Keeping Partners Together

Suppliers tap PRM to boost channels.

As any manufacturer can tell you, running a distribution network with lots of resellers and other channel partners is a bit like maintaining a harem. You expect and demand complete fidelity and dedication from all your partners. They, in return, need to feel like theyre getting something out of the deal.

These days, keeping that kind of channel partner community together, happy and productive, is no easy task. For one thing, competition among suppliers for the best channel partners is keen. Theres always someone out there ready to woo away one of your mates. Then theres the Internet. Many manufacturers, eager to jump into e-commerce, launched direct business-to-consumer online selling efforts only to learn too late that their channel partners felt jilted.

Now, experts say, rather than allowing the Internet to drive a wedge between themselves and their channel partners, many suppliers are attempting to use it to improve communication with and management of their channels. Specifically, theyre beginning to deploy a relatively new class of enterprise applications known as PRM (partner relationship management).

Analogous to CRM (customer relationship management) but focused on improving relationships between suppliers and channel partners, PRM offers several potential benefits, experts say, including the ability to make channel partners more productive by passing sales leads, product information and training to them more efficiently online. PRM also holds out the prospect of allowing suppliers to get a better handle on which channel partners are the most profitable.

But, experts say, implementing PRM is not easy or cheap. PRM suites from both established and startup vendors cost upward of $200,000 to license. In addition, suppliers implementing PRM will face significant integration and user-training issues. And, experts predict, many will have a challenge even persuading channel partners of the need for-and the security of-PRM.

The channel clicks

Still, many enterprises-particularly those trying to get the most out of large, indirect-distribution networks-see PRM as a key competitive weapon. Take Compaq Computer Corp, in Houston, for example. The computer giant has had a strong network of distributors and resellers for a number of years. But with competition in the PC market having grown fierce in the last couple of years, Compaqs resellers have told the company they are looking to simplify and reduce the time they must spend sharing information with suppliers, as well as giving it to them, said Compaq?s director of e-business partners, Colin House.

So Compaq last month implemented a PRM product, eChannel, from Siebel Systems Inc., of San Mateo, Calif. Channel partners use the application to get everything they need-from support to training to product information-by logging on to one extranet site. The system replaces what had been a haphazard, home-grown set of initiatives from Compaq, House said. Previously, channel partners had to log on to separate extranet sites for each type of information or service. As a result, resellers were confused, and Compaq had no integrated view of its channel partners.

Using the Web to improve communication between suppliers and channel partners is at the core of PRM. While each PRM suite now coming to market has its strengths and its weaknesses, said Karen Smith, an analyst with Aberdeen Group Inc., in Boston, most use secure extranets to generate and distribute customized leads to partners, track the progress of those leads, create comprehensive partner profiles that can be accessed upon demand from a central repository, and create commerce functions-such as online buying and selling-between supplier and partner sites.

Most packages also include analytical tools that let suppliers evaluate the performance of specific resellers.

For resellers and other channel partners, features generally include the ability to log on to the system at any time for updates on the amount of business they have done to date with a particular supplier and the ability to get immediate assistance for technical and service questions.

Some application suites are coming from dedicated PRM vendors such as ChannelWave Software Inc., of Cambridge, Mass.; Allegis Corp., of San Francisco; Webridge Inc., of Beaverton, Ore.; and Partnerware Inc., of Austin, Texas. Others are coming from vendors primarily known for providing CRM software. Besides Siebel, those vendors include Onyx Software Corp., of Bellevue, Wash., and Pivotal Corp., of North Vancouver, British Columbia.

Another manufacturer making PRM a key part of its strategy to get closer to channel partners is Maytag Corp., of Newton, Iowa. The maker of large home appliances did a 180- degree turn with its e-business strategy when it chose to implement a PRM application last year. Before that, the company was completely focused on implementing a B2C site. In fact, at the end of 1999, Maytag announced that it would start selling directly to customers through its own Web site.

Within days of that announcement, however, the company was receiving threats of "bottom-shelf" placement of Maytag products from its reseller partners if it forged ahead with its B2C strategy, said Colin Bain, Maytags manager of Internet Business Development. "They considered the move to be directly competitive with them," Bain said.

Taken aback, Maytag simply sat on its B2C plans for a couple of months. Then company officials came across a PRM suite from Comergent. Maytag officials decided to use it to retool the original B2C site into one that would encourage online buyers to purchase products through Maytag?s resellers? sites.

Now, after using the Maytag site to select everything from the model to the color of the appliance they wish to buy, customers are presented with a short list of reseller sites from which they can make the actual purchase. Bain said the Comergent application, which integrates the Maytag site with those of its resellers, also offers detailed information on each reseller, such as service agreements and plans and haul-away and delivery programs so customers arent simply choosing a reseller based on the lowest price.

