Are You Paying Too Much for Channel Services

January 11, 2011 - 0 Comments

By Contributing Editor Ken Presti

Everyone asks this question at some point. No matter how good of a deal you’ve got, there always comes a time when we hear some isolated data point (usually a price) that makes us question whether we are paying too much for the services of our channel partner. The tricky part is that unless we now the whole story, it’s impossible to know whether we are making an apples-to-apples comparison. Here are eight things to consider:

Types of Technologies Your Company is Using

If you’re steeped in design capabilities, working with a wide range of software, and have unified communications all set up and linked to back end data bases, guess what? You’re going to be paying more than the guy who just wants email, web access, and point-of sale capabilities. And if you didn’t have to pay more, the company with the basic needs would have a right to be annoyed with their fee.

Response Times

Also known as “service level agreements, frequent readers have read my various ramblings on this subject before. In a nutshell, the faster you expect the channel partner to drop what you’re doing and come running to your assistance (whether virtually or physically), the more you will pay. If, on the other hand, your need for technology is such that you don’t mind other people cutting in line ahead of you, then you can save money.

Degree of Customization

Depending on what types of software or services you are using, your channel partner may be able to customize the various offerings to suit your needs. To the extent that they do this, the fees go up. To the extent you can work with those offerings on an out-of the-box basis, the more likely you’ll be able to save a little bit of green. So don’t forget to spend some time talking to your partner about how much customization they are doing. It’s important for everyone to be on the same page.

Training Levels of Partner Staff

Vendors hold partners’ feet to the fire on training. After all, a skilled work force is a huge factor when it comes to establishing satisfied customers. In many cases, including Cisco’s, partner profitability is closely to training levels. And training, even under the best of circumstances, is not inexpensive. First, there’s the cost of the training, itself. Then there’s the opportunity cost associated with the person being out of the field while they’re getting trained. Thirdly, once the person is trained, they are then worth more on the open market and, therefore, want a raise. The key is to make sure your partner has the right levels of people mapped to the right tasks. This way you get the right level of expertise without overpaying. This is more of an art than a science, but a discussion with your channel partner should help clarify things.

How Much Help Do Your People Need?

This is the corollary to the partner staffing issue. In other words, the more help you need, the more you’ll pay.

Number of Seats

More people in your organization, more moolah! Any questions?

Number of Sites

Is everybody under the same roof? That should help. If your people are all over the place, that can cost extra. Mobility factors into the equation here, too. But also keep in mind that a lot of the support will be delivered remotely. So that can be a useful point for pushback.

Number of Devices

This sort of ties into my earlier point about number of seats and number of sites. The number of devices is also frequently used as a handy yardstick for figuring out how much you should pay.

Ken Presti has extensive experience in channel program analysis and development.  He is the founder of Presti Research.  His company  focuses on channel and go-to-market programs and strategies in order to help our clients build successful and profitable partnerships with compatible companies.

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