Building The Perfect Channel

I'm just back from The Channel Company’s Best of Breed conference, where Meg Whitman, Michael Dell and the industry’s most elite solution providers met to talk about what’s important and necessary to drive the market forward over the next 12 months.

For three days, the agenda focused on the channel and pushing forward toward a new business model designed to drive customer engagement, partner profitability and a new way of delivering computing power to business.

Michael Dell sat onstage and talked about how he has set a company goal to return to the BoB conference in the future and have the audience tell him Dell is the best partner in the business. Meg Whitman, in her address to the crowd by satellite, committed to the importance of the channel for HP and told partners HP is returning to its roots as a product-driven company with a focus on customers and partners.

The BoB conference, in just its third year, is attracting the top CEOs and industry brass because the channel is serving an even more critical role to the industry’s overall success than ever before.

[Related: CRN's Coverage Of The Best Of Breed Conference 2013 ]

Margins are being squeezed in every category of IT and the resulting pressure on the cost of direct-sales channels, let alone the need to have a deeper understanding of customer needs, is pushing CEOs across the industry to focus on the indirect sales channel. While Whitman and Dell may be the most visible champions of the need to grow via their channel, they certainly are not alone. But how do these titans build the perfect channel for the future? First and foremost, CEOs that focus on channels can move mountains inside of an organization. It takes time inside of larger businesses to turn the ship, but without the CEO’s support, no organization will be committed to success. Building the perfect channel of the future is going to be much different than in the past.

The era of back-end rebates and other traditional methods of compensation for partners is changing. As we move toward a world that holds traditional on-premise sales, hybrid cloud engagements and full public cloud sales compensation methods need to change too. Suppliers, be they vendors or distributors, are making decisions as to what their own go-to-market strategy is. Will they be cloud suppliers, enablers, brokers, or all three? Depending on the strategy, how will they manage the channel conflict if they choose to be both a supplier and an enabler?

Of course, building the perfect channel is subjective. One person’s perfection is another’s abomination. It’s always dependent on where you sit that changes your point of view. One thing is certain, and something that is being proven by the engagement, discussions and attendance at the BoB conference—partners and suppliers need to talk more and be willing to bend past business practices. This is probably the most challenging issue for the CEOs in this industry that are responsible for shifting their businesses. Knowing what to change inside of an organization, be it people, processes, compensation or organizational structure, and when to do so, is critical and tricky.

In the end, there is no perfect channel for very long because this market is continually changing. But there is a way to get very close to one, and it requires CEO leadership, a surrounding team of loyal executives that believe in the goal, and a commitment to take feedback from the field and build a business that is easier to do business with.

The BoB Conference is proving the suppliers, distributors and channel partners are all committed to focusing on the discussion.

Robert Faletra, CEO of The Channel Company, writes a monthly column on CRN.com. You can contact him via email at [email protected].