How Partner Segmentation Has Developed Since 2001

Here’s a partner segmentation questionnaire from 2001. I’ve taken the six major partner categories, not the whole list. This is from a genuine client example, in the software sector.

RESELL PARTNERS

• DISTRIBUTOR

• CORPORATE RESELLER

• VALUE ADDED RESELLER (VAR)

TECHNOLOGY AND SERVICE PARTNERS

• APPLICATION SERVICE PROVIDER (ASP)

• TECHNOLOGY PARTNER

• ALLIANCE PARTNER

In 2001 this vendor split their partners into two broad types, which were ‘resell’ versus ‘technology and service’ partners. And by a long, long way the most partners in their program at the time fell into the ‘reseller’ category. Probably more than 90% in the reseller category. The key resell segmentation was between distribution, and then partners who made margin on resell volume, and those that made money by adding value services to the resell. Like consulting services.

We had two big interests at the time. One was how to sub-segment the VAR group, which was large, and which added value in different ways. The other was the emergence of ‘hosted’ software, where the license sale was to the partner, and the partner sold on to the customer on a per-usage basis. We called that the ASP model at the time. There were some but not many.

Technology and Alliance partners were very large strategic relationships, with companies like IBM or Accenture.

The main partner program was in the ‘resell’ group, and program levelling was mostly based on sales revenue. So you got to become a Gold Partner by selling more. Keep this in mind, as one of the key changes we’ve seen in partner engagement models, and with IoT, is that most of the partners today are in the ‘technology and services’ category. If 90% were in ‘resell’ in 2001, today 90% are in technology and service’.

2010 PARTNER TYPES

Here’s a similar partner segmentation model for a different software vendor in 2010, so nine years later than 2001.

RESELL PARTNERS

• DISTRIBUTOR

• DIRECT MARKETING RESELLER (DMR)

• VALUE ADDED RESELLER (VAR)

TECHNOLOGY AND SERVICE PARTNERS

• MANAGED SERVICE PROVIDER (MSP)

• INDEPENDENT SOFTWARE VENDOR (ISV)

• INTEGRATION OR SERVICE SPECIALIST

There are some similarities, but things have moved on a good deal. We still have the VAR’s in there, and the Corporate Resellers have morphed into DMR, due to the fact that now the corporate resell model, making margin from volume resell, is pretty much all direct on line.

The interesting change is down in the technology and service group. Our ASP have become MSP. And that’s not just a change in name. It’s a change in delivery model. No longer is it just about ‘hosted’ software, where the license sale was to the partner, and the partner sold on to the customer on a per-usage basis. Now there are other models, like the Salesforce SaaS model, where all the software is in the cloud. Or the hybrid model where some of the software is on premise, and some in the cloud. So we’re seeing subcategories of MSP.

The ISV has emerged as a category on its own, as the vendor recognises the importance of developers who create solutions inside or alongside the vendor software platform. And we start to talk more of ISV and SI ‘ecosystems’, where non-reselling partners influence SaaS deals.

The big change I started to see at this time was the way that channel partners responded to these surveys. In 2001 a channel partner would tick one box. By 2010 they were ticking many boxes. The VAR added value by being an MSP and providing integration services. And MSP’s who had created repeatable software models from their integration services were becoming ISV’s.

This is well before the impact of IoT on technology routes to market. In 2001 less than 10% of the partners in the program would profile as technology or service partners. By 2010 more than 60% of the partners in the program were profiling as technology or service partners. In many cases as well as resell partners.

2017 PARTNER TYPES

Now to 2017. These are the partner category definitions for the 2017 Dell IoT partner program. Not the main Dell resell program, but the IoT program. You can see that the resell element has been completely torn out and exists only in the resell business. For IoT it’s all technology and services.

TECHNOLOGY PARTNERS:

• INDEPENDENT HARDWARE VENDOR (IHV)

• OPERATING SYSTEM VENDOR (OSV)

• INDEPENDENT SOFTWARE VENDOR (ISV)

SERVICE PARTNERS:

• SYSTEM INTEGRATOR (SI)

• CONTRACTOR

• CONSULTANT

You can see that MSP is completely gone too, because the whole of this model is a service model. The software is all sold as a service. And we’ve now got contractors and consultants called out. Contractors provide design and installation services.

Let’s take a moment to understand why this is the way it is.

Firstly the technology partners are organised by IoT ‘layer’. So we’ve got the device companies, that make and embed endpoints. The middleware with the OSV, and then the analytics and application companies in the ISV group. We’re going to see relatively few IHV in this program, a lot of OSV, and many, many ISV, large and small.

Second point to note is that the ISV and Services partners are levelled in the program based on their commitment to Dell, in terms of investment, skills and co-selling. They are also grouped based on the vertical end customer industry that they serve. None of these partner categories is levelled on resell revenue, because it’s a services program. IoT partner programs have no resell component.

In this 2017 IoT partner engagement model, the resell model – even for a hardware manufacturer like Dell – has been pulled out. In fact you could say that the resell model now sits, in 2017, where the ‘alliances’ model sat in 2001. Which is as a separate one to few engagement with large specialist partners. The volume program is now the services program.

The content in this opinion piece is an extract from ‘The Impact of IoT on Technology Routes to Market’, a keynote presentation by Matt Rowland-Jones of bChannels. To read more visit Matt’s webpage here.

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