Tech vendors may need to change the way they reward channel partners

By Goh Thean Eu October 27, 2016

Fundamental conflict between reward programme set-up, how vendors are telling channel partners to change
The issues of security are going up, spending will continue to grow

TECHNOLOGY solutions and products vendors may need to re-look at the way they reward their channel partners, as the current popular method may not be sustainable.

That was one of the key points shared by Canalys president and chief executive officer Steve Brazier.

"The market is changing, and it is no longer growing as fast as before.

"The vendors are telling the channel partners that they need to go into services and managed services, device as a service, and others. And yet, the vendors want the channels to be their top tiered partners, as they manage the channels’ qualification (gold, silver or bronze partner) and rebates based on the amount of resale they do,” said Brazier during his opening keynote at Canalys Channel Forum 2016 in Macau yesterday.

"There is a fundamental conflict between how the programmes are set up and how they are telling the channel partners to change their business.”

Channel partners have been a key component for tech vendors’ success. In the servers market, for example, more than half (55%) of servers sold were done via channel partners. While the portion may appear big, it is a declining portion. In 2013, channel partners did about 75% of total servers sold.

"This is something that everyone needs to look at over the next 12 months. We need to get programmes inline with business trends,” said Brazier.

Growing security demand in Asia
Tech vendors may need to change the way they reward channel partners During Brazier’s keynote, he also noted that demand for security solutions would grow over the next few years.

“In Asia, we have been late in discovering the importance of security. It has been in the lower priority state. However, this is changing,” he said (pic).

Over the recent years, the number of security breaches has increased, and more so in Asia.

A few months ago, the central bank of Bangladesh was under attack by hackers which resulted in US$81 million being stolen.

Recently, Dyn, a company that helps people to connect to websites, was a target of hackers. The attack was successful as it disrupted Internet service for major users like Twitter and Amazon in parts of the US.

"The issues of security are going up and up, spending will continue to go up, and those companies and channel partners which focus on this area will have very strong growth,” said Brazier.