Shining Stars

No vendor's growth strategy can be complete without a big investment in partner programs. And as vendors sell more product through their partners and invest more time and money in developing and improving their channel programs, the question becomes this: What are the best practices around those programs? Where are vendors investing their channel dollars and how are they working to make partners more profitable?

VARBusiness recognizes the best and brightest of the channel--70 vendors, to be exact--that epitomize what channel excellence means.

These vendors have higher channel revenue and are selling more through the channel than the rest of the VARBusiness Partner Programs Guide vendors. The channel generated more than $1 billion in annual revenue for more than a quarter of the Five-Star vendors. That was the case for only about 4 percent of the non-Five-Star players.

On the average, this year's Five-Star vendors invest just above 11 percent of their revenue in channel efforts. And that investment is paying off: About 70 percent of their revenue came from partners, compared with about 60 percent for the other vendors.

This translates to a higher percentage of both products and services being sold through the channel. For example, 88 percent of the Five-Star vendors' products are sold through the channel, while 79 percent of services are sold through partners. That compares with roughly 70 percent of products and 62 percent of services being sold through the channel for the non-Five-Star PPG vendors.

Security is a top technical priority for this year's Five-Star vendors, topping the list of categories applicable to their channel programs, followed by software, storage and services. For the rest of the vendors, software topped the list, followed by security and services.

Where exactly vendors are making their investments varies, but many are pouring cash into channel staffing, managed services and specific market segments such as SMB. One thing is for sure: Making partners happy and keeping them profitable are key to the growth of these Five Stars.

Staff And Services

SilverBack Technologies is making big investments in its channel-focused employees this year. Jim Hare, vice president of worldwide sales, says that he's working to increase his channel support and management teams. In addition, he has hired four channel-specific field engineers and a full-time trainer to help build better partner-education programs. SilverBack also completed its e-learning center to supplement on-site and classroom training for partners.

"We see close to 80 percent of our revenue from existing partners," Hare says. "And almost 100 percent of our marketing dollars go to those partners, so it's a very lucrative business for us to make partners successful."

SilverBack's philosophy is to continually reinvest in its partner program, listening to what partners want and building it around them.

Hare's partners appear to be putting the program to work and saw big success last year. He says that SilverBack's Business Builder partners almost tripled their deployments, growing their licenses by 266 percent. SilverBack is also helping partners focus on selling managed services more successfully. "We're teaching our partners how to attach and bundle services. You don't just sell a router; you sell a managed router. You don't just sell a firewall; you sell a managed firewall. We're focusing on the commodity technologies that are potentially manageable."

McAfee is another vendor that's making sizeable investments in its channel staff, and around managed services as well.

"We felt it was important to get our ratio of channel account managers to partners down," says David Roberts, McAfee's senior vice president of North American channels. "In the enterprise space, we'll have two times the resources that we had last year to call on our most precious, targeted VARs that we got to market with."

And for 2006, McAfee is investing in something new--its managed-services offerings for partners. Resources will be dedicated to helping partners understand best practices and sell services around McAfee products.

McAfee is beefing up its technical resources for partners as well. "One thing our VARs have said is that we have to get more technical resources," says Roberts. "[Those are things] such as having a consultant available to subcontract for the VAR to an end user and making a full-time McAfee systems engineer available to the VAR."

All in all, McAfee plans to increase its channel resources--personnel and funding--by 25 to 30 percent.

NEXT: Focusing on the midmarket, finding new business, recruiting national resellers and more.

Focused on the growing midmarket, Business Objects is taking a new approach to its partner program.

"Our growth strategy for the company overall is dependent on the VARs, and one dimension we're focusing on is the midmarket, as well as vertical markets," says Rene Bonvanie, chief marketing officer at Business Objects. In 2006, Business Objects will be setting aside midmarket opportunities strictly for partners.

"They will be the implementation channel for the midmarket; we are dedicating this to our partners," says Juliette Sultan, vice president of Americas marketing at Business Objects. While inside sales reps will continue to sell software, the channel will provide the implementation and support for all midmarket customers, Sultan says.

"We're aligning our inside sales force to focus on the midmarket and working with partners to develop opportunities collaboratively with the rules of engagement clearly defined," says Sultan. "We're making it clear to partners that within the midmarket, the delivery revenue will be theirs."

Oki Data is focusing time and resources on finding new business for partners. Its major and public-sector account sales managers will be mapping accounts with channel partners to identify, engage and win new business for Oki Printing Solutions, says Greg Van Acker, vice president of U.S. channel sales at Oki Data Americas. Oki Data's channel investment also will include driving profitability as the company enhances and expands its managed services, national accounts and managed print programs, Van Acker adds.

Citrix, too, is focusing on demographics, working to recruit national resellers "whose geographic footprint helps better serve larger North American customers," says Mitch Parker, vice president of worldwide channel programs and sales operations at Citrix. Education is also key to enabling partners, Parker says. "We're nearly doubling the number of field channel seminars we're holding in North America to encourage our partners to invest more in Citrix."

Partner Advice

So, what does a quality vendor program mean to partners? According to Jim Simpson, president and CEO of Omaha, Neb.-based MSI Systems Integrators (No. 166 on the 2005 VARBusiness 500), it comes down to both profitability and communication. He asks himself, "Does a vendor program allow us to take our skills, invest in their platform, protect our investment when we engage a client and ultimately make a profit through our partnership with them?"

But Simpson says he looks beyond profitability to consistency and open communication--to vendors that welcome partner ideas when making changes to programs and rolling out new products. "We are continually challenging vendor partners to get us involved earlier in the cycle of a new product launch--something IBM and Microsoft do very well," Simpson says. "Over time, the major vendors want to do more work on requirements-gathering at the client level, but as more of their face time with clients is done by partners, that shifts the partners to understanding the requirements better. They need to have a mechanism to pull the partner into the development side."

Rich Shovick, vice president of vendor relations at Oconomowoc, Wis.-based Paragon Development Systems (VB500 No. 247), has some advice for vendors: Offer rebates, which are huge, at least for his business. Shovick says his top vendor partners include Hewlett-Packard, IBM, Microsoft, Fujitsu, Philips, NEC, Intel and Panasonic. Cisco is his key vendor for targeting the midmarket. And in an ideal world, he would be able to spend those vendor business-development funds any way he sees fit and not be tied to advertising requirements or any others.

NEXT: Additional advice from five-star vendors.

Jim Hare

Vice president, worldwide sales, SilverBack

"Talk to partners, be actively involved in their business. We go on sales calls with them..."

Juliette Sultan

Vice president of Americas marketing, Business Objects

"For a partner program to be successful, there needs to be a clear value proposition that there's a market for partners to develop and that [that] market is protected."

Greg Van Acker

Vice president, U.S. Channel Sales, Oki Data

"We measure our growth based on the quality of partners that we're engaging."

David Roberts

Senior vice president, North American Channels, McAfee

"We don't scale our business without the channel."

Tim Russell

Vice President, Global Channels and Business Development, SafeNet

"Through increased emphasis on partner training, centralized access to partner sales and marketing resources, and enabling partner-led value-added services, we are growing our business."