A vendor who sells directly to customers, cannibalizing its own channel, can be a partner's biggest nightmare. What makes it such a danger is that partners don't expect the competition and haven't, therefore, prepared for it. It blindsides them and before they know it, they've lost a potential deal.
That's what happened to Chennai-based SBA Info Solutions. "Some big brands are now trying to get into large accounts directly, circumventing partners who have built relationships with these customers. It isn't a widespread occurrence, but we have lost couple of our accounts to vendors," says Narayanan.
For those who believe that all is fair in a competitive market, the truth is that there's more at stake than a single sale. When vendors bypass their own channel, they not only steal a sales opportunity, but also burn a relationship it's taken years for a partner to build with a customer. And that affects future sales opportunities.
Partners say that this trend of bypass the channel is worse when billing happens in US dollars. In such accounts, OEMs can lure customers with greater discounts and can therefore wrest control of an account more easily. "They very conveniently refuse to give ORC (over-riding commission) to the partner who brought in the deal. As a result, an OEM can offer a better deal to the customer as there is no commission involved," says Narayanan.
While it's a win-win for the principal and the customer, it leaves the partner with nothing for the effort it's put in nurturing a relationship. Alarmingly, vendors aren't circumventing their channel only for large projects; Narayanan says he's observed this trend picking up even among smaller accounts.
Another growing concern for partners, says Vishal Bindra, CEO of Delhi-based ACPL Systems, is the increasing interference from OEMs during the execution of a deal.
"We are more than happy when vendors have joint sales calls with us and help us promote specific technologies or solutions. However, we don't want vendors dictating all the terms. Some of them go so far as deciding the price and the margins to be made from a deal. When they quote a lower price in order to bag a deal, they're completely ignoring the post-sales effort that's required for an implementation," says Bindra.
Vendors are also banding together partners to execute a project, without paying enough attention to level of skills these partners have. "Some vendors refuse to acknowledge the fact that a good product sold by an incompetent partner is a bigger problem. They bring in multiple partners to execute a deal without even checking whether those partners have the required competencies," he says.
Over time, Bindra has built a counter-strategy: He tends to work less with vendors who operate like that and focuses on those who consistently ensure that they don't award deals to unknown partners.
Sign up for CIO Asia eNewsletters.