IDENTITY CRISIS?

As the domestic IT services market continues to grow bigger, it has created enough space resulting in the emergence of a new breed of service companies in the Indian IT industry. The DQ Channels has been forecasting about the evolution of the tier-2 system integrators and solution providers in a much stronger avatar for a long time. If FY08 and FY09 completed the transformation of the erstwhile box pushers into solution providers, FY10 and now FY11 have marked the coming of an age of the latter as they matured to develop services as a well-chartered business strategy.

What is more interesting is the fact that most of these companies have delved into avenues that demand more market maturity and technical expertise woven seamlessly with an integrated service structure to deliver efficient business solutions for their clients. They have not only restricted themselves to SMBs, but have increasingly started addressing larger clientèle as well. The rock steady performance which defied even the ongoing global recession is proof enough of the buoyant strides the new breed is ready to take.

Doing hardware business and doing solution business are completely different ballgames. Understanding the criticality of providing solutions and services on BI or any business application for that matter, the solution providers have not only developed the required skillsets to deliver such projects but have build well-crafted business blocks around them. Overcoming the fear factor associated with all new ventures and the initial stumbling, the last two years witnessed this thriving business line to slowly pick up and now the market is far more ripe and so are the players, who are gaining better hold of the ground and maturing themselves in providing effective business solutions to their customers. But are they getting adequate recognition for what they are doing? The DQ Channels explores.

Talks have been going on over the projected market size of small-scale IT solutions and the emerging opportunities for long now. As ERP deployments top the chart followed closely by Networking deployments, both in active as well as passive phases, Disaster Recovery solutions have succeeded in creating the biggest buzz recently.

While vendors are keen on bagging the maximum number of projects whether small, medium or large-scale, the channel community seemingly, is not quite happy. Major states and union territories like Chandigarh, Arunachal Pradesh and West Bengal have performed fairly well recently in terms of the projects in the government space as well as corporate IT deployments. However, many channel partners have long been complaining about 'loss of opportunity' as a result
of disqualification from participating in state tenders on account of the revenue and certification criteria. The result is that most of the major vendors bag these projects directly or route them through big SPs or system integrators (SIs) like TCS, IBM, Wipro or Infosys. Partner training, certification or recognition of the channel partner's efforts are featured as the primary concern in the channel space now.

People we know as SPs

The channel partners, who offers the customer a complete or partial solution, both customized as well as in standard format, have been termed as SPs overtime and are known across the channel community through this term by choice.

Speaking about the business of solutions space, Ranjan Chopra, CEO, Team Computers said, “A solution provider's main focus has to be on the positive outcome of a solution. You have to see whether the solution provided by you is actually benefiting the customer or not. The orientation of a SP has to be towards customer getting benefits from the solution. He has to see, as to whatever has been promised to the customer is being delivered or not.”
However, channel partners across India have unanimously agreed upon the fact that most of the vendors are not ready to recognize these SPs in the channel space as certified SPs.

Speaking over the same, Devendra Taneja, CEO, PC Solutions said, “In my knowledge, there is no differentiation or additional recognition or reward given to partners from any brand owner in the country. You are recognized with the variety of work you do. Vendors are only interested in just selling their products.” He further added, “Customers and the market recognize you as a solution provider and I do not think any OEM differentiates between any of its partners. All one needs to do is to live upto the confidence of their vendors. As far as an OEM is concerned, he is out once you pick up his product.”

Analyzing the fact of 'non recognition' or 'no differentiation', a closer look needs to be undertaken. Although vendors may call the SPs as solution providers unofficially, there is again no differentiation for them apart from being 'certified trade partner' in tune with the vendors channel hierarchy.

The Channel perspective

Based on the strength and merit, SPs have to procure variety of products for the customer and the purchase at the same price level from the OEMs. SPs have often opined that they need to find their own core competencies and rewards from the customers and not from OEMs, as they don't have any system of recognition.

Sounding a similar tone, Nidhi Sehgal, CEO, Klassic Computech said, “We were HCL's service partners for the last 12 years. But in the last one year, we have left the service due to some personal reasons. We were giving them services in the whole of Faridabad, Palwal and even Gurgaon. We were getting only Rs 200 for warranty card for one year, which was too less; but still we were working for them. Now they came up with a new policy wherein we had to give a security deposit for which we didn't agree. HCL also wanted us to change our name, which was totally unacceptable. People know us because of our name.”
However, HCL did not comment over any of the questions raised by The DQ Channels while probing into their channel policy or the terms of trade.
Talking about the essential qualities for the SPs-one should have a qualified staff and the hardware engineers have to be well qualified. It also depends on the type or nature of the service center one is handling and backup support from the parent company (vendor). If a service provider is not able to deliver services on time, then everything goes haywire.

