PRM: shrewd investment or another fad?

Customer relationship management (CRM) projects have tended to promise much but deliver little in the way of returns on...

Customer relationship management (CRM) projects have tended to promise much but deliver little in the way of returns on investment. So will the new strain of partner relationship management (PRM) software go the same way?

As if customer relationship management (CRM) wasn't enough to tie up organisations' budgets, a variation has now emerged in the form of partner relationship management (PRM) software. This time the systems are designed for companies that sell extensively through indirect sales channels, and which have additional customer processes they need to automate, such as lead distribution and the management of co-op marketing. Yet with CRM projects failing at a rate of 80% according to Gartner, how can resellers be sure that the PRM they're now being encouraged to buy into will have any more success?

The reason CRM projects have struggled to provide acceptable returns on investment is that they have bitten off more than they can chew. Technology has been thrown at poor existing business processes, and at badly maintained and unwieldy prospect databases, compounding the chaos rather than taming it. It's not so much that the software itself has failed, but that it has been applied without any real planning. If companies investing in PRM systems don't heed the lessons learnt here, the chances are that these projects will go the same way.

"PRM systems need good information in them to make them work," notes Julian Dent, MD at VIA International, an IT channels consultancy which has been tracking the PRM phenomenon for the last six months. "The trouble is, vendors' information on the channel is so poor, and dispersed across disparate systems, that there's a lot that needs to be done first. Putting in the PRM software is typically only 10% of the job."

Yet PRM, still in its early stages in the UK and Europe, has met with initial enthusiasm from IT manufacturers. AMR Research claims indirect sales will soon account for 70% of IT business, so providing a better service to channel partners makes as much sense to IT manufacturers as CRM does to consumer customer management.

The reason analysts believe PRM systems may soar where CRM projects have taken a dive is that PRM deals with a finite customer base. It helps too that the software projects, being typically an add-on to vendors' existing extranets and CRM systems, don't take nearly as long or cost nearly as much to implement. VIA puts the cost of a basic PRM implementation at under £100,000, and the timing at just 90 days. Several PRM systems are also available on an ASP basis, making the technology implementation a no-brainer.

Resellers needn't even be aware they're entering a PRM system, since they typically log on to a vendor's Web site in the way they've always done to access product information. The PRM dimension simply involves a greater element of data recording. Instead of partner Web sites being used passively by resellers to collect product information, the idea is to use them more proactively and strategically to close more business and present a united front and more complete solution to the customer.

Get your PRM priorities right
Typical PRM priorities for vendors include:

  • Partner profiling

  • Lead management

  • Targeted e-mail/Web communications

  • Incentive funds management

  • Literature fulfilment

  • E-commerce

  • Training

Early users in Europe to date include 3Com, Cisco, Compaq, Oracle and Microsoft. Yet very few vendors have tackled all these elements. Partner profiling, lead management and literature fulfilment tend to be the first priorities.

Compaq takes its time
Having the luxury of learning from mistakes made with CRM, Compaq is taking its time over rolling out PRM to its channel. It gained the functionality when it upgraded its CRM system to Siebel 2000. (Although there are specialist PRM vendors - eg Allegis, ChannelWave, Partnerware, and Foundation Network in the UK - most of the major CRM software companies now offer PRM modules as an extension of their existing systems.)

Compaq's first goal is to improve its channel partner database, encouraging channel partners to provide greater levels of information about their value-added activities. Channel director Mike Morgan, who notes that these activities are part of a wider channel restructure for the company, admits that the data gathering and categorisation alone will keep the company busy for the rest of this year.

The underlying aim of the Compaq PRM is to improve communications with the channel. "Our business has become so diverse that we now need to focus the right information on the right people and in a timely fashion. The new system gives us greater granularity so we can better target our activities," Morgan notes.

Such targeting will benefit loyal reseller partners as much as it benefits Compaq in being able to identify these companies more easily. Morgan concedes that, as Compaq's channel activities become more visible to the company, it will shower more rewards on the top performers. "It's fair to say that those who invest in a strong proposition around Compaq products will be rewarded appropriately."

Given that resellers will be required to spend time sharing information about their own marketing and sales activities, this could pose a problem. While high achievers will be keen to show off their sales activities to their closest vendor partners, other resellers may not be quite so keen to expose their sales data in case they dig their own graves.

Maintaining your own customer base
While Colin Grace, head of Oracle applications at independent systems provider Compelsolve, claims his company has already benefited from information provided through Oracle's year-old Product Lead System, he is reluctant to share information about leads generated by his own staff. "We'd need to know who was seeing this information and why. We are independent so an initial enquiry about Oracle could lead to a sale of SAP if it's better for the client." The suggestion is that Compelsolve wouldn't want Oracle then trying to convert this into an Oracle sale, which Grace fears could happen if the lead was registered on the Oracle Web site.

He reports that Oracle's lead distribution system is expected to extend into co-op marketing management within the next six months, but notes that Compelsolve now has to migrate from its existing SAP marketing management system to the Oracle system to take full advantage of this. Grace claims he doesn't mind doing this, because it will make prospect categorisation and automatic database updates a lot easier if the two companies share the same internal systems.

Yet, while this is fine for Compelsolve which does a lot of Oracle-related business, for other resellers with a wider range of vendor partners, it will be impossible to match everyone's internal systems. Since few resellers have the time or inclination to update information on two systems, integration between their existing customer databases and those which form the basis of a vendor's PRM system is likely to be a critical factor in the success of this market.

Oracle, which has a lot of catching up to do when it comes to courting the channel, has provided all the right incentives - heavily discounted software, free consultants' time, and the promise of higher partner status at the end of it all. As analysts point out, resellers cannot be bullied into putting data into these systems, unless this was made a criterion in the initial terms and conditions of the relationship, so the rewards to co-operative channel partners must be obvious.

Incentivising users through PRM
3Com, one of the more advanced users of PRM in Europe, now offers event registration, marketing aids, e-learning courses and discounted access to Web tools through its Partner Access Web site. This classifies users by role in the company as well as market focus, and tailors information and communication accordingly.

As well as discounts on tools, resellers can build up Web "dollars", like Air Miles, and put them towards training or marketing. James White, head of international channel marketing at 3Com, claims resellers are responding well to the system (which he notes is just one way of accessing 3Com - resellers can opt out if they want), with "thousands" of resellers accessing the Partner Access Web portal each month across Europe. More PRM functionality will be added this October.

Yet some resellers don't have the patience for PRM and feel good relationships can't be automated. Says Glenn Morrison, general manager at hardware and peripherals reseller Upgrade Options, "I do accept the positives behind identifying business processes but surely if you want to be successful in business you work with your suppliers to create the most beneficial trading relationship. PRM, CRM - what's next? PYS (pay your staff), PYT (pay your tax), or MAP (make a profit)?!"

Danny Williams, head of product management at voice/data integrator Telindus is similarly dismissive: "We have all the time in the world for partnerships, but traditional partner relationship management is not a mechanistic three-letter acronym. It's the art of connecting people who share a common business aim - not a system."

If PRM software can take the pain out of this, though, there could be something in it. Certainly the IT market is currently so competitive that, whatever role PRM systems might play in exposing resellers' weaknesses, if channel companies aren't strong enough as businesses to overcome issues about sharing data in an age where supplier collaboration is fast becoming the only way of meeting all a customer's needs, they could be on shaky ground. As well as sending out negative signals to their partner suppliers, failure to join in could mean that their leads dry up as more manufacturers adopt these systems in an attempt to remove cost and inefficiency out of channel management.

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