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Are ISVs and channel singing from the same hymn sheet?

Survey from Cloud Technology Alliance reveals misaligned expectations between ISVs and their channel partners

The Cloud Technology Alliance has published a revealing analysis of how cloud ISVs work with the channel to take their solutions to market.

The research was based on two surveys conducted earlier in the year, one which surveyed ISVs and, the other which polled channel partners. Side by side, the two reports offer an interesting glimpse into the state of relations between vendors and their channel partners.

Deadwood

Collectively, 47% of ISVs reported they receive less than a quarter of their revenues via the channel. Microsoft vendors had the most mature channel programmes, with 45% reporting between 25% and 75% of revenues coming from their partners.

Surprisingly, the survey found that channel partners were much more aggressive than their vendors when it came to reviewing performance and removing deadwood. Only 60% of the ISVs surveyed said that they reviewed and cut nonperforming partners, and only 14% said they had a systematic approach.

Partners, on the other hand, had no time for underachievement, with more than 90% saying that they ‘frequently’ conducted strategic reviews of their vendor relationships.

“The channel is extremely disciplined when it comes to reviewing their portfolios and weeding out under-performing products, which is a stark contrast to what we have seen on the ISV side,” the report said. 

Targeted relationships

When it came to recruitment, there was near universal agreement amongst both ISVs and partners that broad-based partner recruiting programmes were not the way to go. Channel partners stated that they generally evaluate new solutions based on customer demand.

Nearly 40% of ISVs said that customer recommendations were the most important factor in forging new channel partnerships.  

“The best ISVs focus on selecting which channel partners to strategically recruit,” said the report. “Microsoft ISVs, in particular, focus here, with 60% responding that ‘Selective recruiting of partners’ is their most relevant tactic for recruiting.”

Channel conflict

Channel conflict was unsurprisingly an area that revealed varying degrees of misalignment between the two sides. Partners said that channel conflict was a top concern, whereas the majority of ISVs didn’t perceive much conflict taking place.

For example, the majority of channel partners surveyed said that lead generation should be the responsibility of the vendor and was an important component of how they judged a partnership. And the majority of channel partners believe that they should be responsible for customer renewals, while only 38% of ISVs gave their partners any power over customer renewals.

“The last area where there can be better alignment between ISVs and their channel partners is the investment in channel management resources,” the report concluded. “ISVs believe that having dedicated partner management resources is not a factor in how the channel selects vendors, whereas channel partners place a lot of emphasis on this.”

 

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