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Newsletter Home > February, 2007
We don’t need no stinkin’ badges -- or do we?
By: Ken Presti
Much of relationship building in today’s business world involves understanding where people and organizations fit in: who they are, what they’re good at, what they’re likely to cost and a host of similar things. We do this through a variety of clues, both subtle and not so subtle.
For example, if you recognize the “stinkin’ badges” reference in the headline, I can get a sense of how old you are and maybe even assume that, back in the old days, watching “Blazing Saddles” was more fun to you than, say, hanging out with the chess club kids.
Differentiating themselves as one “type” or another also has been a challenge for resellers, integrators and other channel partners who sell you technology and make it work. Initially it was simple. Resellers pushed boxes. Value-added resellers built something additional into their value proposition. Integrators mostly functioned at the high end of the market and could do virtually anything, based on the variety of task-based teams on their payrolls.
Over time, technology vendors have introduced a vast array of authorizations, certifications, specializations and other designations. All of these “-ations” are essentially badges that fall into two broad categories. Some pertain to the individual’s sales training or technical aptitude. Others pertain to the channel partner itself, and usually things such as sales volume, specific areas of training, advanced training, numbers of specific types of staff members, service capabilities, demonstration facilities and basically anything else human creativity might conjure up.
Unfortunately, many vendors do a spotty job of explaining to customers what these badges are intended to be, how the partners earn them, and what sorts of vendor access and other benefits they get when they meet that higher level. This is important information for customers because the badges offer clues to what the partner sees as its primary business and how that business will evolve to meet industry change. As technologies become more complex and more integrated, it is helpful to understand which channel partners are best aligned with your own technology vision. Furthermore, badges provide vendors with a somewhat objective means of determining the best fit between the sales lead and the chosen partner because they demonstrate investment and commitment – and, usually, competence.
One word of caution, however: Keep in mind that past performance and good rapport trumps all badges, unless you are moving into an area clearly beyond the skill set of the incumbent partner. Even then, the incumbent might make useful recommendations on how best to proceed. Badges become especially important when selecting a new partner, either because your business is new, you’re dissatisfied with the old partner, or you’re moving into a geographical or technology area beyond the incumbent partner’s reach.
Take a look at the Web sites of your key vendors and see if they do an adequate job of describing their badges. If not, perhaps they need to hear from customers how important the information really is.
Presti is president of Presti Research & Consulting, Inc., which specializes in go-to-market solutions for technology companies. He can be reached at ken@prestiresearch.com.
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IT Leasing: A New Horizon?
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According to an old saying, if it floats or flies, you’re better off renting. That philosophy is now more often applied to IT solutions as channel partners, vendors and distributors, look at creative new strategies to move advanced technologies, particularly in the mid-market. One recent example would be a new financing program launched by Cisco Capital and Ingram Micro. The Cisco Express Leasing Program is designed to streamline the process through which channel partners can credit-approve customers, obtain lease quotes, and submit the related documentation. The system is based on online tools combined with a dedicated team of specialists at Ingram.
“Leasing volumes in the commercial space are up 80% year over year,” said Maryann Von Seggern, director of worldwide channel development at Cisco Capital, the wholly-owned finance subsidiary of the San Jose-based networking vendor.
The Cisco Express Leasing announcement is consistent with ongoing Cisco efforts to expand its position in the SMB/commercial space, where price sensitivity has hindered the vendor from building the market share dominance for which it is famous in the Enterprise. By offering a lease option, channel partners can provide customers with lower up-front costs in exchange for a monthly leasing fee that includes hardware, software, and professional services.
“Leasing helps our customers manage their technology lifecycles,” explained Von Seggern. “Instead of investing in the technology, they pay as they go. And that allows them a vehicle to refresh more often without having to bear the full cost out of pocket.”
Ken Bast, Ingram’s vice president, networking, security and mobility, agrees. “An IPT installation might be a little bit expensive for an SMB. Leasing makes it easier.”
But leasing is not without its downside. “Partners are sometimes concerned that it makes the sale take longer, but it’s worth it because the customers can often buy more,” according to Bast. “If somebody’s got a $50,000 hardware budget, it’s hard to sell them more than that. But if it’s on a lease, we can usually develop payments they can digest.”
And while the leasing contract can make the relationship “stickier” from a customer retention point of view, Bast admits that leasing also introduces a variety of back-office obstacles. “When you lease something, you don’t usually get paid until the whole project is signed off. If this is an advanced technology install that takes three months, it can be hard to get money out of it quickly.
To add extra encouragement, Cisco offers a variety of incentives, according to Scott Faxon regional vice president of Digitel, an Atlanta-based partner that includes leasing in approximately 25% of its transactions.
