Businesses across all industries are achieving unprecedented productivity gains enabled by investment in software. Gartner, IDC and others have forecasted that spending on enterprise application software, either on-premises or in the cloud, will grow from roughly $150 billion in 2016 to more than $200 billion in 2019. New software tools are enabling businesses to streamline back- and front-office operations, increase collaboration between employees and business partners, and mine insights from the mountains of data that they collect each day. These are truly exciting times.
High-tech channel managers, along with their peers in other sales and marketing functions, have a tremendous opportunity to capitalize on this wave of innovation. For decades, companies have struggled to utilize technology effectively to manage their channels. Poor data quality, fragmented systems and budget constraints hindered efforts to apply science to the art of channel management. Channel managers grappled with manual processes, difficulties measuring channel performance and an inability to allocate investment based on facts versus intuition. The good news is that many channel leaders are overcoming these challenges.
Most high-tech executives now realize that indirect or hybrid channels drive the vast majority of revenue and profits, and represent the best opportunities for growth. Consequently, they’re implementing new processes and programs to improve collaboration with their partners and the quality of their channel data. There’s an increased willingness to invest in new tools and skills to enable these programs, but now there’s a new challenge: With all of the channel management solutions that are available, where should you invest?
Any channel sales, marketing or operations leader tasked with identifying and comparing available channel management tools soon realizes that there’s no single place to find all of his options. The high-tech industry hasn’t defined a common framework or taxonomy that can be used to organize all of the available channel management tools. The challenge is further complicated by the fact that new software vendors and tools are constantly popping up. How do you keep up with all of the vendors and what they offer?
High-tech channel managers should take a structured approach to the identification, evaluation and selection of channel management tools. To get started, channel managers should follow a seven-step process to develop a comprehensive technology plan for the channel.
- Inventory current tools: The first step toward developing a channel management technology plan is to identify the tools that are already in place. Conducting a current state assessment is usually an eye-opening experience because typically most vendors are surprised by how many systems are in place to support the channel. After recently embarking on such an analysis, one leading global high-tech vendor identified more than 200 IT applications that “touched” their channel partners.
- Identify gaps and redundancies: Many vendors have developed their channel management infrastructure organically over time without the benefit of a clear vision and blueprint. Consequently, the tools that are in place to support the channel often provide overlapping functionality. Individual business units or regions often implement different tools to accomplish the same objective. At the same time, critical pieces of functionality may be missing and key channel management activities are performed manually using standalone spreadsheets.
- Clarify responsibilities and governance: One challenge that many high-tech vendors face is that responsibilities for the selection, implementation and maintenance of channel management technology are not clearly defined across functions. Before selecting new tools, channel managers should map roles and responsibilities across sales, marketing, finance and operations, and IT and define how technology investment decisions are made.
- Define and prioritize business and technology requirements: After conducting a gap analysis (step No. 2), many high-tech channel managers find multiple issues that cannot be addressed simultaneously within budget constraints. It’s important to prioritize business and technology requirements based on the strategic priorities for the channel. For example, if a primary objective is to encourage partners to be more self-sufficient and independently generate demand for new solutions, a channel manager might prioritize investment in deal registration and partner enablement tools. On the other hand, if the channel manager’s goal is to reduce channel costs and eliminate unnecessary or inaccurate incentive payments, she might prioritize investment in channel data management and inventory management tools.
- Ensure interoperability and data integration: Many vendors struggle to overcome challenges created by “stovepiped” channel management tools. When channel management tools are not integrated, data quality and latency issues emerge. Channel managers should ensure that any tools that are put in place utilize application programming interfaces that make it easy to share data with other systems and enable creation of a central channel data management solution.
- Identify investment requirements and the supporting business case: Inevitably, requests for additional investment in channel management infrastructure will be met by some with questions and, in some cases, skepticism. Unfortunately with many high-tech providers, channel issues and performance drivers are still not widely understood. Channel managers should comprehensively identify the costs, expected financial benefits, and the risks and dependencies of any channel management technology investment before requesting funds.
- Develop a channel infrastructure blueprint and implementation road map: Channel managers need to clearly define their channel management technology strategy before investing in new tools. A channel management technology plan should include a blueprint that identifies key business requirements, a summary of IT needs and a road map that outlines how fulfillment of those needs will be sequenced.
No doubt the number of vendors and applications to enable channel sales, marketing and operations will continue to increase in the coming months and years. It will be more important than ever for channel managers to clearly define their channel management technology strategy, develop comprehensive technology plans and stay on top of the industry trends.