Software partner veteran Terry Petrzelka, now a valued advisor and consultant to vendors and resellers discusses the top concerns for accounting technology consultants in this monthly Q&A series.
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This month, Terry addresses some of the trickier issues related to vendor/partner relationships, particularly when it comes to ending them as well as how to deal with discontinued product development.
What are the signs a relationship with a vendor or publisher is not working?
Petrzelka: Unfortunately most partners do not have a periodic process in place to step back and assess their relationship with their publisher partner. This is even more crucial in today’s world where publisher partner programs are changing significantly as partners have experienced over the past 18-36 months. Additionally, the market that partners are serving has also changed dramatically with the buyers being much more educated than before due to their own initiatives to become a more prepared buyer by doing independent research before engaging with a channel partner.
I would advise partners on a yearly basis to take a step back and assess if the publisher that they are aligned with matches their business/organizational goals. The three major questions a channel partner needs to ask and analyze are:
1.) Are we aligned with a publisher who demands too much “one time” business? I call these “volume partners.” If the partner does not have a business focused on repeatable solutions to take to market, the partner will have an almost impossible time making their model work with a publisher that demands volume to keep the margin levels required for the channel partner’s business model to work.
2.) Are we aligned with a publisher that demands a major investment yearly to stay current on their technology? If so, are we prepared to make this investment?
3.) Are we aligned with publisher that requires significant transactional investment (i.e. long and detailed sales cycles) that is so high that our business model cannot support any longer?
Channel partners need to take a hard look at the above annually. As I mentioned, the market is changing at Internet speeds, with publisher programs/partner support dramatically changing yearly. As such, it is my belief that owners/principals of the channel partner businesses do this assessment and take it seriously. If they do not, they will find their business on the endangered business list in the very near future. And, more importantly, they will see their business continue to erode in value because of their lack of attention to this major business issue.
What are the best practices for ending a partnership with a vendor or other partner?
Petrzelka: Too often as humans we want to give things another chance or extend the decision timeframe because we believe time will heal or solve a problem. Well, when it comes to personal relationships this might be the case (I emphasize might). However, in business 80-90 percent of the time it will not, in fact it will only get worse and eat up more of your time and that of your organization as you try to make it work.
When business goals do not align the best thing is to end the partnership immediately instead of fooling oneself that over time it will work itself out. My recommendation is to end it quickly.
You need to do the right thing for the clients if they are affected. This can only help your reputation in the market. You should also take the high road as the partnership is closed off.
The channel partner business is a small world, so not burning bridges or tarnishing ones’ reputation is a wise thing.
How do you address when you find out a vendor you represent will discontinue support of a key product?
Petrzelka: The flippant answer would be the partner would say “I need a good strong drink right now and, wake me up in six months.”
The first point I would like to make is if a partner is caught off-guard with this type of announcement from a publisher, I wonder how in touch the partner is with the business they are in.
The second point I make is that the key issue to deal with is the client base of the partner. In today’s world the annuity base of the clients – renewals and services – is a major component of a partner’s business model and the real value of the business. This has to be protected and preserved.
The partner needs to make sure they immediately deal with the news from the publisher and let their base of clients know that they will be getting together with each client to discuss a plan on how they will deal with this news together. These types of discussions need to be ‘one-on-one’ with each client. Part of the messaging is to assure the client that the “sunsetting” of the product will occur over a period of time, it will not be immediate, and there is no urgent need to do something today – other than to start a planning process to deal with a logical, unemotional migration path that the partner will help the client deal with.
The third point is that the partner needs to assess the needs of their client base and build out a matrix of requirements; features that are needed for their base to have in a new solution. The solutions need to take into account timeframe as well. That is, if the client wants to migrate or not in the near future or over a longer period of time.
Once this is thought through, the partner needs to look at the solutions being offered today, and more importantly, where these vendors and their solutions have their investment plans for the future. The partner needs to select an enduring technical solution, not another “here today, gone tomorrow” solution.
Ultimately, the partner needs to focus its selection process that takes into account the following:
- A new technical solution that allows them to add value as their “go to market” solution/services offering
- A functional/feature base that meets their current clients’ needs as a standalone or with IP the partner can provide
- A technical underpinning that has a long technical runway that be current for the market for years to come, and
- A partner program philosophy that matches the partner’s culture and its vision for the future of their business
Again, I hope that a product “sunsetting” announcement does not catch a partner off guard. To that end, if partners have soon to be discontinued products that they are supporting, the partner should immediately kick off planning and be ready when the publisher makes the official announcement.
The plan must deal with their client base needs/requirements being satisfied; a client base assurance message that is ready to go when the announcement is made; and the partner’s recommendation on the right new technical solution for the client and the partner’s future business. The right new technical solution also needs to be vetted to see how it meets the needs of the partner’s existing client base, has a strong visionary plan for the future and is a technology of the future, and aligned in a positive manner with the vision of the partner and the organizational goals of the partner’s future business model.
Got a question or concern Terry can address? Send it to email@example.com for our next column.