Saket Kapur, CEO, Green Vision opined over the factors related to HR practices. He said, “To become a successful solution provider, you have to be a technical person, as technical qualities are of extreme importance. Besides, you need to have project management skills, organizational skills, and excellent motivating skills. One should also possess a good understanding of the products or services, which has a unique standing in the market — this means that you need to have R&D and continuous innovation capabilities as well. These are some of the skill sets required to become a successful solution provider.”
However, Kapur also agreed over the accusation that the vendors are primarily concerned over selling their products rather than helping out the channel partners in an all-round development to emerge as a big SP. “Currently, most of the vendors with their channel strategies and programs encourage mainly sales and their focus is just on selling their products. It is around trading and not exactly solution providing. As such, none of the vendors have any kind of program, which encourages or supports quality selling; they aim on quantity selling, as they are all target-oriented. Vendors have actually become building block suppliers. They should consult the customers on their requirements and then offer that particular solution,” Kapur said.

He further shared, “We enjoy healthy relationship with Intel and we have been recognized as their solution partner. But in actual sense, it boils down to numbers and figures only. Today, the whole deal is based on transactions. The market dynamics is such that every vendor is vying for market share and you need to generate volumes to justify it. Solution providing is actually a slow process and it can be measured on the basis of volumes. It involves quality and not quantity, as it is project-based and also involves longer transactional cycle.”

Thinking High

The vendors on the other hand are mostly focused on the big SPs and SIs on account of the maximum business volume pouring in from these sections. Whenever questions about SPs and deployments are put forward to the leading vendors, it has been noticed that they come up with 'big names' in the software and solutions space while their 'well known channel partners' do not feature in the list.

“Cisco has partnered with Wipro, Datacraft, HCL Comnet, HCL Insys, IBM, Idea Cellular, TCS, Airtel and others. We have recently announced participation in MyCity Technology, which is a company co-invested by Wipro and Lavasa Corporation to develop India's first sustainable, intelligent and connected city. The strategic collaboration between the three companies, to build a next generation intelligent sustainable community, is based on a shared vision
of sustainable urbanization, Cisco's 'Smart+Connected Communities' initiative, and Wipro's ICT solutions and services,” said B Raghavendran, VP- Channel Operations and Commercial Strategy, Cisco India & SAARC. He further added, “As part of the collaboration, Cisco will partner with Wipro for the supply of ICT products and architecture and will propose the technology vision, products, services and solutions based on its 'Smart+Connected Communities' initiative and service-delivery platform to help make Lavasa City a smart and sustainable city in the future”

An example of the planned Lavasa City, highlights the fact of the place and status of the channel partner, the supposed SP of the vendors, which is lacking or missing altogether in this deployment.

Also, Cisco and IBM have recently worked together to deploy a first-of-its-kind unified communications and collaboration solution for IDEA Cellular. The fully IP-based solution offers rich media conferencing and integrated messaging for productive and effective communication within IDEA Cellular. The implementation of Cisco 'Unified Meeting Place' by IBM will help enable IDEA Cellular improve the way employees communicate and collaborate across the enterprise, resulting in significant productivity boost and enhancing business growth.

“To be or not to be”: The odd system of accreditation

Though some of the vendors in India do accredit their partners as SPs, AMD is one of the few vendors, which has such a system in place. Besides naming HCL and Zenith as their 'leading SIs', AMD has also named PCS and Sai Info Systems as their 'primary SPs'.

However, when it comes to SPs, most of the vendors shy away from any responses. Channel majors like HP, Intel, Dell, Fujitsu, Samsung and others shied away from any comments, with most of them not revering with any communication.

However, the question still remains open and unresolved as to what makes the SPs different from the 'box-pushers' and how do vendors categorically decide on this. Over this, most of the vendors opined that it is training and certification of the channel partners, which qualifies one as a solution provider, although none of the vendors have any official system of terming their 'certified partners' as SPs.

Highlighting the fact, Vineet Sood, Head- Channels and Alliances, Symantec India said, “We have a well-defined certification criteria whereby our channel partners are listed and enrolled. In the 'Partner Recognition Program', we have two sets of criterion- registered partners and specialized partners. All of our partners have the choice of opting for multiple specialization based on his choice and deliverables.”

“In terms of the channel partner varieties, we have the professional service partners, who provide the on-site license delivery and skills pertaining to knowledge about the product and the market. In the service provider front, we regularly update the base on a quarterly or half-yearly basis working as a 'utility-based model'. However, for handling large accounts and customers, we have the 'strategic service provider program' under which a partner is given recognition after successfully completing the tests and acquiring the skills required for handling the large accounts.” Sood added.

However, Sood opined that although Symantec does not have any official term as 'Solution Provider', clearing certain tests and acquiring some necessary skills qualifies them as SPs.On the other hand, AMD has a dissimilar system of accreditation.

“We at AMD have a different system of recognizing our channel partners. Our channel partners are accredited under AMD's globally recognized 'Fusion Partner Program'. The AMD 'Fusion Partner Program' has various tiers like 'Elite', 'Premier' and 'Select' under which we group our partners. AMD has a selected and focused set of partners, who enable and ensure that AMD products reach out to final tiers like system builder partners, commercial customers and consumers in all key markets across the country,” said P Raghuraman, Director-Transaction Business, AMD India.

