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Sun 4 Feb 2001 04:00 AM

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Sculpting the perfect partnership

VARs looking to sculpt a niche for themselves in the market for large projects face difficulties with finance, with retaining a wide range of skills, and with getting the approval of the customers to whom they hope to sell. A solution is to partner with other VARs to pool resources and share the spoils. But that isn’t as easy as it seems.

What kind of reseller are you?|~||~||~|Imagine having a tender sitting on the desk worth a cool US$5 million, but then realising with a sinking feeling that actually, the expertise and skills that the company possesses, are not enough to fulfil the requirements for the tender. Is the first thought to sigh, reminisce about past deals that the company has been unable to fulfil due to the same reasons and then slowly tear up the piece of paper worth $5 million; or is it to reach for the telephone and dial up a number of someone that can fulfil the parts of the deal that are missing?“We know in the past there have been deals that our local partners have turned down because they have been too big for them,” says Graham Porter, marketing manager, Hewlett-Packard Middle East.Of course, the correct answer is to pick up the phone, but then the choice is between phoning a vendor that you undoubtedly know can help, or phoning another member of the channel and getting them to help. The situation is difficult, but one that, with a little thought can mean the difference between winning the tender, and giving it away to someone else. “When you look at big projects, it is very difficult to say that one partner can do everything. If you speak to the big five consulting firms, even they will tell you that they partner with someone on a project,” says Etienne Jacques, sales director, Microsoft GEM.||**||Individual cases|~||~||~|The region’s vendors would like the channel to believe that they wish their partners to partner with other members of the channel. After all, their equipment will be used. But at the same time, many vendors bid for those same tenders themselves. Not that that is a bad situation to be in. However, the way to increase the confidence of those businesses holding the multi-million dollar accounts is to prove that handholding by a vendor is not always necessary, and that channel partners can work together on a single tender.That is not to say that channel partners working together does not happen, in fact there are many instances where two non-competing channel partners have pooled skills together to successfully close and implement a deal. It’s all a matter of choosing the right partner. If for instance, one company working on a project has the networking and e-business skills required, but not the expertise to implement a CRM system, then they should find the best partner that does. “Right now, there is one example where we are working on a tender because of the standing with the account. Our partner actually asked if it was OK to team up with another partner just to increase his opportunity of winning the deal. The three of us are now working together,” says Christoph Schell, hard copy manager, HP ME.||**||Using the vendors|~||~||~|There are of course other skills, other than technical that need to be considered when choosing the right partner. “The question I think all vendors are asking, is what does the local partner add in terms of value?” says Porter. If when putting in a tender for a local telco company for example, you know that another company has contacts or has worked for that particular telco before, then the ability to open doors to that particular telco and win the deal is almost certain to increase considerably. “For example, if you talking e-government, you have to have access to government ministers. These are local networking skills,” says Porter.“We have been looking at who we should partner with. But choosing partners is incredibly difficult, we want people who add value, not people who come back to us and say, here is the request, you need to bid by Tuesday,” he added.Unfortunately, the trend in the market at this present time for putting enterprise solutions together is for the channel to invite a vendor in on a deal rather than another channel partner. Which is understandable in itself, after all there probably aren’t too many resellers that possess the financial backing required to bid for a large project, and this financial prowess is a requirement that is asked for by many companies offering the tenders. “One of the issues for the partner is, when it comes to large deals, the partner has to be financially credible because their working capital requirement for a large project may be large,” says HP’s Porter.Microsoft’s Jacques agreed: “When companies send out proposals they ask for [financial] guarantees, so by default that excludes the small resellers that don’t have the financial bandwidth.”It is however, a reason that smaller resellers are less reticent when it comes to partnering with other channel members, and hence why a number of large projects are won by a number of partners that are willing to co-operate, instead of a large reseller. “I think you see the smaller resellers partnering with resellers because they know and understand they cannot do everything. It very often seems that the larger resellers are the ones that try to provide the whole solution,” says Lars Jeppesen, managing director, ValueVAD.||**||Big finance for big projects|~||~||~|To help with financing, vendors are able to come to the rescue again. Hewlett-Packard for example, has its own bank that can secure financing for a channel partner if necessary. “We can actually arrange the finance, so will arrange big deals with the partner. I mean the partner still has to do something, but in terms of the finance, we still look at doing that,” says Porter.However, whilst vendors are more than willing to be involved in a project with a partner upon request, there are times when a vendor involving a local partner is simply not a viable option. There are a number of crucial reasons, ones that the channel needs to address in order to be included in large, local projects. The first is the lack of expertise within the channel, especially with new technology, which leads vendors to seek partners outside of the region, mainly from Europe. Local channel partners were passed over recently in a project undertaken by Microsoft for Lebanese telco LibanCell, in favour for partners from Europe. The reason being that the expertise in the local market for the wireless and WAP technology required by the telco was not available. This is a problem which local vendors wish to address, namely to improve the knowledge and expertise level of local partners to enable companies to participate in this type of project, but also because of the cost to the vendor in hiring partners outside of the region. “We try to minimise bringing in partners from other areas than the Middle East because the cost to bring someone in from Europe or the U.S. is more expensive, and we would also prefer to transfer knowledge to local partners so that we have people that we can work with in the future,” says Jacques.||**||Specialising in vertical solutions|~||~||~|One suggestion put forward by vendors to address the growing need for skilled local partners is that the channel specialise in vertical solutions such as the oil and gas industries, telcos and banks, market segments that the vendors themselves are concentrating on. “In a market where you have a lot of opportunities, moving the specialisation to the maximum level makes sense to be able to survive. In a market where the opportunities are not as large as you think, then you had better be so good and competitive that you can put your hands on enough to basically allow that profitable business,” warns Joseph Hanania, general manager for the Gulf and Levant, Compaq MEMA.“This is what some of our key partners are starting to do today. They are starting to send their people for training and certification on solutions that we need,” he added.This however, presents problems for the channel as large tenders are often tailored specifically to vertical industries, and do not provide a constant flow of projects.Unfortunately, that may mean a channel partner keeping a team of skilled employees that may only be required to work for three months of the year. On the other hand, it is specifically this type of offering that wins a partner the right to work on a project and most probably leads to winning deals in other countries in the region. It would seem that whilst no particular complications arise from channel partners working together on a project, all too often a vendor is relied upon to take control, leaving a channel that has a lot to learn from working closely together.||**||

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