The Good, the Bad, & the Ugly of building the Channel – Lessons Learned

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dt_twitter_picture  Written by Daniel Tautges @danieltautges
CEO – Pinpoint Worldwide

“If you save your breath I feel a man like you can manage it. And if you don’t manage it, you’ll die. Only slowly, very slowly old friend.”

I started my career working in the channel, in sales and management at mega-large industrial distributors.  Later in my career I succeeding in creating global OEM and Reseller agreements that led to 10’s of millions of dollars in new business and dream exits for early stage technology businesses.  This experience set a foundation in how I think about the channel and how I have been able to build the good, while managing the bad, and avoiding the ugly.

The Good

“There are two kinds of people in the world those with guns and those that dig. You dig?

Whether OEM, Distribution, VAR, or Representative Sales, Channels and Partners should be part of the total selling strategy.  I have created channel relationships with some of the largest technology companies in the world, brand names like HP, IBM, BMC, Cisco, CA, Ericsson, BT, AT&T and NTT.  The good is that the channel can be a huge contributor your business and provide scalable revenue growth.

Good OEM relationships are characterized by the OEM owning the end customer relationship, Cx, and 1st and 2nd level support.  In OEM deals, typically your product becomes a component of a much larger solution.  OEM relationships can be a great way to build technology while building revenue.  OEM’s providing a funding source for your R&D.  OEM’s are also a direct source to market, to gain insight into customer personas, and without the direct sales overhead expense.

Good Distribution/VAR relationships are typically not white label, like OEM, and require more pull through marketing to build channel demand.  Examples of VAR/Distributors are companies like Avnet, Arrow, Gaybar, and Anixter.  They expect you to drive market demand and the VAR’s to deliver your product by attaching their service or compliment products.  A great VAR relationship can greatly reduce the cost of sales and provide access to global and vertical markets without building out local facilities.  Global Distributors are now hybrids that provide VAR like services while maintaining their traditional value, maintaining inventory, and providing credit.

Good Selling Representative channels are typically successful when there are individual’s or groups of people who are highly connected with your target customer.  I have been the most successful with these when opening international or geographic markets.  The Rep  is independent and maintains the selling relationship with the customer.  The company supports the product and provides the terms of the sale and finance.

The Bad

“..but you know the pity is when I’m paid, I always follow my job through. You know that.”

The bad part about building a channel strategy is getting started and then executing.  Building the right channel model, legal contracts, selling tools/CRM and branded marketing collateral is time consuming and can be costly.  Pricing models, localization, product support, sales overlays, and supporting assigned teams all require resources.

There are several bad challenges that can delay or derail a channel plan.  Including:

  • Building enough interest in the market so that there is demand.
  • Developing the right relationships that will deliver results is often difficult to predict.
  • Going global through channels before penetrating the domestic market can dilute cash resources.

Understanding how best to channel the product requires experience.  Make sure that the effort doesn’t turn ugly.

The Ugly

“If you want to shoot, shoot, don’t talk…

The ugly is when the channel strategy goes wrong.  The OEM’s are not interested.  The VAR’s and Reps commit to penetration and account exposure but are not delivering.  Tools, Marketing, and Ops expenses have been spent but there is little revenue to show for the time and cost.

I have been in these situations as part of my consulting practice and was able to move from ugly back to good by refocusing.  What is typically wrong is that the channel partners picked the company vs. the company picking the channel partners.  The partners were either easy to access by the company (came to them) or friends and associates that the leadership team supported.  The most important thing to do to stay out of the ugly is to understand your market and focus your efforts on the channel partners (OEM’s Resellers, Reps) that will deliver value.  Measure the effort, incentivize the results, and support their success.  All huge factors in a good channel strategy.

images_note   dunnan dun, wa wa wah

So a sales channel can be good (it can be great), it can be bad (hard to do) or downright ugly.  The lessons I have learned in building global channels are that like any approach there needs to be a solid plan, an understanding of the value of the product to the channel, measurements, structure to support, and the committed financial resources necessary to be successful.

If you would like to learn more about how I have built over $100M in channel business for technology companies while leading or consulting for global business’, please contact me at daniel@pinpointworldwide.com or visit our website at http://www.pinpointworldwide.com.

 

DCIM at a Crossroads – Is IoT the Answer?

