How Special are Specializations?

Amazon Consulting 2011 1

How Special are

Specializations?

Does the Value Warrant

the Investment?

Research - Executive Summary


Solution Providers Vendors

Respondents’ Profiles

Annual revenues >$5m (55%)• 50% are regionally focused

VAR and SI are two leading

business models (58%)

Large organizations• 40% >$5b

• 33% >$1-5 b

More heavily software focused• 55% infrastructure software

• 33% applications

N = 34N = 391


When are specializations important?

What is the value of specializations?

How do I get partners to invest?

What do the program structures look like?

What are the trends or best practice in specialization programs?

What are the pitfalls to avoid in building specializations?


When Are Specializations Important?


Trigger Result

Portfolio grows very broad Partners can choose their focus

Channel conflict grows Partner need better differentiation and

ways to establish customer value

Vendor needs to expand marketshare

or enter new markets/verticals

Use specialized partner skills to foster

partner-led selling

Vendor needs to foster field sales

teaming with direct sales

Partners establish credibility and

mindshare with vendor sales teams

Vendor needs to scale services

delivery

Partner gets enablement and IP from

vendor services teams, either pre or

post-sale

Breadth of Portfolio and Partners are Key Drivers


Currently 3,000 Specialized partners each with avg. 3 specializations.

Total of 30,000 certified implementation specialists (individuals)

Broad portfolio

from M&A activity

Foster field sales

teaming - access

to Partner

Business Center

(100 global reps)

Content and

competency

assessments

organized around

“Knowledge

Zones”


The End-user

• Clearly delineation of partner skills and vendor endorsement

• More alignment to their solution needs and industries

The Partner

• Enhanced market credibility

• Enhanced profitability (services attach, can charge more)

• Makes partner to partner collaboration easier

The Vendor at HQ

• Defines partner investment and loyalty; allows for clearer prioritization of support

• Helps to promote specialists to end-users and field sales teams

The Vendor in the Field

• Makes the “trusted friends” network less critical

• Gives broader set of skilled partners to work with


Creating End-User Value & Partner Differentiation

What were the biggest drivers for your company in creating a specialization program?

0% 20% 40% 60%

Make co-selling with direct teams easier

Target market penetration, leverage partners' vertical expertise

Partners investment opport. & show commitment

Allow partners to differentiate

Providing greater end-user value


Scalable Computing & Infrastructure

Oracle Solutions

Microsoft Solutions

Enterprise Storage

Services Sales Networking

Public Sector SMB Health Care

SAP SolutionsConverged

InfrastructureVirtualization

SoftwareBusiness

Critical SystemsNetwork Security

Office Printing Graphics Store Solutions

Solution

Technology

Market

PartnerONE Elite Portfolio

Focused on

creating partner

differentiation and

encouraging

solution-selling

across the broad

portfolio

Integrated set of

specializations

based on solution,

technology or

market orientation

Clear linkage of

specializations to

main program

tiering


Specializations are SpecialLess than 20% of partners hold specializations

Q: How broadly have you currently implemented your specializations program across your partner community and program structure?

< 10%

11- 20%

21 –35%

36 – 50% > 50%


0% 20% 40% 60% 80%

Partners more readily adopting emerging technologies

Better key market penetration

Easier, more effective sales teaming

Higher profitability

Increased loyalty

Increase competency

SP Vendor

Increase Competency and Profitability

V: What value do you want to create between your company and partner around their specialization investment? SP: In what ways could investing in specializations positively impact your relationship with your IT leading vendors?

Other Solution Provider

Objectives

More marketing support &

visibility – 30%

More channel program

benefits - 23%


Global Commerce

Integrated Architectures Specialization (IAS)

Focused on

increasing partner

competency around

company’s evolution

to solutions &

architectures

Aimed at increasing

partner profitability

Market, technology

and architecture/

solution

specialization

options

Specialization

requirements tied to

Silver & Gold

program levels


Most Have 3 – 5 Specializations

1 – 2

3 – 5

6+

Q: In terms of revenue, who are your top four strategic IT vendors? Q: How many specializations do you currently hold

with these strategic vendors?

http://www.brocade.com/partnerships/oems/hp/index.page


Creating better differentiation and ways to establish customer value for the

partner ecosystem and scaling services delivery for Microsoft

Competency and advanced competency across people/methodology,

technology, revenue, sales and marketing, and customer evidence


0% 10% 20% 30% 40% 50%

Doesn’t help differentiate us from our competition

Difficult to provide the customer references required

Current specializations haven’t been that beneficial

Too many employees have to earn/maintain specialization

Takes too much time

Too expensive


57% of Solution Providers Decided Not to Specialize

QSP: Have you ever considered obtaining certain IT vendor specializations but decided not to? Why did you decide not to obtain those specializations?

QV: What are the barriers that have prevented your partners from investing in your specialization program?

“Usually, the

barrier is, that it

doesn’t mean

anything to the

client”

We’re too small to

have dedicated

person for every

single product


Time and Expense are Barriers

Q: Have you ever considered obtaining certain IT vendor

specializations but decided not to?Q: Why did you decide not to obtain those specializations?

