Channel Partner Contracts: Things to Consider

November 3, 2010 - 0 Comments

I love a catchy title! No. Seriously. I really do.

But certain things in business are worth reading, even if you know they’re not very exciting, and you just spread a fresh coat of paint and were hoping to sit back and watch it dry. Channel partner contracts are especially likely to be so excitement-challenged, but don’t let that unfortunate tidbit lull you into a false sense of security. After all, whether we’re talking about battlefields or legal contracts, landmines are never intended to be all that noticeable.

For the most part, the objective is to figure out whether there’s a fair balance between what you’re paying and what you’re getting. And while that might sound brutally obvious, keep in mind that contracts for services can sometimes be more than a little vague. So somewhere right now, a company like yours is paying for services they’ll never really need. Somewhere else there’s a guy who thinks he’s got a great deal, but will get a rude awakening when he learns what services he’s not getting; or how long he will wait to receive them. I guess he didn’t read the fine print.

The contract will likely fit into one of four buckets. It could be a specified project for a set fee. It could be service on an hourly basis, as used. It could be on an ongoing retainer. Or it might simply put a master agreement in place that governs the more specific engagements that will be determined later. Each has their own place and level of usefulness relative to the circumstances. So the best option for your company will depend on the task at hand, your resource level, and the degree to which temporary service interruptions impact your ability to keep the doors open.

Beyond that, ask yourself if you can determine what’s really covered in this contract. Does it accurately describe what services or products they are providing? Are you working exclusively with the channel partner, or do you have to go to the manufacturer for certain issues? If so, what are they?

How soon will they promise to respond when something goes wrong? “Right now” will always be the feel-good answer of the day, but “right now” is also the most expensive answer, so you’ll have to balance speed with your budget and needs. In actuality, of course, response times are measured in hours, if they’re covered at all. Throw in the term, “service-level agreement” during this part of the discussion so they’ll know you’re not a rookie.

And who’s doing the work, here? Are they doing it themselves? If not, who is the subcontractor, and what are their qualifications?

In what ways do they limit their liability, and do you think those terms are fair?

Is there any kind of exclusivity, expressed or implied? How will they keep you apprised of what changes are made to your systems. While that might seem like more information than you need, it’ll come in awfully handy if you ever want to move to a different channel partner.

Running a small business usually requires that we do a lot of things in a lot of different areas. So it might be tempting to try to cut corners, here or there. But analyzing the partner contract is not a corner we can safely cut.

In an effort to keep conversations fresh, Cisco Blogs closes comments after 60 days. Please visit the Cisco Blogs hub page for the latest content.