Pereion Solutions Blog

Yesterday IBM announced a new Managed Service Provider or MSP program, I had the opportunity to sit through the global announcement.  It was strong announcement on IBM's part in that it laid out a clear and compelling set of benefits for MSP partners.  The IBM press release for the announcement can be found at the following link: http://www-03.ibm.com/press/us/en/pressrelease/38943.wss.  The new program provides differentiated offerings and benefits to MSP partners in the following areas: 

• Access to IBM offering and Global Centre's 
• New marketing and sales support options
• Leverages IBM PureSystems and SmartCloud offerings
• Innovative Financing Options

It is clear that IBM is now serious about building out there own MSP Ecosystem that will allow them to more effectively sell into that market. While it was a good announcement on IBM's behalf, the market does expect this level of support from IBM and other vendors as well.

Ecosystem is one of those consulting words, that can seem a bit theoretical. However, in the MSP environment it is real. 

The challenge really lies in front of the Managed Service Providers themselves in creating their own Partner Ecosystem.  In addition to building out the physical offerings they need to provide, they need to rethink the partnerships they have and the way they go to market. 

• What software partnerships will they maintain? 
• What hardware or service partnerships will they leverage? 
• Will they create a partner sales channel to sell their offerings?
• Will that be a resale or referral model?  
• What are the economics of an MSP or Cloud channel delivery model?
• Is the go to market model efficent enough to support a partner channel based on the margin structure? 
• What is required to enable and manage this new channel? 
• Does the model change if they play at different layers in the Cloud stack, i.e. SAAS vs PAAS vs IAAS? 

While the large technology vendors are used to dealing with these questions, this is new ground for many firms that are new to the MSP market and historically have played in more traditional business models. It is clear that the marketplace shift is real and that those MSPs that find the way to build their own robust Ecosystem of partners with the right channel model will be the winners.  It will be an interesting journey.  If you need a partner to help navigate this journey, give us a call.

Companies tend to spend a lot of effort to maximize the value they can provide to their respective clients, but the value they offer their channel partners is often an afterthought.  Creating partner value within your distribution chain is critical to having a successful indirect sales channel. Channel savy companies find ways to differentiate from their competitors through their channel programs and offerings.  Any partner recruitment effort will be dependent on establishing a well differentiated partner value proposition.  Assessing and defining the key elements of the partner value proposition is critical, a spider chart like the one that follows can help clarify the critical elements of that value proposition and where the key points of differentiation exist.  

Following are some key areas to consider as you think through the value to your partner channel:

1. Net Margin - Economics is the most critical element of your partner value proposition, while Net Margin is not the only element of the economic model it is an important one and an element that is usually apparent. That said you probably want to look at broader economic measures like partner ROI when you communicate the economic value of a channel partnership.  
2. Market Growth - Enabling your channel partners to identify and participate in key growth segments can be a huge value add to your channel partners who may not have the resources to identify and develop certain markets on their own.  
3. Reduce Costs - This comes in two flavors: cost reduction and cost avoidance.  Value add services can reduce the cost for your partners, especially in areas like sales and marketing support.  Cost avoidance comes in by minimizing administrative costs and reducing unnecessary investments that are critical to channel sales growth. 
4. Marketing Support - Marketing support sometimes gets minimized to marketing funding, while marketing funding is important there are other ways to differentiate partner offerings through marketing.  Market intelligence, prospect lists, marketing content, social media support, and assistance in building marketing plans are all ways to provide incremental partner value. 
5. Sales Resources - There are various ways to deliver sales support to your channel partners, including sales collateral and tools, proposal support, and technical sales resources.  Depending on your products and the channel sales model you can determine where you can provide the most value in enabling channel sales.  
6. Skill Development - Developing the marketing, sales, and technical skills within your partners is a critical element of any partner program; this is also an area where partners really look for assistance to grow their businesses. 
7. Barriers to Entry - This is an area that requires consideration and can cut both ways.  What I mean by that is there are times you want to reduce barriers to entry and there are times when you want to preserve barriers to entry to protect profitability.  Either way you need to consider the impacts.

While this is certainly not intended to be an exhaustive list  and there may be other areas you need to consider, hopefully it prompts your thought process as you think through your partner value proposition.  It is critical to test your perceived value proposition with current partners and potential partners to validate both the elements of your value, your ability to deliver, and your relative position to your competition.

Channel readiness is an approach to assess why your partner channel sales are performing at the current level and what the inhibitors may be to accelerate sales performance. While understanding all the elements that impact your channel sales performance can be difficult, having an approach to ensure the key elements are in place for your partner channel to perform is critical.  

 Launching a new product, a new partner program, expanding to a new market, or assessing performance of your channel sales are all great opportunities to make sure everything is in place for your channel to deliver the sales results you need.  Think of channel readiness in terms of a launch pad. Is everything in place for your channel partners to be successful?  Are you ready to launch that new product? Are you ready to enter that new market?  Having a channel readiness checklist will at least ensure you are asking the right questions. 

Following is simple ten point channel readiness checklist:  

1. Partner Profile - do you understand the profile of a successful channel partner?
2. Channel Capacity - how many partners, how many salespeople, how many transactions are needed by region? 
3. Economic Model - does your channel program provide a profitable business model to your partners? 
4. Product Enablement/Access - do partners have access to the product and know how to use it? 
5. Skills & Education - are you providing the right level of training to your partners and do you know who is and is not trained? 
6. Sales Support - do you have the resources in place to support your partners throughout the entire sales cycle, including post sales?  
7. Marketing - do you have a channel marketing plan in place to deliver the lead volumes needed to achieve the sales targets?
8. Order to Cash - is the infrastructure in place to register leads, place orders, ship products, and complete sales transactions? 
9. Partner Payment Systems - can you pay your partners in a timely and clear manner? 
10. Management System - do you have the data and tools to understand the performance of your channel and make decisions to improve results?  

This simple checklist gives you a starting point to assess the channel readiness of your partner program. If you have questions or would like to discuss how to apply a channel readiness methodology to your business, please let us know.  

Pereion Solutions, LLC was formed as a new Channel Consulting and Services Provider. I get the same question from many of my family and friends, what is it your going to do? After a long career at IBM in various executive sales and marketing roles, almost all of which involved working with channel partners, I felt it was time to step away and build a company whose mission was to provide Channel Consulting and Services to other companies. Specifically, to help other companies grow their revenues by leveraging business partners, dealers, resellers, strategic alliances, and various other forms of indirect sales channels. Pereion will provide a full lifecycle of Channel Consulting and Services; including Partner Recruitment, Channel Marketing, and Channel Management. 

So that begins to the answer the question of what it is that Pereion Solutions will provide, but it does not answer the question of why. Jim Collins introduced a principle called the Hedgehog Concept in his best selling book "Good to Great".  There are three element to the Hedgehog concept: 

• What can you be the best in the world at

• What drives your economic engine

• What are you deeply passionate about

The concept was developed to guide companies in focusing their corporate strategies, but it also feels like a pretty good set of guiding principles if you are going to start a new company. Pereion Solutions sits at the intersection of Channel Consulting and Services and those three points. That combined with an intrinsic desire to run my own company is why Pereion Solutions was formed.  

This is the first blog article for Pereion and I thought it was only appropriate to talk about the rationale for starting Pereion Solutions. Going forward we will provide more insight on the Channel marketplace, although I expect we will talk some about the journey as well.  Thanks for listening and please Follow Us!