0% 10% 20% 30% 40% 50%

Difficult to provide the customer references required

Doesn’t help differentiate us from our competition

Too many employees have to earn / maintain specialization

Current specializations haven’t been that beneficial

Takes too much time

Too expensive

> $5m < $5m


Partners Specialize to Increase ProfitabilityExpect to see that return within a year

0% 10% 20% 30% 40%

Varies by vendor line

More than 18 months

12-18 months

6-11 months

3-5 months

Less than 3 months

How long do you expect it to take to realize return on investment

on an investment in specialization?How do you measure return on investment from your investment

in specializations?

0% 20% 40% 60% 80%

Higher attach rate of services to products

Better market differentiation

Increased customer satisfaction

New customer acquisition

Increased revenue

Increase profitability

Only 2% do not evaluate the ROI of their investment in specialization

ROI Metrics Time to ROI


What Partners Value

Opportunity

Investment

Brand Strength

& Demand

• Brand recognition

• Strong reputation

• Install base demand

• Financial health

• Innovative technology

• Technology vision

Revenue &

Margin

• Reasonable product

margins

• Professional & support

services margins

• Multiple engagement models

(agent, reseller, OEM)

Relationship Training & Enablement

• Technical training cost

• Sales training cost

• Staffing opportunity cost

• Formal certification

• Use of services

methodology & templates

• Limited channel conflict

• Clear rules of engagement

• Accessible partner manager

• Strong local relationships & clear

teaming processes

• Executive level support

• Chemistry and abiding trust

• Technical support

• Sales support

• Marketing support

and MDF or co-op

funding

• Field mentoring

Program

Support

• Ease of transaction mgmt.

• Automation of key program

elements

• General ease of doing business

• Demo, lab equipment & NFR’s

Business Process

Performance

Incentives

• SPIFs

• Rebates

• Promotions

• Deal

registration


Program Structures Attributes of a Strong

Specialization Program

Aligned with customer

targets & portfolio solutions

Enrollment is proportionate

to breadth of partners

Advances holistic skills of

partner (not just technical)

Distinct and quantifiable

benefits to partner, esp.

economic

Gives clear direction to

vendor direct sales team

about engagement &

support

Is leveraged through

vendor marketing strategy

Specializations

(verticals, solutions or functions)

Certification & Accreditation

(products)

Core Product Training

(sales & technical)


Technology Solutions Skills Most ImportantWaning focus on customer segments or verticals

0% 20% 40% 60% 80% 100%

By ServiceCapabilities

By TechnologySolutions

By VerticalMarkets

By CustomerSegment

Vendor SP Future SP Current

Q: In which areas of IT vendor specializations is your company

planning on investing? Q: Which areas do you have IT vendor specializations?


Many Vertical SpecializationsLimited solution provider interest

0% 10% 20% 30% 40% 50% 60%

Aerospace and Defense

Media and Entertainment

Public Sector

Energy, Chemical, Utilities

Retail

Transportation and Distribution

Financial Services & Securities

Manufacturing

Consumer Products & Goods

Telecommunications

Banking

Education

High Tech

Healthcare/Medical

Solution Provider Vendor

QSP: In which vertical markets would a vendor specialization be most attractive to you in the next 18 months?

QV: Which vertical market specializations do you offer today?


Longstanding focus on

industry solutions, especially

in the mid-market (penetration

of “general business”

category)

Committed to measuring

customer satisfaction and

client references through

specialized partners

Quality vs. quantity approach

– partners must apply to

become specialized

Five specialties:

1. Cloud Computing

2. Industry Solutions

3. Infrastructure Solutions

4. Systems Storage

5. System X

PartnerWorld Specialties


Partners Want Financial Incentives Deeper Training & Technical Support

Q: What are the most important channel program benefits you currently receive from your existing IT vendor specializations?

0% 10% 20% 30% 40% 50% 60% 70%

Early access to demos and labs

Preferred access to vendors’ leads

More lucrative sales influence/referral fees

High-profile visibility through the vendor’s outbound marketing

Promotion to a higher tier in the vendors’ program

Free or preferential technical support

Specialized sales or technical training

Eligible for higher financial incentives

Current

Expected


Misaligned Program Expectations

QV: What additional benefits are your partners asking you to provide for specializations (that you currently don’t offer)?

QSP: What are the most important benefits you expect to receive from your IT vendor specializations?

0% 10% 20% 30% 40% 50% 60% 70%

Early access to demos and labs

Preferred access to vendors’ leads

Promotion to a higher tier in our program

High-profile visibility through the vendor’s outbound marketing

Free or preferential technical support

Specialized sales or technical training

Eligible for higher financial incentives



Assess Your Need for SpecializationWhat are your real drivers?

Who’s experiencing the greatest pain or lack of value?

Define an Effective ProgramDo specializations scale your services delivery needs?

Are industry specializations significant in your business?

Determine the Value PropositionWill it increase the partners profitability?

Is the value chain (end-user, partner, vendor) clearly defined?

Evaluate Your Partners SpecializationsDo you have enough partners specialized? Too many?

What is the capacity for specialization?

Drive Field Level EngagementAre the partners investments in specialization visible at the field level? Does your field align with industry and/or technology competencies?