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4 principles for selecting the right principals

Shantheri Mallaya | May 23, 2013
Three years ago,Sudarsan Ranganathan made a decision that some would have called, let's say, far out.

Three years ago,Sudarsan Ranganathanmade a decision that some would have called, let's say, far out.

The founder and CEO of Chennai-based Veeras Infotek decided to shrink the number of vendors the company worked with--hoping it would make his cash registers ring faster. It's a fairly counter-intuitive strategy in an industry that applauds the idea of having plenty of vendor alliances. The more vendors in your portfolio, the logic goes, the healthier your business.

Instead of plummeting, Veeras Infotek's bottomline jumped 90 percent year-on-year and over a six-year period the strategy helped the company net a CAGR 350 percent. "We are better off today because of a selective vendor alliance approach," says Ranganathan.

As solution providers look for new ways to tweak their businesses, vendor portfolio management could be just the thing they need. Less, they might find like Ranganathan, equals more. But is there a magic number of vendors you should work with? Who do you choose to work with? How do you rate your current set of partners? Which relationships should you kill? Your peers give you the answers to those questions.

Figure Out Your Magic Number
There was a time, during the era of product sales, when more meant better and having a long list of sign-ups was the norm. Solution providers, irrespective of their size, swore by this mantra. But as the Rs 70-crore Veeras Infotek shows, a lengthy list of vendor alliances doesn't mean squat when it comes to the bottomline.

Veeras Infotek had about 24 active vendor alliances before a spate of acquisitions among vendors--and the threatening moves by one of its vendor-partners--made Ranganathan decide it was time to do some spring cleaning.

At that time, Ranganathan remembers that HP had bought out Fortify, Mercury, ArcSight, and Tipping Point. Then Dell acquired SonicWall, and Websense had picked up SurfControl. At around the same time, Veeras Infotek lost a long-standing customer to the SI arm of a vendor and a competitor of sorts for Veeras Infotek. The vendor, recalls Ranganathan, sold a Cisco-Ironport solution and Cisco went ahead and backed the vendor in question--a move that set alarm bells ringing at Veeras Infotek's headquarters.

"With this deal, we realized we had to clean up our vendor portfolio to safeguard our interests against large vendor opportunism," says Ranganathan, whose list of partnerships now has 10 names.

Is 10 the magic number of vendor alliances to have? "Of course not," says Mekalai, CEO of Chennai's Chain-Sys Systems. "Each business derives its own number."

Chain-Sys Systems' number is one. An Oracle Platinum partner, Chain-Sys Systems does not feel the compelling need to have multiple vendor alliances. With 90 percent of its business coming from one vendor, this SI-cum-consultant is happy not to venture into more partnerships.

 

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