“Cisco has incentives for both the partner and the end user,” he said. “For example, if a deal is financed through Cisco Capital, there is an additional upfront discount available for up to 24 months. This way if there’s any add-on business coming in during the next 24 months, there’s a more aggressive price. There’s also a payment schedule in the SMB space where I can receive up to 80% of the value of the project on delivery of equipment. Customers can also get SmartNet [service packages] with zero percent financing options.”
The recent Cisco/Ingram initiative is designed to provide a venue for one-stop shopping as relates to leasing deals. Under the plan, Ingram Micro financing specialists work with the channel partner to ascertain whether leasing is a solid option for the particular customer. If it is, the team develops a quote, completes an application with Cisco Capital, and forwards the information to the customer.
When the lease comes to term, the customer can either negotiate ownership or return it via the reseller.
Though the Express Leasing program is open to the full range of Cisco products, software and services, partners must still have the necessary certifications in place in order to sell them. Financing terms for Cisco products are more favorable than the terms for non-Cisco products included in the same solution.
Leasing: What to Look Out For
Ramsey Dellinger is no stranger to the leasing business. As founder and president off MSP OnDemand, LLC in Hickory, NC, Dellinger has been working with leasing and managed services models since [insert year]. While reading the fine print is important in any business process, he cautions that many leasing contracts have a number of potential land mines. And customers hold the channel partners responsible for them.
“I’ve researched a ton of leasing contracts and I am appalled by some of the things I’ve seen. They might charge interim rent on the equipment before it shows up – which can be a substantial amount of money if you’re talking about a long term project. Or they reserve the right to do an on-site inspection of all the equipment, 7x24, which is real intrusive.”
Other potential problems include interest on top of late fees, made worse by increased interest rates as a further penalty for late payment, or the requirements/interest rates at the time of return may be vague. The fine print may also require returning the equipment in the original shipping container or face a monetary penalty.
“People need to set accurate expectations about the deal, and they sometimes don’t cause they’re scared to death they’re going to lose the sale,” Dellinger added. “Then we reach a point where we’re not getting any more money from the client because they’re paying the finance company, but the expectation of the client is I’m still paying you.”
All this notwithstanding, Dellinger clearly views leasing as an important opportunity for channel partners who take the time to learn the proverbial ropes.
Ericcson’s acquisition of Redback Networks signals a move into broadband and edge routing that might bring about some interesting possibilities for channel partners working in the service provider space. As the market for broadband and Internet-based telephony, television, and mobility services continues to grow, the need for skilled partners essentially speaks for itself.
But with the ink barely dry on the $1.9 billion transaction, most of the details on this portion of the strategy have yet to be developed. “We will be needing channel partners – especially integrators,” said Ericsson wireline director Ragnar Erkander, who added that additional details will be forthcoming in the March time frame. Erkander pointed to last year’s acquisition of Marconi as further evidence of Ericcson’s plans for market expansion.
In October, the company reorganized itself into three operating units. Network Systems is traditional wireline and wireless technologies that make up the lion’s share of Ericcson’s revenue. The offerings of both Redback and Marconi are managed in this unit. The second group is the global services business. The Multimedia unit is built around partnerships for content development, emerging applications, and new revenue-generating opportunities for the operators. The company’s more traditional enterprise business and roll that in under multimedia.
The third unit is Global Services which, according to Ericsson, already accounts for approximately 25% of revenues. Offerings include network design, deployment management, hosting, etc.
Cisco Adds ScanSource Named Specialty Wireless Distributor by Cisco
Cisco has added ScanSource to its list of authorized distributors in the United States as a Specialty Distributor for mobility technologies in key vertical markets. The move provides ScanSource resellers with access to Cisco’s wireless access points, controllers, network management software, security, switching and routing products, as well as the vendor’s portfolio of services, including training, sales and technical support, marketing assistance, etc.
Linksys Appoints Rod Keller Vice President, Worldwide Sales
Linksys, a division of Cisco Systems, Inc., appointed Rod Keller as vice president of its worldwide sales organization. Keller has more than 25 years experience in the technology industry and more than 10 years in executive and general manager sales roles. Most recently Keller served as President and CEO of Augmentix Corporation, a server-based solutions company serving the military, industrial and telecommunication industries.
Other roles include various senior executive positions in management, sales and product marketing at Trilogy Software, Toshiba, Epson, Compaq and Dell. He has also been responsible for ventured backed start-ups, starting new business units, product planning, policy determination, distribution strategies and for sales revenues of over $2 billion.
Nokia and Siemens Strategy Forthcoming Soon
Nokia and Siemens are scheduled to begin sharing the proposed product portfolio plan for the future Nokia Siemens Networks this month. The transaction has been given antitrust approval in the European Union and the United States, and the new company's global mode of operation and organizational structure have been defined. The planned merger to create Nokia Siemens Networks is expected to close in the first quarter of 2007.
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