So far, Maytag has rolled out the application to 3,000 independent dealers, as well as to Maytags 650 application centers around the country. The system has been running for about two months, and Maytag is seeing about 2 percent of its sales moving through it. Bain said the company expects that number to rise to 10 percent by 2004.

For Maytag, the benefits of PRM extend well beyond simply referring online sales prospects to resellers. Because consumers are still interacting directly with the Maytag site to configure products, the company is able to solidify its relationships with consumers without jeopardizing its relationships with resellers.

The advantage for partners, Bain said, is that they get new customers to their sites who could end up buying other products from those sites or from physical stores.

Pleased with the results, Maytag is planning to start Phase 2 of the rollout to include major retail resellers such as Sears and Lowes by midsummer, he said.

The earliest adopters of PRM applications have, however, met with a host of challenges, said Bob Thompson, president of FrontLine Solutions Inc., of Burlingame, Calif. For example, many suppliers said they didn?t know what they were in for when they tried to integrate partner data from their old legacy systems to their new PRM systems, Thompson said.

Some PRM pioneers have run into another significant challenge: training. Even though most PRM products are Web-based and require no special client software beyond a browser, channel partners will still need plenty of hand-holding before becoming productive PRM users.

"Never underestimate the amount of training it can take to implement a PRM solution," said Tony Batman, president of 1st Global Inc., in Dallas, whose company implemented a PRM product from Pivotal in February.

Before implementing the PRM product, 1st Global-which provides business services to independent tax and accounting professionals-was using phone, fax and its own client/server-based systems to train and support its 900 partners. On average, each of these companies has five owners and about 1,600 tax and accounting clients, Batman said. With those numbers, 1st Global was finding it increasingly difficult to monitor and measure partners performance, he said.

The PRM implementation solved that issue. It also helped 1st Global evaluate and certify partners. But managing that many partners also meant training that many partners, and that didnt happen overnight. Indeed, the company has been rolling out the PRM application to just 30 partners at a time. Each rollout takes about a month of training. In the first few rollouts, the company is also taking the opportunity to find out what users like and dont like about the system so they can fine-tune it for the next rollout, Batman said.

While PRM systems offer some clear potential benefits to manufacturers and suppliers, experts say its sometimes not so clear to channel partners why they should switch to a new, online way of doing business. In some cases, suppliers need to offer channel partners compelling reasons to embrace PRM.

Thats what Ricoh Silicon Valley Inc., in Cupertino, Calif., did when it turned to a PRM product to get a new reseller network off the ground quickly. The company was created for the sole purpose of launching a retail product called ecabinet, a centralized electronic filing cabinet for both paper and electronic documents. As a new company, RSV did not have a single reseller partner to begin with. "We had to ask, how do you go from zero to 300 partners in under six months?" said Janice Quelch, RSV?s senior director of worldwide marketing.

RSV officials hoped that using a PRM application from Allegis would help automate the sign-up process and get resellers on board more quickly, Quelch said.

She said the company also believed that using a PRM application would be a much faster way of distributing and tracking leads, as well as distributing product, training and marketing information. That was particularly critical because RSV was selling a totally new product in a completely new product category that its resellers were unlikely to have ever heard of.

Before the company could make PRM work, however, it had to give resellers a reason to use the system. One way RSV did that was by generating customized leads for resellers and making them available only through the PRM system. Resellers that signed up for the program received customer lead notification through e-mail. To accept the lead, the reseller had to log on to the system, Quelch said. Once a partner starts pursuing a lead, RSV can use the system to track the status of the leads. Partners received more leads based on the number of closed deals they reported through the system.

So far, getting channel partners to use PRM seems to be paying off for RSV, Chief Technology Officer Kurt Piersol said. The goal of signing on 300 partners and four distributors within six months was reached via an e-mail blast, and "surprisingly, through word of mouth," Piersol said.

That had, in part, to do with how quickly RSV got the software up and running, he said. To build its own extranets to coordinate and communicate with resellers alone would have taken the company several months and put the partner initiative way over budget, he said. Instead, using the PRM application, it took less than three months for the partner program to go live.

One way to improve the chances channel partners will buy in to your PRM strategy, experts say, is to resist the urge to roll out all the features of a PRM system right away. As thrilled as you might be with your new PRM solution, said Sheryl Kingstone, an analyst at The Yankee Group Inc., in Boston, partners might be overwhelmed. Remember, yours may not be the only system a partner is being asked to learn. The best approach, Kingstone said, is to focus first on where you?re having the most trouble with your partner relationships. If its in distributing leads, you might pick a vendor that has strength in that area. Said Kingstone, "Pick your pain point first and start there."

If you do, experts say, PRM can help you keep your channel partners on the same page and under the same tent.