more and more New Economy vendors. In all, respondents reported alliances with more than 100 different vendors.
• Overall, IBM was ranked second. Respondents indicated that its program was clearly on the upswing. Computer Associates followed in the rankings.
• Major vendor programs that have been revamped and refocused, such as those at Compaq Computer, Hewlett-Packard and Novell, received "good" ratings. Even so, some respondents expressed dissatisfaction with these programs. As a result, they're apparently hedging their bets by entering into multiple arrangements or, in extreme instances, dropping out of these programs altogether.

What's driving these developments? And, more importantly from your perspective, are you teamed up with the right vendors and getting your due from these alliances?

Probably the best way to assess your own partnership strategy is to start by looking at some of the key changes that are under way in the channel today and how they impact solutions and service providers.

Some of these changes by now are self-evident. Clearly, for example, the complicated and rapidly changing dynamic of competing in the e-business arena today makes it increasingly difficult to operate effectively without a strong partnership network. "There is so much complexity, no one firm can do it all," says Loren Coles, iXL's senior VP of alliances.

The complexity and multidimensional aspects of many e-business-related solutions also dictate that you maintain relationships with a wide variety of vendors and be flexible in aligning yourself with partners. "I think for people in the New Economy, the imperative is cooperation," says Alisa Tubbs, marketing director for Integrated Information Systems. "As the market expands, you have to work with everybody. Just because someone is your competitor one day doesn't mean they won't be your partner the next," she adds.

The downside of a multiple-vendor partnering approach? "We have learned that you cannot take on too many partners and be both credible and do justice to a partnership," notes Bill Archer, VP of worldwide marketing for TechSpan.

Respondents - at least those in the consulting field - also indicated that while they typically work with many vendors, they are at times reluctant to lock into formal or exclusive partnerships for fear of restricting their clients' product or technology choices.

As an example, Scient reports that while it maintains informal relationships with a large number of technology purveyors, it has no formal partners. Instead, Scient evaluates vendor products and technology in its own labs and makes the results available to its clients. Clients then select the vendor that in turn is brought in by Scient on an informal partnership basis.

Diamond Technology Partners takes a similar approach. "Because we're a management consulting firm that builds individual solutions, we don't want exclusive alliances," notes Diamond COO Mike Connolly. He concedes, however, that vendors often aren't responsive unless some kind of relationship is in place. "Some of the prime players, the Blue Martinis and Aribas, say, are so busy, it's tough to make headway with them. If you don't have a relationship, you can't get their attention."

"If you're working with technology from a company you don't partner with, it's more difficult to get feedback from customer service, help desk or programmers, or to get bugs taken care of," adds a Lante spokesperson.

Entering into a formal or exclusive partnership, however, doesn't always mean that you're going to get everything you want. Respondents voiced a number of negatives about their vendor partners - chief among which are concerns about vendors competing directly. "Quite often, they market the same products [you're selling] through other channels like mass marketers, mail order and the Internet," says Lonnie Rose, CEO of Rose Computers. "It's often difficult to compete on the price side in these instances."

"Every vendor comes in with the proposition that they want to partner with us, yet mostly this turns out to be a one-way street with us selling their product," adds iCepts Technology Group (formerly I-Sys Technologies) CEO Lester Adams.

"In the end, we don't get the leads from them because they keep the larger deals themselves," says Dennis Schleicher, iCepts VP of marketing.

That attitude extends to integrators and consultancies as well as VARs, respondents says. "Usually, technology vendors look at consulting firms like us as an extension of their sales force," offers John Raveret, VP of corporate development at Cognizant Technology Solutions. "They want us to pay a fee, train our people on their technology and then sell their products. It's very one-sided."

As a result, Cognizant prefers to partner with other service providers, because they aren't as demanding. "They're better than technology firms," says Cognizant VP of marketing Larry Gordon. "They bring us terrific clients."

Another frequently voiced concern was the inconsistency of some vendor/partner programs. "Our only real disappointment is when there's not a firm commitment to the channel," says Hilton Howard, director of business development at Cambridge Information Systems. "The vendor starts a program and doesn't follow through."

Computer Resolutions CEO Carl Palmi eri asserts, "When we embrace a vendor, we put a lot of energy and cost into the relationship. Then, when the vendors change their position and become less partner-friendly, we're at their mercy."

Finally, some partnership programs apparently are behind the times and fail to focus on the move by solutions providers to consulting and ASP models. "They try to treat you more as a VAR, which is not the business we're in," Diamond's Mike Connolly laments.

"They haven't caught up with the needs of the ASP model, which is a recurring revenue model," adds Feisal Mosleh, VP of marketing and product management at Agiliti Inc. "So they can't structure a negotiation that allows us to sell their product cost-effectively on a rentable basis."

Despite such complaints, respondents gave vendors, on average, a "good" rating overall and a similar rating in such categories as effectiveness in communicating product or service strategy, and effectiveness of the vendor's Web strategy in supporting partners.

The only category to draw a relatively low rating, as might be expected, was the effectiveness of vendors in passing along sales leads.

