I often work with clients to help them improve the performance of their channel programs. When speaking to channel managers and their partners about their experiences and preferences, it often surprises me how much of a gap there can be between perception and reality or even adherence to best practices.
Over Q2 and Q3, 2015 I had the pleasure of working with the Cloud Technology Alliance on a research project collecting data from over ninety-two cloud ISVs and solution partners. We created a definitive set of data on how ISVs go to market through partners, and how cloud solution providers select and work with ISVs. (Click here is you haven’t yet read the research.)
One surprising area of difference between ISVs and their channel partners is how they manage their portfolios of partners. You would expect ISVs to be run a tight ship when it comes to selecting, managing and then pruning their channel partners? Wrong. Only 14% of the cloud ISVs surveyed said that they "review and cut non-performing channel partners systematically." But more than 90% of the cloud solution providers surveyed said that they “Frequently” conduct strategic reviews of their vendor relationships.
The reason why these two parties differ in how they manage their portfolios of third-party relationships can be traced to how strategic partnering is for them and the number of partnerships they manage at any one time. According to the Google Apps for Work partners surveyed, they receive more than 50% of their annual revenues from the resale of recurring cloud services, while Office 365 solution providers are currently receiving 39% of their revenues from recurring cloud services but expect that number to grow significantly. Compare that to 47% of the ISVs surveyed who said that they receive less than 25% of their revenues through the channel.
Partnering is more strategic for the cloud solution providers. The average Google Apps for Work partner works with fewer than 5 vendors at a time, while the average Microsoft Office 365 partner can work with anywhere from six to ten vendors. Compare that to cloud ISVs, where one third of those surveyed said they work with more than 25 channel partners at any one time (and 9% said they worked with over 100 partners).
So you can see that on the one hand cloud solution providers consider their vendor relationships to be very strategic, while cloud ISVs can be more cavalier when it comes to managing their channel partnerships.
What is a cloud ISV to do? Treat your channel partners with the same professionalism that they use when considering and committing to vendor relationships. Refer to the report for more information on how cloud ISVs and solution partners can work together.