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Interviews
Published date: March 30, 2009© 2009 Avangate page 1
www.avangate.com
 
Interview with Ken Beam
“
Channels are a long-term commitment... a partnership marriage!Not everybody survives the post-Honeymoon period.
”
 
Delia Ene, Marketing Communication Specialist, Avangate
Interviews, Published date: March 30, 2009
Ken Beam is an IT Strategic Alliances Consulting and Business DevelopmentSpecialist, with 27 years in IT Industry and channel management positions forOracle,Baan (now owned by Infor Global Solutions), Intergraph, Sun Microsystems, GE Access.  Ken is also president and founder of The VAR-City
–
a Channel Salesdevelopment, management and consulting company for the IT industry.
Delia Ene:
You've been in the IT channel management business for a long time now. What haschanged and what is more or less constant in this line of business?
Ken Beam:
Let me start with the Channel constants and then we'll circle back to the changes.Most of the things that haven't changed could be classified as business drivers, or "why" they'rein business. What they do, and how they do what they do fall into the changeable group.They're 'resellers', so unlike a Vendor, their product is not a tangible entity you can slap aSKUon. Their product is themselves - their reputation, their expertise, their credibility,honesty and trustworthiness. They always strive to be accepted as the knowledgeable trustedadvisors their customers can call on for advice, guidance and informed recommendationsleading to the delivery and satisfactory implementation of the recommended solution.They may be generalists serving the needs of a community or specialists reaching beyond thefinite demographic limitations of a staked out region. Either way they face a similar competitiveduo - other resellers and vendor direct reps. And, in either scenario, their strongest defense is«differentiation» or, more importantly, «
relevant
differentiation».
 
 
Interviews
Published date: March 30, 2009© 2009 Avangate page 2
www.avangate.com
 
What I mean by that is offering something the other guy can't offer and that
 something
mustbe of importance to the buying decision maker. It may be a team of specialists who are trainedand certified to address a unique requirement or circumstance; it may be owning the exclusivesales and distribution rights for an absolutely necessary product. More frequently it'ssomewhere in between.I point this out because that's one of 
the
most important things that have not changed, fromthe vendor's perspective.Any reseller worth your effort to pursue is constantly poked at and prodded by other vendorsseeking a sales partnership and they better have a well defined Business Value Proposition thatincludes a differentiation factor along with a realistic profitability projection if they want to beseriously considered.Resellers, VARs, Systems Integrators, whatever handle you apply, have limited resources andare only looking for new products that do not cannibalize sales from existing products (a no-winzero sum game) and products that can be a catalyst for greater growth within their existingcustomer base and one that allows them to extend their established expertise into new andincremental business opportunities. It's also worth a couple of bonus points to you if yourproduct compliments another high revenue product they currently offer.There are many other things that have not changed - but, for the vendor attempting to expandtheir indirect sales revenue this one is, in my opinion, the most important to understand andplan for.In regards to what has changed the most, other than the obvious product and technologyadvances, a couple things come to mind.One is how the resellers have morphed (perhaps "evolved" would be a more accuratedescription) to adapt to the commoditization of technology products that were once the salesdomain of technicians and only purchased through locations that could deliver, install andsupport the purchased (high profit margin) items. By happenstance or convenience the internetstarted growing into an acceptable buying vehicle about the same time, and together this dual-force wave began culling the storefront retailer herd and opening new marketplaceopportunities for eBay, CDW, Amazon and others.
 
 
Interviews
Published date: March 30, 2009© 2009 Avangate page 3
www.avangate.com
 
Resellers had to find new ways to make money, some didn't.As a result what we began seeing in the reseller community starting in the mid-90's (or a littleearlier) was a shift (by resellers) towards products that required more services and what wasonce an 80/20 - Products/Services model began closing in on 50/50 and even greater to a polarreversal. As it turns out, services are generally accounted for in the 50% profit range whileproducts began dipping towards 10% margins and less.Following that trend we also started seeing more resellers dropping product sales altogetherand calling themselves "Sales Influencers". In the simplest terms they behaved just like theyhad as resellers with proactive marketing and opportunity creation; but, what was different isthat, as the opportunity approached closing, the recommended vendor was brought in tocomplete the sale and handle the nasty bits like invoicing and collections (aged receivablesreally knock down the profits and crunch the credit line). The "Sales Influencers" would thenmange the services aspect of the project and enjoy the higher margins without diluting theirprofitability with lesser margin products and delayed pay.Those would be the high points on both sides of the question.
Delia Ene:
When is a software company ready to embark on indirect sales? I know you'vecontributed to a very useful Channel Readiness Quiz by Bruce Hadley (part 1and 2). Is there a most essential requirement that no channel program should be initiated without?
Ken Beam:
That quiz, even though a bit outdated, is still a good indicator of just how Channelworthy-ready you and your organization are. The included self-scoring is also a good way toidentify (in) which areas you might be the weakest and how important those areas are in thebig picture. Some are easily handled with minor modifications and others are, frankly, dealending.What I typically find is that the
readiness
factor is less about the product than it is about thepeople. Too many go into Channel sales believing that they're ready; but in fact they really arenot. Their expectations regarding time to profitability, infrastructure overhead, their product'sactual appeal to the reseller community, their allocated budget and so much more arecompletely out of whack and often self-deluding.
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