Why Channel Management Sucks

Despite trillions of $s flowing through indirect partnerships (including marketing, sales, and support channels across the entire end-user experience for tech vendors), the process of effectively extending cross-functional enterprise processes to build superior business partnerships is broken and manual. Enterprises cannot calculate cause and effect relationships between their investments in business partnerships and the resulting enterprise value achieved. Executives responsible for managing these partnerships are therefore marginalized and lack enterprise political and financial capital.

The processes needed to manage business partnerships cut across marketing, sales, enablement, finance, legal, support and other enterprise processes and involve working with third-parties (and their employees), aka the channel, who are outside of the enterprise command and control governance (unlike a direct sales organization). The combination of disparate systems and a disaspora of third-party companies and individuals outside of corporate control makes the processes of partner management automation very complex.

There is a catch-22 between the need to create systems that measure, direct and optimize these relationships (PRM), the lack of poltical capital in Channel Chiefs to dive organizations to evolve to use them, and the lack of hard-measure enterprise value that business partnerships deliver. Until recently, pre (Social/Mobile/Analytics/Cloud), the tools and systems to deliver federated PRM systems did not exist.

Channel organizations within vendors struggle with the challenge of proving their Effectiveness and ROI vs other enterprise initiatives.  They certainly want to become more efficient (how to do more with less) but more important is their ability to deliver value to partners and to their organizations.  The effectiveness question manifests itself in solving point problems – often how to effectively on-board, train, motivate, tier, track, etc.  Most vendors (prospective PRM customers) are not concerned with automating cross-functional channel management because they know that the components (on-boarding, training, etc.) are not effective enough and need to be fixed before automation becomes a top-of-mind concern.  Not surprisingly, systems are single-threaded (addressing point concerns) homegrown and/or processes are managed manually with spreadsheets.  At the end of the day, channels are hard to ramp, hard to train, hard to motivate, hard to track, hard to pin down as to contribution (e.g. can’t really measure influence); no wonder Channel Chiefs have trouble becoming credible and keeping their jobs!  Best practices exist but they are not federated and its hard to show examples of what it looks like when a vendor ‘gets it right.’

Channel management is therefore a clumsy art vs. a streamlined science.

The impact of these dynamics is that indirect business partnerships (channels) are uniformly poorly managed through disparate and disconnected systems; resulting partnerships drive soft-measure value and are important strategically but typically never get the investments to become hard-measure drivers of enterprise value. Ironically, channels which are all about achieving enterprise leverage and scale are managed through unleveraged, cumbersome, manual processes. To Sum up the voice of the technology vendor C-Staff customer “Yes, we need channels, but no we won’t really invest to make them great and we’ll fire the guy in charge because he/she didn’t get it right, again.”

Correspondingly, on the partner side of the equation, despite the huge dollars flowing through indirect partnerships, partners uniformly report that among their greatest friction working with vendors is how hard it is to do business within their partner programs. As the cloud and other trends pushes many partners out of business, the ability to compete for channel mind and wallet share may come down to ease of doing business more than ever before.  Partners may stop doing business with clumsy partner programs just as they stop using enterprise software that didn’t meet their Consumer-IT expectations.

At the same time, channels are becoming more important to tech vendors as their dependence on indirect is growing at the expense of direct channels.

The strategic imperative for tech vendors then is

‘How can we automate and professionalize channel management’ as a primary driver of market-share game and profitability for our overall business!

The result of all this chaos is that vendors who don’t get channels right will lose critical time to market advantages resulting in lost market share and diminished enterprise/shareholder value.  The year of PRM becoming a legitimate enterprise software category is finally upon us.

Vendors who are not strategically focusing on how to build agile and efficient partner operations and developing a 360 business intelligence view of partner contribution should beware.

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