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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.

Bindra has reason to feel strongly. Recently, he says, ACPL received a curt e-mail from the Indian representative of a vendor informing him that the vendor'sIndiaoperations were being shut down. The note, recounts Bindra, said he could deal with the inventory as he "deemed fit".

ACPL went ahead and sold the orphaned stock bravely, but the episode was an eye opener. ACPL's always been choosy about who it works with, and it's more selective now. Bindra says it's become extremely particular about checking up on their vendors, beyond their technology, market share, and pricing strategies, says Bindra. This includes a vendor's global track record, itsIndiacommitment and vision, most importantly its partner programs and the resources it plans to allocate to enable partners, training and certification. If these aren't in place, then there is no question of tying up, says Bindra. Today, ACPL has six key vendor relationships that contribute to about 70 percent of its bottom line.

Pawan Khurana, CEO of QuantM Technologies inNew Delhiagrees with Bindra's approach. Khurana, who recently signed up to be an exclusive distributor for a messaging intelligence company, TrustSphere, says, "We will only get in if there's a semblance of trust and authority."

QuantM Technologies, says Khurana, is extremely clear about not hobnobbing with vendors they perceive as lacking in commitment to their partners. It's one of the reasons QuantM Technologies works less with vendors known to push volumes, says Khurana. These companies, he says, will insist their partners drive volumes even to the detriment of the relationship between the partner and the vendor.

Khurana also singles out a networking vendor, which, he says, needs to fix its pricing policy, an important indicator of a vendor's vision. The problem, he says, is that the vendor's official disty price is higher than that of the grey market by between 5 and 15 percent. As a result, many partners are sometimes forced to do business with the grey market. "Until the vendor works out its pricing policies, this is what most partners are going to resort to," says Khurana.

On the other hand, QuantM Technologies appreciates the way IBM, HP, and NetApp run their partner relationships. And the company has reciprocated by investing in skills to drive sales of these vendors. These three vendors contribute to about 60 percent of the company's top line and help keep its profitability up. He especially likes NetApp's commission policy on every bill of material.

Policies around pricing and commission often end up being a bone of contention between partners and their vendors with the latter normally allowing a standard overriding commission of 5 percent on disty, dollar, joint, or individual deals. "If I am not going to get my fair share why would I want to work a specific vendor?" asks a partner who doesn't want to be named.

 

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