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6 threats for enterprise channels in 2013

Channelworld India staff | May 2, 2013
A weak economy is combining with a number of long-dormant issues to form a set of challenges partners needs to watch out for.

Like Bindra Bangalore-based Archon Consulting, too, limits the number of vendors it works with. But, CEO Sachin S. Rao has another problem: Vendors who aggressively push technologies and solutions without really understanding what the customer wants.

"Every customer goes through a certain adoption cycle. It's the solution provider--who has done the due diligence and understands a customer's requirements well--who is in the best place to create the right solution. While we encourage joint sales calls with vendors, they are sometimes excessively eager to sell certain technologies. They need to see what customers can use," says Rao.

The Tier-1 Torment

The Threat: More tier-1 players are muscling into tier-2 dominated areas as their markets dry up. Tier-1 SIs leverage their larger brands, slicker marketing, and their ability to offer bigger discounts to lure SMB customers away.

For the longest time, few tier-1 players bothered with the further-from-home, SMB markets that tier-2 partners controlled--and few tier-2 partners had the gumption to poach accounts on tier-1 hunting grounds.

A tougher economy is beginning to change that. In the last six months, more tier-2 partners have found their turf being invaded by tier-I players looking for new watering holes as their own dry up.

"Many large accounts are now deferring purchase decisions. Many of the domestic counterparts of global accounts are also not very active, of late. As a result, tier-1 players are now crowding the SMB space because it's still one of the fast-growing markets in the country," says A.L Srinath, CEO of Hyderabad based Shell Networks.

His tier-2 peers agree with him. Ajit Mital, managing director of Lucknow-based Acme Digitek Solutions says, "Most large SIs are used to double-digit, year-on-year growth; nothing less than 15 percent. The slowdown is getting in the way of that kind of growth. So they're falling back on the SMB market to achieve their growth targets," he says.

Sandip Sarkar, director-sales, Sterling Infoways, believes that tier-1 expansion isn't caused by a rundown economy. "The large enterprise segment is gradually getting saturated and they [tier-1 players] see the SMB space as a promising market," he says pointing to a longer-term trend.

Whatever the reason for their invasion, tier-2 partners agree on one thing: Tier-1 SIs are bringing big guns with them.

Srinath from Shell Networks reports that he's recently lost a couple of prospective customers to tier-1 players. And those that haven't been snatched are in danger of being lured away by tier-1 players, who use their deeper pockets to trigger a price war. "Tier-1 players are able to lure customers with deeper discounts. Though we are in a position to give similar discounts to our customers, it affects our margins. For smaller players than us, it means losing a customer," says Sarkar.

 

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