AMD India has also recently rolled out its 'SMART channel program', which is focused specifically on the final tier- SI partners and system builders. Under the SMART channel program, the company has firstly listed down its key SIs and system builders, who have complete knowledge over the 3As (AMD CPUs, AMD Chipsets and AMD graphics) and help the customers get the best in class PCs which offers the maximum value for their investment.

Cisco too, following the common trend in the channel space has its own system of recognition in place enabling all categories of partners to extend their capabilities to be a provider of broad, integrated networking solutions, highly specialized solutions, or both-and rewards them for doing so. The 'Cisco Lifecycle Services' approach has been integrated to help partners successfully deploy, operate, and optimize Cisco solutions to strengthen their customer relationships and enhance profitability.

“The Cisco channel partner program certification levels are based on the number and type of technology specializations a partner achieves and reflect their breadth of skills across key technologies. By choosing to specialize in multiple technology areas that are related to core product and services offering, partners further validate their broad-based value proposition to customers. The program has four levels of certification: Select, Premier, Silver, and Gold, each with specific requirements,” Raghuraman said.

The Structure of Channels

“Partners have to fulfill the requirement of having a certain number of Cisco certified engineers, depending on the level of certification. Cisco certification differentiates a partner's business through market recognition and branding, providing recognition for technology expertise through specializations and individual career certification requirements, and validation and credibility by lending extra credibility to companies that achieve Cisco certified partner status,” Raghavendran said.

Besides having a tier-3 distribution structure in place for its range of flash business, Kingston has an altogether different approach to the channels. “We have three to four layers of partners. The Indian market is not that educated and can transform to any extent; here everybody has moved into LFRs like Cromas, Staples, etc. We still have predominantly big and small market, where we have traders, dealers, resellers, stationary shops, and shopkeepers,” said Nidhi Sethi, Product Manager-Flash, Kingston. In its four layers, Kingston has a national distributor who is directly linked to Kingston and imports the products into the Indian market. Under the ND, the company has set up regional distributors appointed region-wise, followed by the sub-distributors. Last in the channel tree are the resellers and shopkeepers.

“The main stockists for us are our national distributors and regional distributors. However, there is a huge level of channel involved in the whole process. These are the distributors, who have a strong hold in the IT market and carry the whole lot of brand portfolio. They are not SPs or SIs, they are NDs, as these guys are not into system processing or system integration. They are into distribution and they support system integrators and provide peripherals and software to system integrators at a very reasonable price for their projects,” Sethi added.

Vying for recognition

From the above stated scenario, it emerges quite clear that none of the vendors named above have any official system of terming its SPs as solution specialists, although to an extent, after rigorous training programs and certification processes, a channel partner can acquire the status of an SP, unofficial in name.
“In the current scenario, it is difficult for one to take up a single SP for any vendor as it has been proven in the past that partnership keeps on changing. The loyalty factor is a must to allot time and efforts to a particular brand or vendor. When the vendor is not looking for long-term associations how can we commit our resources to that vendor,” commented PN Prasad of Microplus Computers.

“Vendors are concerned only about the stock lifting capacity and is not bothered about our technical competences to support their products. These days most resellers prefer to pick up stocks in the market where mostly one finds the prices lower than DTP. Why go through the trouble of SP, claim process, targets etc. This makes the life of vendor very difficult as the same partner may not pick up stocks next month if he finds better schemes by another vendor,” Prasad further stated.

One of the primary problems in this sphere is the fact that most of the dealers do not have any written agreements with the vendor they deal with. All that one gets after a channel-vendor tie-up is a certificate framed as either dealer or reseller (with many varieties) which is often not renewed.“It has recently been seen that in Tamil Nadu and across India many partners of HP India have not willingly renewed their partnership with that company; a clear indication of some lapses or lag in the vendor's channel policy.

However, the primary question about the present status of SPs still remains unanswered.

According to AMD's version of SP for the company, Pattabiraman stated that a channel partner of AMD needs to be fully aware of PC technologies and understand the various elements of PC technologies with respect to the CPUs, graphics and chipsets. Moreover, they should be able to guide the customer and give them the best possible solution according to customer needs. The above said criteria qualify an AMD channel partner for the SMART channel program. Also, for Cisco, marking a channel partner as an SP (unofficially) amounts to the degree and nature of specialization that one has in place.

“Partners with a highly qualified practice in a given technology can achieve master specialization, regardless of certification level. This enables partners to deliver more complex business solutions, and the new master specialization branding provides more opportunities for differentiation,” Raghavendran concluded.
As the issue of accrediting channel partners as certified SPs continues to rage the channel space with most of the channel SPs blaming the vendors for mere 'box-pushing' or 'lack of interest in developing the technical skills of the partner', the vendors on the other hand seems indifferent to these approaches with full-fledged system of accrediting their very own SPs as partners depriving the SPs of the term and constraining them to the level of mere channel partners.

Avishek Rakshit
(avishekr@cybermedia.co.in)
(with inputs from Nivedan P from New Delhi and Revathi Raghavan from Bengaluru)