Reseller guide to vendor channel programs

With hundreds of vendor programs out there, here's a quick guide to picking a decent partner and some tips on how to sweeten deals.

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It happens all the time. A storage vendor suddenly decides that the direct sell model isn't working or isn't working for a particular market segment. And all of a sudden, middlemen start to seem like a better idea.

So what should you do if you are a reseller and a storage vendor with a history of direct selling approaches you and asks you to join its new reseller program? And for that matter, what's to like about storage vendor channel programs in general?

"There are a million variables," said Janet Waxman -- an analyst for IDC who focuses on the channel. Those variables range from program details to your goals and the vendor's goals, which may or may not align, she says.

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For Ed Gogol, director of enterprise systems for Solarcom LLC, a storage reseller based in Norcross, Ga., determining whether to work with a vendor boils down to some basic horse sense. Already representing companies such as Advanced Digital Information Corp., Brocade Inc., EMC Corp., Hewlett-Packard Co., Hitachi Data Systems Inc., LeftHand Networks Inc., Nexsan Technologies, Spectra Logic Corp, StorageTek/Sun Microsystems Inc., Quantum Corp. and Veritas/Symantec Corp., Gogol says, "Our school of thought is to seek out best-of-breed players, but other resellers will sometimes target Tier-2 companies that don't get a lot of attention simply because that gives them a chance to be important."

Gogol says your geographic reach is also important to consider so that you have the right mix within the region you serve.

Echoing Waxman, Gogol points out that any reseller relationship, especially with a new program or new company, offers opportunities to make a deal or make a deal sweeter. For example, he notes, often times you can get manufacturers to offer demonstration equipment or even specific presales engineer funding in an effort to boost its product sales. "On a smaller scale, many of the manufacturers offer incentive programs to our reps -- in our case these have to be preapproved and controlled," he says. In fact, at Solarcom, no direct cash payments to representatives are permitted, instead the incentives have to come through corporate channels to be sure they are captured for tax and record keeping purposes.

"Our management has mixed feelings on these incentives and would prefer to just get better pricing from the manufacturers or distributors rather than specific payments or prizes to the reps," he said. Of course, he added, "the sales reps enjoy plasma TV's, BBQ grills, [and]AmEx gift checks."

Erik Logan, chief technology officer of Seattle-based Pogo Linux Inc., a reseller of Linux-based iSCSI and SAN products, says the biggest challenge as a reseller in working with vendors is "making sure that marketing, sales and support all get the information they need."

Logan says most opportunities to join new reseller programs occur with emerging vendors. Perhaps they started with a direct sell model because they had no choice but their long term goal is to become channel focused.

Still, Logan said, "We like to get a few assurances and lots of specifics regarding how competition will be handled on direct deals." Generally, according to Logan, such companies have more leads than they can handle, which is why they are looking to the channel. But they still have some capacity for going direct and long term and that's a situation Logan says he stays away from. Furthermore, he notes, "Sometimes it is beyond their ability to control because it is up to individuals within the company to follow the agreement, and sometimes their own self-interest takes over," he said.

Beyond such "cover-your-backside" issues, Logan notes he also looks for a good balance between earnings potential, and the kind of hand holding and support a vendor offers. For example, he cites Applied Micro Circuits Corp. (AMCC), a Sunnyvale, Calif.-based hardware company that makes SATA II RAID controller cards and PowerPC processors optimized for storage applications. AMCC, he says, offers a good mix of profit potential and things like sales training and support. "They are probably the most proactive company that we deal with," he said.

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