The IT Industry Takes A Walk Down The Yellow-Brick Road - Part 3 of 3 22 August, 2008 By Robert M. Cohen

The Paradigm Shift $750 billion of the global $1.3 trillion of annual IT sales come from the US and Canada. SMBs account for $300 billion of this $750 billion. 80% ($240 billion) of the annual purchases by SMBs go through VARs. VARs are fabulous technically but normally not very good at marketing, sales or understanding business. Vendors expect VARs to be their sales and marketing arm. SMBs expect VARs to help them develop IT-focused business solutions. For the IT industry to successfully provide business solutions to SMBs through VARs a paradigm shift is required! Sales and marketing has to become more of a collaborative effort. VARs have to become more business savvy. Vendors, VARs and SMBs have to be able to communicate better. VARs have to: Be Trusted Business Advisors to SMBs. Provide end-to-end solutions, including: business advice, installation, service and support. Remove the fear, uncertainty & doubt. The paradigm shift requires: Creating a new VAR standard based around business knowledge that enables Vendors and SMBs to readily identify and find business savvy TBAs (Trusted Business Advisors) The development of communities that allow: Vendors to find, recruit & engage TBAs. SMBs to understand what TBAs are and to interact with Vendors & TBAs. The development of multi-vendor tools that: Enable VARs to automate their marketing and sales efforts. Provide Vendors with a streamlined process for getting their messages out to SMBs via VARs. Track results so that Vendors, TBAs and SMBs can attach an ROI to the time and money they spend.

Most vendor channel marketing programs are not in line with what VARs require. Vendors promise high margins but do not protect prices at the street level. They promise leads but the leads are not qualified and they do not take the time and effort to provide VARs with the necessary product and sales training. They offer marketing tools but the VARs do not use them as they don't trust the Vendors and are afraid to let these Vendors near their databases.

The IT industry NEEDS a paradigm shift so that the delivery, service and support of technology fits the needs of the makers, sellers and users of the technology.

The North American IT industry's go-to-market model is inefficient and ineffective. It is based on an outdated strategy whereby Vendors rely on technology focused VARs to act as their sales team, selling products instead of solutions. Most VARs lack the business knowledge and selling skills necessary for survival. Meanwhile, Vendors ignore the core problem and continue to train them on their technology.

In Dorothy's perfect world, the ChannelLine Advisory Council is trying to create OZ: a Paradigm Shift that allows VARs to do the jobs they do best, provides education, creates the rules of engagement and provides the tools that facilitate the change.

TBAs:

Capable VARs, who understand both the business and technology aspects of delivering IT-centric business solutions to SMBs, need to be differentiated from the majority of VARs who don't get it, and don't have the resources or the commitment to change. These Trusted Business Advisor (TBAs) need:

• Business education and certification.
• To be part of an industry-wide partner locator and lead-generation program that makes it easy for SMBs to align themselves with appropriate TBAs.
• Communities that enable TBAs to collaborate with Vendors, Distributors, Peers, Customers, Industry Publishers, Analysts and Channel Marketers.
• Multi-vendor enablement tools that automate the marketing and sales process so that TBAs can focus on the activities that VARs do best.
• Vendor education to ensure that they understand the role of the channel and where TBAs fit in.

Results:

• A defined set of VARs that are capable of delivering business-centric IT solutions will be certified as Trusted Business Advisors.
• Vendors will be educated on the benefits that TBAs provide.
• TBAs will be educated on how to sell, service and support solutions.
• TBAs will be enabled with automated marketing and sales tools.
• End users will be informed of the unique capabilities that TBAs provide.
• The ecosystem (Vendors, TBAs, SMBs) will be able to collaborate.

For the channel to survive and thrive, it needs to change. The paradigm shift is already starting as vendors are pushing their marketing and sales people to show measurable ROI on channel marketing expenditures. Distributors are cutting services in order to turn positive net profits. VARs are leaving the industry in record numbers as they cannot survive on the margins they are earning and do not understand how to change their business model. The change coupled with declining profits and mixed go-to-market messages has created a state of distrust within an industry that is out of control.

Vendors are looking more and more downstream into the SMB marketplace for sales. They are quickly realizing that it is a daunting task to reach, sell solutions to, service and support these businesses without the assistance of the VAR community. It is a long way to OZ. By working together, we can make the journey go quicker and encounter less hick-ups along the way.

To find out more about what the ChannelLine Advisory Council is doing or to join us, please contact me at 1-800-465-2059 or by email at rcohen@integratedmar.com.

Robert M. Cohen, a passionate and enthusiastic channel advocate, is the founder of the ChannelLine Advisory Council as well as president and business editor of Integrated mar.com, publishers of Channel Advisor, eChannelLine and ConnectIT. Since 1980, he has worked with 300 IT vendors, distributors and resellers in developing and implementing strategic go-to-market programs, using a variety of direct, channel and hybrid models. Integrated mar.com, in its role as publisher, channel marketer and founder of the ChannelLine Advisory Council is proud to be a leader in orchestrating the paradigm shift. Together we will make the IT channel more profitable for all of us!