In terms of specific benefits, 90 percent of respondents reported they were receiving technical support, and 86 percent receive product training. Other soft-dollar benefits such as marketing collateral and product discounts were being allotted to roughly two-thirds of the respondents. At the bottom of the list: Only 28 percent of respondents are receiving co-op funds.

For smaller solutions and service providers and start-ups, vendor alliances provide credibility and an entrée to the customer. "For a small partner such as ourselves, it's the name," says Susan LeWinter, a VP with Web Emporium. "We partner with IBM and go head-to-head against companies with well-established names, so we piggyback on IBM's reputation. That only lasts as long as you maintain your level of service up to that of your partner. You only get one shot at doing it right."

Adds Phil Simmonds, director of technical marketing at Pilot Network Services Inc., "We can leverage the investment the vendors have made in their technology and their position in the marketplace. We're a Cisco partner, so that shows our customers we work with the leading technology vendor."

Two other big pluses with these programs are speed to market and information. "We don't have to reinvent the wheel when we engage a client," a Sapient spokesperson notes. "If we're working with someone who knows something we don't, we can act quicker."

"Many alliances are about sharing intelligence," adds Diamond's Connolly. "We have alliances to get the best intelligence and get things done faster. It's about information and responsiveness," he asserts.

TSR Solutions president Tim Radtke takes a similar view. "Partners bring good marketing information to you - what's hot, what customers are looking for," he explains. "They can tap into a lot of customers we don't know. A good vendor relationship is part of the equation of having a good sales force, because they support your salespeople. They may also drop your name, mention you to potential customers."

Partnerships also enable solutions and service providers to round out their portfolio of offerings as well as to stay ahead of the curve as new technical developments evolve. "It's a way for us to extend our capabilities and have our people learn new technologies and enter new areas," says Robert Kelley, partner, business development, at Broadreach Consulting Inc.

"Vendors provide the expertise and fill out the total solution," says Elizabeth Hirsch, director of alliance programs at UUNet.

"The biggest benefit is the ability to share cutting-edge technology and channels," concludes Tubbs of Integrated Information. "One of our differentiators is to stay ahead of the technology wave, and one way we do that is by always talking to our partners."

If you're altar shy when it comes to partner programs, or you've been burned in the past, some of your peers offer the following tidbits of advice for making these relationships work successfully.

"Vendor partnerships offer the same challenges - and the same benefits - as other relationship-management issues," advises Dewey Blaylock, senior VP at Stonebridge Technologies. "The central criterion of vendor partnerships is setting expectations and standards on how business opportunities are addressed."

"There's a real potential for disappointment, if the partner's goals aren't aligned with ours," adds Bryan Linscott, VP of e-commerce products at USinternetworking Inc. "In those instances, the partnership won't bear as much fruit.

"It has to be a two-way relationship," adds Mike Dahan, director of e-business hosting at Breakaway Solutions. "It doesn't help if one party provides all the leads and the other doesn't provide any."

In a similar vein, CMGI Inc. VP of strategic alliances David Luff argues that the biggest challenge is cultural compatibility, a factor that is sometimes overlooked when entering into an alliance. "We ask if we are similar and can get along," he explains. "Second, it is important to make sure you have shared objectives."

Realistically, though, there is only so much a solutions provider can do in determining if a relationship is going to pan out. As an example, one frequent complaint about vendor alliances is the high turnover of the personnel assigned to the program. That leads to confusion and all sorts of communications glitches.

The good news is that more and more solutions providers have become realistic with regard to their alliance applications. "People are entering into these things a little more guardedly," suggests Mike Mc Dermott, marketing manager for SEI Technology. "They know it will take some effort, but their eyes are wide open. Before, it was simply, 'Hey, let's be partners.' " Additional reporting by Alan S. Horowitz.

The list above shows how the top 25 vendors stack up against one another. Results are based on 150 online responses as well as telephone interviews with many of the Smart 100 companies. The results represent an average based on the following scale: 1 = excellent, 2 = good, 3 = acceptable and 4 = unsatisfactory. Vendors with a rating of "3+" were deemed less than acceptable and teetered on unsatisfactory.

Getting Yours

Are you getting your due in partnering with vendors? Here's a look at the percentage of solutions providers that are receiving specific benefits from vendors. See how you stack up compared to the survey respondents.*

Technical support: 90%
Product training:86%
Sales training:71%
Marketing collateral: 69%
Product discounts: 67%
Sales leads: 57%
Partner database: 51%
Market development funds: 46%
NFR evaluation products: 41%
Co-op funds: 28%
*Based on 150 online responses.

Overall Ratings

Here's how survey respondents ranked vendors in general.*
The results below represent an average based on the following scale: 1 = excellent, 2 = good, 3 = acceptable and 4 = unsatisfactory.

• Effectiveness in communicating product or service strategy: 2.1
• Effectiveness of program feedback mechanisms: 2.4
• Effectiveness of vendor's Web strategy in supporting partners: 2.2
• Effectiveness of vendor in responding to ideas and input from partners: 2.6
• Effectiveness of vendor in passing along sales leads: 3.3