DISGUISED DIRECT SELLING

The phenomenon has become more prominent recently...

While worldwide the phenomenon of disguised direct selling has been in
existence for a long time, it has become quite prominent in the country over the
last couple of years. Even though, the vendors proclaim that they have a
partner-centric business model, they set aside ethics and deal directly in case
of a large customer account.

While on the one hand, vendors put regular pressure on parters to make sure
that the sales targets are achieved, on the other, they themselves put their
foot in the moment they see a lucrative and large business proposition.

“It is not fair on vendor’s part to sideline the partner once it sees a  large business coming in from an account.” Vipul Tanna  MD Kay Impex Pvt Ltd

Customers rejoice but partners suffer...

Though vendors pass on the benefit earned by selling direct to customers, it
is the partner who suffers ultimately. The partner works hard to build
relationship with customers over a period of time and puts in lot of effort to
develop an account. So, it is not fair on vendor’s part to sideline the
partner once it sees a large business coming in from that account.

Vendors should realize that after all they are the ultimate beneficiaries
even when business is done through partners. It is also a fact that by dealing
direct, though vendors may have succeeded in pleasing the customers, it has in
no way resulted in growth of business. It is partners ultimately, who can bring
in growth in the business.

Partners are not even given credit...

While vendors at times take away the business from partners and deal on
their own, the least they could do is to give credit to partners. However, this
is not a common case and vendors react as if it was never the partners’
business at the first place.

This attitude discourages partners to a great extent. But at the same time,
partners feel helpless as they are not left with any choice.

Partner interest levels will go down...

If vendors continue with this approach, partners would subsequently stop
taking interest in building new relationships and developing new accounts.
Vendors should realize that it is the partner who can offer value-addition and
reach necessary for the growth of the business. Partners would ideally like to
have a written commitment from vendors clearly mentioning as to what extent they
want deal with clients introduced by partners.

Under some circumstances, when partners find it difficult to execute an
order/project all by themselves, they can allow vendors to do it but not without
appropriately compensating partners for the ground-work done by them.

Majority of our business is through channels...

IBM’s go-to-market strategy is ‘business partner led’. Majority of our
business is through our channel network and our focus is on creating offerings
and developing the right channels that address the unique needs of SME
companies. We are committed to significantly increase the channel business in
its revenue yield through various routes to market. To achieve a much higher
channel participation, IBM India made fundamental structural changes like our
coverage strategy that is business partner led and channels marketing as a
discipline in IBM to look after the business partners’ needs, earlier in 2001.

“There exists a consensus between the customer, IBM and the partner, on the the engagement model for a particular opportunity.” Mukul Mathur  Country Manager, Channels and CSI IBM India Ltd

We believe in ‘customer first’ concept...

IBM believes in the concept of ‘customer first’. Our approach and route
depends on what delivers the best value to the customer. In most situations,
working with our partners brings value and benefit to the customers. That’s
when we work with partners.

In some situations, there may be a requirement for a vendor to deliver a
consolidated offering as the best value proposition. In these situations it is
beneficial to go direct.

Consensus exists between customer, IBM and partner...

At IBM, prior to engaging in an opportunity, there exists an understanding
and mutual consensus reached between the customer, IBM and the partner, on the
route to market and the engagement model.

In the case of large complex orders, they tend to have long gestation periods
and also require significant investment in time, finance and effort. The project
scope is generally divided between IBM and the partner, in terms of ownership.
This happens during the bidding stage itself. And we believe that such an
understanding is essential for successful partnering and bidding.

Also, our strategy is to develop our business partners as technology
consultants to customers. This means that we will continue to invest in skills,
in forming alliances, in executing marketing programmes to reach out to
customers with specific offerings and in doing enough to help our business
partners run a profitable and sustainable business. This is the kind of credit
that partners should be looking for which we are indeed offering.

Channels will always have a synergistic role...

Channels bring to the vendor strengths and value propositions, which are
complimentary to the vendor’s strengths and value propositions. Channels will
always have a role to play synergistically, resulting in better benefit to
customers.

In such synergistic prospects, there is significant opportunity for both–the
vendor and the channel to be successful, mutually profitable and grow their
businesses.