1. GLUDORF
12/15/2016
Achieving Sell-thru
with the Global SI . . .
And why most (small) software companies fail.
More often than not, it is the executive team that fails to
understand thistreasured partner and the requirementsfor
engagement. A review of any number of software companyweb
pagesthat addressthe Partner relationship, generally show a
lack of understanding of whatthe SI Community is looking for.
Generally, and with notable exceptions, smaller companiesin
their first 3-5 yearsdo not have the resources, the brand, or the
patience to engage the SI. But there still lies the opportunity to
achieve a beneficial level of success in 12-18 months.
2016
2. Achieving Sell-Thru with the Global SI . . . and why most (small)
software companies fail.
Small to mid-size software companies often add 1 or 2 business development reps to their
team seeking to leverage the GSI channel for substantive revenue gains in a 1- 2 year
period, often expecting results in the first year. 1-2 years later, void of meaningful results,
they turn over the headcount thinking they have hired the wrong people. That may be the
case, but the challenges far exceed the headcount. And companies often pay BD people less
than the direct team, which yields less strategic and lower level capabilities, when just the
opposite is required to activate the business. More often than not, it is the executive team
that fails to understand this treasured channel and the requirements for engagement.
Going further, the executive team generally treats the GSI like any end user customer or
less so, is ill prepared to meet the needs of the SI, fails to positively resolve conflict with its
own sales force, and falls woefully short of supporting the partnership.
The GSI have clearly demonstrated the ability to substantively build on a company’s brand,
generate large percentage revenue gains, and add Global 1000 customers to the vendor
portfolio. Once the channel is active, the cost of sale and support is arguably low. However
initial engagement can be expensive in terms of resources, management, timing, and
product development. Generally, and with notable exceptions, smaller companies in their
first 3-5 years do not have the resources, the brand, or the patience to engage the SI.
Implementing an SI strategy would often be more successful in years 5-7, following the
achievement of substantive milestones implicated below.
A review of any number of software company web pages that address the Partner
relationship; generally show a lack of understanding of what the SI community is looking
for. Actually, many of the strategic advantages marketed to the SI, are more often
advantages that accrue to the company, as driven by the SI, for example:
Expand and grow your reach.
Enable your customers to deliver the best user experience.
Bolster your portfolio.
Offer comprehensive solutions.
Who are we kidding? Sure, if you are $30Billion Oracle with the broadest technology and
application portfolio in the market, the highest level of brand recognition in the industry,
and viewed by IT as a low risk decision, then the claims are accurate. For companies at the
opposite end of the spectrum, this is pure rhetoric.
Side bar: Rhetoric-- language designed to have a persuasive or impressive effect on its
audience, but often regarded as lacking in sincerity or meaningful content.*1
3. The advertised marketing advantages are also less meaningful to an SI:
Expand your business with our joint marketing and co-selling programs.
Add revenue to your bottom line.
I should note these benefits are often marketed to the Reseller and applied only by default
to the SI.
So what does the SI want from software vendors? First it is helpful to look at why SI’s do
not engage software vendors:
The cost of acquiring the skill sets across the business, exceed the tangible near
term payback.
The risk that a less branded technology can generate meaningful demand, does not
justify the initial investment.
The SI run multi-billion dollar revenue portfolios. How can a small company have a
meaningful impact?
Despite claims to the contrary, the vendor has not done an effective job of
packaging, delivering complete solutions, and/or highly valued reference
architectures. This added burden falls on the SI.
The next step is to understand the SI business model. As a start, the lucrative part of the SI
portfolio is application hosting, BPO, and Managed Services. Understanding the hosting
model and how that business is transacted is critical. Many software companies position
for the maintenance, break fix service business, and ITO. This is perhaps the lowest margin
portion of the SI portfolio and the target of the most ‘vendor driven noise’. So focusing on
applications hosting starts to separate the noise from the value.
The needs of the hosting business are different:
Clearly recognizable brand with supporting buzz in the media and trade shows, that
emanates from the ecosystem, not the vendor’s marketing organization.
A contribution and value proposition that is ‘strategic and substantive enough’ to
warrant building a practice around the technology.
Introducing the technology to a vested customer results in a high 6 figure to 7 figure
revenue add, because it underlies a new business initiative within the client.
Introducing the technology to a new customer can make the difference between
making the short list and losing the bid.
The vendor has begun the heavy lifting by winning key named (vertical) industry
applications, and configuring and validating key reference architectures.
