Email

OK.  First I need to declare a conflict.  Although I have been on both sides of this issue, I am now on the channel side.  But perhaps this discourse will still provide you with some food for thought and you can reach your own conclusions.

There are basically 3 business models for software:

• Software developer sells direct to end users
• Software developer sells through alternate channels: Distributors, Certified/Authorized Partners, OEMs, VARs, VADs, SIs, and several other names.
• Some combination of these.

This discussion will be applicable to complex software packages.  I am not sure a case can be made to acquire MSOffice® from a reseller, unless it is several copies and includes customized training.

Alternate channels are often used “on the way up” by a vendor.  This gives them a wider sales and installation force.  Partners may have a particular cultural, national, or industry expertise, and really do bring significant value to both the vendor and the end user.  We have often been reminded by some of our largest clients that they had the opportunity to deal directly with the software vendor, but chose to use QIC because of our expertise in solving the client problems.

Sometimes when the vendor thinks they are big enough, they cut off the partners and take everything direct.  Customers are always the losers in this kind of action – often being forced to decide between their solution provider, and the software supplier.

The other, diametrically opposed model is seen very often in technology today – the vendor builds a brand by skimming the cream by selling direct.  Then when there is mostly only skim milk left, and every sale is exponentially smaller and harder, the vendor “discovers”, and embraces partners.

QIC has both kinds of relationships with its partners.

There is an inherent motivation in commerce to “cut out the middleman”.  (At Harvard, they call this “disintermediation”.)

And, in many cases, the middleman (or middleperson) does not add value.  We often book our business travel direct with service providers – I have enough experience that I can usually book a faster and more cost-effective itinerary than any travel agent we have used.  BUT, for vacations, or itineraries that use different vendors, I use travel agents who have the country and resort knowledge.

When you are considering a system that has wide ranging impact, such as a MES, PLM, ERP or Document Control System, you can also benefit substantially from such partner knowledge.  If the software vendor has any integrity, you should not pay any different price for the software whether you buy direct or from a partner – the part of the sale that supports working with the client on the solution, simply goes to a different party.  The work still has to be done if a successful outcome is expected.  Competing against your partners is not a great long term business strategy.

There is an argument that dealing direct gives the client access to the “thousands of implementation specialists” that the vendor has available.  Firstly, although there are thousands of people carrying business cards, you will probably find that a great many of them are contractors, not employees!  Secondly, the real question is “how many of those thousands actually know anything about the product I am buying?” and “how many are available for my project?”  There is a Chinese company in the MES space that advertises every solution known to man. They have bought up all kinds of software vendors.  I am told that calls to their support line often results in not finding anyone who has even heard of the product the client has installed – let alone knowledgeable support – but they do have thousands of people!

Conversely, QIC is not a huge company, but when called upon by a large multinational to deploy net contents control in over 50 plants over an 18 month timeframe, we put the teams in place with a 300 page customer-specific reference document (including customer objectives, vocabulary, hardware, software and training instructions, etc.) and executed the most successful system implementation that client had ever experienced.  By contrast, a parallel supplier with those “thousands of specialists” had trouble identifying people to assign to a very small project in the timeframe required – they were all allocated, or did not have the knowledge required!

QIC was literally reacting to client schedule changes by cell phone while at the airport waiting to go out to a customer facility.  Try doing that with a cast of thousands!

So, in my not-so-humble opinion, getting it “wholesale” in a complex business systems market is not a cost effective approach to achieving success.