Stop Saying Partner

[July 2019] When I look at the channel shows, it is MSP morning, noon and night. At CPEv in DC there will be a whopping 3 sessions aimed at agents. The rest is an MSP-centric show.

Most channel shows and programs seem to cater to MSPs now. And MSPs already have 5 shows a month to attend!

Most keynotes and channel influencers seem to be talking about MSPs – even when they are not. I sometimes wonder if some of these folks have any idea what constitutes the channel. It is made up of a number of very different business types.

MSPs and VARs are not the same. One deals with managed IT on a recurring contract; one deals with install and break/fix. VARs rely heavily on their vendors – Cisco, Juniper, ADTRAN, HP, Dell – in their business model. Keeping their gold status with a vendor is a primary concern, since getting top support (and top discounts) is how they are able to retain customers. [Inter-connects had a similar model just with PBX vendors like Avaya.]

For years there were specialists and seminars to help VARs become MSPs. To help them switch the mindset and the business model, but when you rely on hardware sales to cash flow and compensate salespeople, it isn’t always so easy to convert the business model.

Everyone is selling some kind of managed service today – managed router, firewall, wi-fi – but that doesn’t make them an MSP. Every business likes recurring revenue that doesn’t mean that the rest of the revenue streams can be ignored.

There is an emerging segment made up of developers who program integrations and manage applications for companies (now called ISVs formerly SIs). With open APIs now widely established, someone has to do the dirty work of making sure the data in one program speaks to another program properly. (It is not as simple as log in and Bingo!). CPaaS and SaaS providers are courting this group. One analyst suggested that MSPs also have this skill-set – some do in a limited fashion, but that is like calling CapGemini an MSP.

For a few years, Virgo tried to get VARs and Agents to marry. Then for several years the keynotes said agents were dying or dead. Then all the prattle was morph into an MSP or ISV if you want to survive. Speakers demonstrate time and again how far removed they are from the actual channel partners.

I get that some of the talk is rhetoric to get buzz. Yet there is much evidence that the speakers just don’t understand the channel.

The channel has morphed in a lot of ways in the last 5 years. Microsoft partners took a huge hit when Office365 launched. Many became .NET developers as opposed to a SaaS sales force. (Twenty five cents per inbox per month doesn’t cover even one support call.)

Cisco has been have a tug of war with its partners, trying to get them to push Webex as opposed to switches.

AT&T and Verizon are just 2 of the telecom vendors who have changed their programs in big sweeping ways. For AT&T, moving to a monthly commission structure after years of being an upfront payer, broke some partners. Cash flow in those partners’ business ended.

Office Depot didn’t even give the channel a shot. (Two years is not enough time to build a channel.)

So many other vendors come to the channel unprepared and really unavailable. One recently was talking about building up an affiliate program for their channel. That is a watered down version of a referral model. That isn’t going to attract much interest.

I won’t go into why so many programs are ineffective except to say that they don’t know how to align – align their product and services with a target and align their partners with their program and products. Anyone can fog a mirror and ink an agreement; it is AFTER the ink that the real work begins in on-boarding and alignment.

One factor: know which segment you are aiming for.

STC doesn’t allow their members to take money from a vendor. CPA firms are leery of taking money from vendors as well. Many TEM firms try to stay neutral. They might be excellent candidates for a referral program though.

For some MSPs who are billing a customer $2-5K per month for managed IT, they don’t want to jeopardize the account for another $200 in commission from a UCaaS provider. That is a hurdle that cannot be ignored – especially when service delivery and customer experience in the UC space is not pillars.

If I am a VAR or MSP selling managed firewall, I would want to sell cable or a reseller, who won’t try to push their own managed firewall on to the customer. Managed router and firewall are some pretty lucrative contracts. Once again, the $150 per month in commission on the pipe isn’t much compared to the TCV (total customer value).

The other consideration is that the owner of the partner business has to maximize his staff and their skills. The emphasis is on the skill set available. Oft times that is misaligned with the vendor’s newest mission.

The Channel is a whole collection of shoes. It isn’t one size fits all. You wouldn’t wear sneakers with a tux or go jogging in crocs. The two main factors are business model and skill set. Stop treating it as one homogeneous pool. Stop saying partner when you really mean VAR or MSP or ISV. It makes a difference.

Scroll to Top