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With more than 30 years of leadership roles within global software companies, Callidus Software's President and CEO Robert Youngjohns has had a lot of experience working with the IT Channel. Robert gained in-depth understanding during his 10-year tenure at Sun Microsystems, serving as executive vice president of the global sales organization and vice president for its EMEA region, coupled with his 18 years at IBM including director of the company's RS/6000 business for the EMEA region and for the United Kingdom. Since 2005, Robert has taken the helm at Callidus Software, a company that provides a wide array of solutions for sales performance management and incentive compensation. He and I exchanged opinions on channel members and sales. Cohen: Do you think that the IT Channel is being well utilized by Vendors in terms of sales? Youngjohns: Definitely not. Most Vendors don't really understand what is going on and have little understanding on how to use the available information to get better ROI on the money they spend in the channel. Cohen: Where do these problems start? Youngjohns: Vendors tend to ignore the simple fact that channel partners have to make money. These channel partners want to work with Vendors that provide a predictable environment that doesn't change every time the wind blows. They need to know the rules of engagement and be able to trust the Vendors they work with. By constantly changing strategies, programs, remuneration methods, margins, registration programs and so forth, the Vendors lose the ability to predict the environment they are being forced to work on. This creates confusion, extra work and distrust. Cohen: Thus, the only thing that they can predict is the lack of consistency. Why do you think this happens? Youngjohns: Most VARs are smart people and want to understand the rules. Most Vendors never really set rules of engagement. Cohen: So, where do the problems originate? Youngjohns: You have to go right to the top. CEOs and CFOs get overly concerned about the costs of running a channel, rather then understanding all of the details and the benefits the channel provides. Strategic relationships don't really exist when it comes to channel partners. It is all about tactical relationships and what's in it for each party. Vendors are inconsistent and unpredictable. They don't treat VARs right. Rather then taking the time to understand the channel, Vendors make assumptions, many of which are not correct. For example, they assume that by creating a channel network they will generate demand for their product... that somehow the VAR will create the necessary branding and demand generation necessary to move their products. This just does not happen. Vendors overestimate the value of raw discounts. Coop and soft marketing funds are often viewed as being more important then building long-lasting relationships. Truth is, discounts typically flow through to end users and do not help most VARs. The business proposition is not clear. Frequently, Vendors forget to clearly articulate the "what's in it for me" to the VARs. Demand creation turns to lead generation programs. Leads have to be qualified. The channel has to close. The channel is best at closing, under the right circumstances as they are the closest to the action. Cohen: So what should Vendors be doing to fix these problems? Youngjohns: They have to optimize resources. This begins with setting targets that are effective and moving qualified leads through quickly. Sales compensation incentives have to be flexible and effective. They have to track analytics on what happens. Vendors have to take sales performance management seriously: who sold what, where and when. Vendors have to track return on investment including sales expenses, incentives, compensation and commissions. They have to make sure that their Channel partners know that their commissions are accurate and timely. They must see what they have earned and what they need to sell to get to the next level. This leads to increased predictability leading to better trust, better relationships and an overall better ROI. About Callidus Software® Callidus Software (www.callidussoftware.com, NASDAQ: CALD) is a leading provider of on-premise and on-demand Sales Performance Management (SPM) solutions to global companies across a broad range of industries. Our software allows innovative enterprises of all sizes to strategically manage incentive compensation, set quota targets, administer producers, and align territories, resulting in improved sales and distribution performance. Over 1.7 million salespeople, brokers, and channel representatives have their sales performance managed by Callidus Software's products.
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