 

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dt_twitter_pictureWritten by Daniel Tautges @danieltautges
CEO – Pinpoint Worldwide Consulting

In 2004, I joined a startup in San Francisco in the Microsoft Visio ToolSet software business.  The company had licensed visualization technology and were building a toolkit to help engineers document data center racks.  This company Visual Network Design (Rackwise) had about six people and a few thousand dollars in total revenue.  What I knew at the time was the business model they had didn’t work but what I didn’t know was that this company would be one of the early innovators in Data Center Infrastructure Management Software (DCIM).

My early days in DCIM and the Network Management Software space led to me launching Nlyte Software into the US market, as President, and then building my consulting practice and assisting in growing the software business’ of Schneider, Geist, No Limits, InControl, Optimum Path, Asset-Point, Modius, RIT Tech and Track-It.  I have been on the product development and marketing side, closed early clients and partners, worked with VC’s, advised analyst and written and executed the complete corporate plan for these and other companies.  The evolution of DCIM, the strategic interest and new emerging markets, have led DCIM to a crossroads.

Evolution of DCIM

What is DCIM?  My guess that if you are reading this you probably already have a pretty good idea, but fundamentally DCIM is the management of data center infrastructure in regards to Cooling, Space, Capacity, and Power.  IT & Network Assets (ITAM), Service (ITSM), Uptime (NMS) are all associated components of the physical management of the data center and DCIM vendors have features to support parts of this as well.

Facilities vs. IT

Who in the organization should own DCIM and why is that important?  It’s really interesting as it is different ownership at different companies.  I have seen IT own the software, facilities own the space, and HR own the budget.  It can make for a difficult and long sales cycle when HR owns the Data Center budget.  I believe right now, companies that own data centers have determined that it is core to their business.  If not, then they have outsourced or will soon move to an outsource model.  Therefore, if they own their own data center the DCIM budget is now strategic.  Strategic funding comes from the Executive level and so CEO’s, CIO’s, and CTO’s are now directing DCIM buying and architecture decisions.  This is important as selling at this level can grow into a much bigger and strategic sale.

True Story

Back in the early days of DCIM I worked closely with (my mate) Robert Neave, CTO and co-founder of GDCM (Nlyte Software).  Rob had managed a large data center for UPS in the UK so he had a deep understanding of what was needed and knew that DCIM software that existed in the market at that time had some serious deficiencies.  Rob was a visionary and I had a great time helping him bring his vision to market.  Rob and I both realized that DCIM would touch everything from IT to Facilities to Service Desk.   I think now even more.

Outsource Impacts Evolution

Cloud and Co-lo providers had a serious impact on the DCIM market as Enterprises shifted to an outsource vs. insource model.  This seriously impacted the growth of DCIM and did some serious damage to the appetite for investment in DCIM technology and killed off a few companies that were early entries.  What is happening now is interesting in that the large incumbents have de-emphasized their DCIM innovation, focusing on their traditional business, while the smaller software-only players have focused their innovation around markets that are attracting new funding.  IoT is one of those markets.  There were always IoT components in data centers, sensors for temperature, humidity, access, etc.  So some DCIM vendors have now built interfaces to support IoT data.  It’s not a far reach to now be able to manage those arrays in the context of larger upstream systems.

An IoT assisted data center workflow example could be: run this Pod (area of compute), turn on thermal imaging sensors, predict load impacts, start/stop economizer, reduce/optimize load when temperature reaches a point where set point values need to be adjusted.

Internet of Things 

IoT offers great advancement in tuning, measuring and managing but there are large challenges with areas around protocol compatibility and security.  DCIM has, for the most part, already solved those problems and the platforms modeling and predictive capabilities should be leveraged both inside the data center and now outside the data center.

The evolution of DCIM, the Executive level interest and the new emerging IoT market has led DCIM to a Crossroads.  It will be interesting to see which companies have the vision and capacity to continue to evolve in and out of the traditional data center.  The ones that do could be the ones that continue their journey beyond today’s crossroad.

To learn more about Pinpoint Worldwide and how we have solved company growth problems, helped penetrate new markets, and launched innovative technology to a global marketplace, please visit us at http://www.pinpointworldwide.com or contact me at daniel@pinpointworldwide.com