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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.

Adit Microsys' case is not an isolated incident. About 1,500 kilometres in Bangalore, Valuepoint Systems, too, faced a similar situation with an end-to-end logistics company. Only in this time the project never closed--and the company lost the Rs 23 lakh it had invested to procure equipment for the implementation.

According to Shanbhag, the logistics company delayed the project because of budgetary constraints. "The customer stated problems with capital and, in the end, didn't even complete the deal. Everything went for a toss," he says.

Adit Microsys and Value Point Systems are just two of a number of enterprise channel partners complaining of customer projects that stretch beyond their target window, lengthening sales cycles, and creating a host of challenges for channel partners.

To those who have spent time in the channel space, the truth is that this challenge is not new. But it's grown more acute thanks to a sluggish economic climate, and a more cautious RBI. The combined effect of these two trends has made it harder for enterprises to find affordable capital to fund projects. "There are always issues of upfront capital investments. Market conditions directly impact the amount customers can spend on IT. In a gloomy economic scenario, customers backtrack on payments for certain projects due to a lack of capital," says Shah.

For channel partners this trend can bite hard. As more customers find it difficult to come up with money come pay date, channel partners, who have bills to pay, find their sales cycles lengthening and their operations gasping for cash. "Elongated sales cycles adversely affect an organization's top lines as investments have to be made upfront," says Shah.

A longer sales cycle also hurts a solution provider's bottom line. "We end up losing a lot of cash during that [waiting] period," says Bhaskar, director-technology services, Sunfire Technologies.

What's worse is that the longer a sales cycle stretches, the greater the chances a project will wither and die on the vine, as was the case with Valuepoint Systems.

"Because of that, effort is wasted. We end up losing many prospective customers and are unable to meet numbers," says Bindra of ACPL Systems.

Some of these cash-flow woes can solved by offering customers opex models. "By shifting to an opex model, solution providers can offer the same kind of products and solutions, and not force customers to shell out large chunks of capital upfront," says Shah.

To be fair, the blame for longer sales cycle doesn't rest solely with customers. Most management gurus say that the length of a sales cycle is defined by the quality of a salesperson. Presenting a solution to a customer who doesn't need it immediately, or making a pitch to the wrong person, will lead to delayed decision-making and a stretched sales cycle. "There should be an effort from the solutions provider's side to wrap a particular solution and present it to the right person on the customer side. The key is talking to a person who understands IT and not just hardcore sales," says Shanbhag.

 

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