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Gatineau, Québec, Canada, 2008/09/09 - More than 50% of VARs surveyed expect managed services to grow by up to 30% over next 24 months. Issues around discounts, pricing, training, marketing and sales appear to continuously arise between manufacturers and VARs according to study.
A new study published today by Channel Management International (CMI), in conjunction with Integrated mar com Corporation (publishers of eChannelLine) reports a general lack of understanding on behalf of IT Manufacturers of the business workings of their reseller channel. Issues around discounts, pricing, training, marketing and sales appear to continuously arise and manufacturers had a generally poor understanding of the business drivers of their reseller base.
These are just some of the findings from a recent study of the U.S. and Canadian technology reseller channel. Majority of resellers surveyed sold or provided services for computers and peripherals, networking, IT security, storage, email and power supply equipment and back-up, while the majority of manufacturers surveyed sold computers and peripherals, storage, networking, and IT security.
Overall, there is a general lack of understanding within manufacturers of the key day-to-day business relationships between themselves and their resellers. Many of the manufacturers polled didn’t know discount levels, growth rates of key business initiatives, etc. As an example, resellers and manufacturers were asked what they received or gave as product discounts. The majority of resellers stated that they receive a 5 to 10% discount on hardware/ 5 to 15% on software compared to the street price. On the manufacturer side, the “I don’t know” response was quite high, which was startling given that 91% of manufacturers who were polled were a business owner, marketing, sales or management employee. To a large extent this shows disconnect internally between end-user and channel activities. Most manufacturers’ internal resource allocation and marketing focus is on end-users even when they have a large component of their business as an indirect model.
“We have to start realizing that resellers are techies who own the relationship with their SMB clients. For the most part they are NOT marketers or salespeople. Thus, we have to move the marketing and sales efforts back to the manufacturers and find ways to leverage the resellers’ relationships in a much more automated fashion,” said Robert Cohen, President, Integrated mar com Corporation. “More work needs to be done on educating manufacturers on the strengths and weaknesses of resellers and how they operate their day-to-day businesses.”
The survey highlighted that Manufacturers should be spending more time with programs specialized on small resellers, given the obviously large volume of resellers under 100 people. As well, focus has to be turned to where resellers make the biggest difference … in the SMB space where they act as a Trusted Business Advisor as opposed to being a box pusher where the lowest price gets them the business.
Today, almost 50% of reseller respondents attribute less than 20% of their revenue to managed services. The numbers are still significant with 24.5% attributing between 21 and 60% of their business revenue with a managed service offering. 17% of respondents had no offering today. Of those reseller respondents who were asked if they expect that their managed service business to grow over the next two years, a staggering 36% expected it to increase by 11 to 20%. Another 19% of respondents expected it to grow by 21 to 30%.
“Small resellers have found substantial growth in the managed services area and are extremely upbeat about their revenue projections for managed services over the next two years. Manufacturers on the other hand have not taken advantage of this growth area by creating MSP solutions that can match the market. Manufacturers have to start thinking about how to ensure that their reseller partners are profitable. Managed services are a good start,” said Leigh Ann Empey, VP of Marketing, CMI.
About Channel Management International
Channel Management International (cmi-inc.ca) is a leading innovative Canadian Channel Management Company that creates sales opportunities for Canadian-based technology resellers and IT manufacturers. Experienced and knowledgeable in the Canadian market, CMI brings emerging and innovative IT security products to resellers that will differentiate them in the competitive Canadian market. CMI provides a responsive single point of contact for a range of vendors while delivering effective sales and technical support, guaranteed lead generation and customer focused marketing programs that drive revenue, shorten sales cycles and reduce costs.
About Integrated mar com Corporation
Founded in 1980 by Robert Cohen, Integrated mar.com Corporation is involved in three key areas:
• Channel Marketing: mar.com has worked with more than 350 vendors, distributors and large resellers in developing and implementing strategic go-to-market (channel) programs.
• ePublishing: a leading electronic publisher for the IT Channel, mar.com's eChannelLine Daily News provides about 100 million impressions per year. Other key ePublications include: ConnectIT - the worlds only end-user channel advocacy publication and Channel Advisor providing channel marketing tips to the IT vendor community.
• ChannelLine Advisory Council: mar.com founded and administers this group of 700 leading channel people from the vendor, distributor and VAR communities. The objectives of the Council are to look at opportunities and threats currently facing the channel and then to implement solutions that will ensure the long-term viability of this important segment.