Myth-Stakes of Partner Building 104

Myth-Stakes of Partner Building 104: Expecting that channel partners will be eager to invest in a new PLM market segment, a new technology, or a new product introduction from a new ISV, even when it would improve the partner’s own business viability as traditional channel models are being disrupted if not failing.

It is no revelation that VARs seek to sell products for solution providers that are already well-known, in demand by users, and so mature they require little market-creating missionary work. In this traditional VAR model, partners like to think their customer facing value added is in user training, customer support, account management, and relationship building.  The value add that they hope to bring to their solution providers is in field marketing, customer acquisition, territory development, and account maintenance.

But this legacy thinking is now a mistake as both sides of the channel value equation are being threatened if not obsoleted across many PLM solution market segments.

An inconvenient truth for the PLM channel is that customers can now obtain technical support from numerous sources, including social communities, and have little patience for anything less than quick deep expertise when they have a question or problem. Training in most engineering applications rarely requires lengthy on-site classes as in yesteryear, and many users expect software to be so intuitive that learning by trial and error through use is the norm. Account management, ordering, and software maintenance has become a virtual self-serve function, especially over the cloud.

For those applications that are well-known and in demand, which VARs want to represent, solution providers don’t need VARs for the reasons the VARs want to believe. Providers believe they can reach deep into remote territories and vertical markets to identify prospects, then educate and motivate customers remotely, and develop accounts all without having a field-based direct sales force of their own, much less needing that of a partner’s.  It is undeniable that many large providers want VARs simply because they lower the cost of sales for selling into the SME market which they themselves can no longer afford to do efficiently or profitably.

Smart partners have realized the game is up on the traditional channel model. Being a traditional partner in PLM market segments is a very tough business model to make work. Success requires a staggering command of functional competencies and technical expertise in customer requirements, industry applications, solution selling, territory knowledge, underlying technologies, product portfolios, technical support, and the list goes on. Even enterprise solution providers can’t do all of this well, so why do we expect that a small or even large channel partner can?

For these reasons and others to be covered in a future post, traditional PLM channel models are unlikely to be sustainable or even viable for the long-term. Having spent much of my career on one side of the channel or the other, I wish it wasn’t so, but solution providers don’t need partners – and customers don’t either – as much as they once did.

However, that does not mean that there is no future for the PLM channel. Quite the contrary, the future will offer more opportunities to contribute greater value to our industry as the business pressures on customers, technical requirements of users, and complexity of solution spaces all accelerate. But that future is not in “selling” application software nor even in supporting them.

The future is in serving up what customers and providers both value and increasingly seek more of: partners of collaboration and innovation. That is, partners who have intimate industry experience combined with deep vertical application expertise to become co-innovators with their customers. As solution suites have become ever more complex, it is increasingly rare that software developers themselves possess the bandwidth to be experts in their technology base, product offering, and all of the many different applications across so many different industries around the globe.

In the next Alliance Alchemy post we will explore how small nimble partners who are hyper-focused on collaborating with their customers in a small set of industries can become the preferred channel model of the future. For these innovative partners, they don’t run away from new products, new technologies, or from new unknown providers, but seek them out as opportunities to differentiate themselves as value added collaborators.