June 1, 2009

Channel Speak: a.k.a. the Channel

In the IT industry vendor community, everyone talks about ‘the Channel'.  We are valued for our reach and scale, our reliable feedback on new products, and our unique ‘touch' with our customers.  But it is very difficult to adequately describe the Channel, and the buying public doesn't even know it exists.

To some extent the Channel is defined by the vendor community.  Hardware vendors channel products through system builders and integrators, and software vendors tend to partner with VARs and solution providers.  Most of the time, a company's size is a qualifier for our club; the multi-nationals (Dell, HP, IBM, etc) channel product from the manufacturers to end-users, but no one I know considers these giants peers of the Channel.  Large companies are not as nimble or agile as small companies; part of our value to the vendor community is our responsiveness and vertical expertise, which are inevitably lost at some high point on the revenue curve.  Essentially, Channel companies can be defined as entrepreneurs with vertical expertise and a willingness to go the extra mile for their customers.  Their value proposition is "we cost a little more, and we're worth every penny".

Unfortunately, we are the best-kept secret in the technology business; highly valued by the vendor community, and virtually unknown to the buying public.  We produce up to 40% of vendor revenues, but enjoy few of the benefits that come with that distinction. We deserve better pricing from the vendors - and channel specific products - but have not organized a collective action to negotiate for it.  I believe the Channel will evolve into a business entity capable of collaborating, negotiating and organizing action.  We will collaborate to negotiate for Volume Purchasing, to organize a service network and to market the Channel brand.  It will be a premium brand and our customers will acknowledge its value.

In summary, the IT Channel is a loose affiliation of small businesses founded by entrepreneurs with specific [vertical] industry expertise.  We are VARs and Solution Providers, and system builders and integrators.  We are fanatic about satisfying our customers.  We are highly valued by both the vendor community and the end-users.  Generally speaking, we don't invest a lot of time in corporate mission statements or marketing budgets.  In my experience, most of us don't have formal business plans (and if we do have one, it's the original).  We keep things simple.  We keep our eyes on the ball.  We keep our eyes on our customers.  We like direct communication and promises kept.  The Channel is not yet organized to provide vendors with marketing plans or sales forecasts.  But a Channel Network has been formed and is working to build consensus within the community.  It is not sponsored with vendor money or by any third party association.  The Channel is collaborating, establishing a consensus, and looking for new partners in the vendor community.  We will remain the same honest, reliable companies with whom you've always partnered; we'll just be more organized.

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