Watching technology companies figure out their channel strategies is very interesting. Ask anybody who has run a technology company or a division of a large company and they will tell you the ‘how to ’scale’ the sales process’ is one of the hardest things – even harder than technology problems. Why? Because it involves people and changing behavior at scale is very hard. Oracle tried selling applications for many years, but finally bought Peoplesoft to get it right. IBM is a direct sales company and MSFT is a channel driven company.
Cloud computing offers new opportunities for the indirect channel (VARs, resellers, system integrators) – where enterprises buy technology/services from an intermediary instead of the original technology provider themselves.
The indirect channel generally (they are exceptions) are focused on small/mid size companies or departments of large companies. They have recently transitioned away from being a demand generator (proposing innovative solutions) to demand fulfillment. It use to be that if you got the channel you had it made – Powersoft, Citrix etc. are a few companies that build very successful businesses by seeding and growing the channel. But as information has become readily available their value to technology companies and to the end customers themselves has reduced. However some have continued to thrive, by reinventing themselves as system integrator or value added resellers.
With cloud computing, the opportunity for the indirect channel increases, especially ones that are focused on medium size companies. The know the customer environment well, and there is enough noise, that they can help sort things out and make recommendations. The issue is one of skills. Their value add will require them to focus on different issues then they have focused on. Security, compliance, SLAs and other operational issues become higher priorities. Channel companies that make the transition will do very well.
Recently there has been good back and forth on this subject by Larry Walsh and John Cowan. Interesting points of view. This is all part of evolving the business. The opportunity to help medium size companies is definitely there, the remains to be seen is how many channel partners take up the opportunity.
