From everyone at InfoNow, have a great holiday season!  Thanks for reading our blog, and we look forward to continuing to comment on the channel in the New Year.

Picking up where we left off in the previous post, “Can you Optimize, Part I”, following are the top ways to overcome the challenges of getting to visibility and optimization in channel sales. These points will help organizations start to think about how to get more value out of channel management.

1.)   Automation – It is financially and technologically unfeasible to effectively track thousands of potential customers, distributors, and resellers, as well as millions of related transactions, manually either internally or through a BPO service. By automating the collection of channel partner POS and inventory data, accurately identifying end customers and products, and delivering audit trails and analytics to ensure compliance and drive Insight, costs can be dramatically lowered and the problems of poor visibility and long cycle times can be eliminated.

2.)   Cloud services – Tapping into the power of the cloud. We have talked a lot about the cloud lately in this blog, but utilizing cloud applications that can be deployed 5 times faster and 50% cheaper than legacy software solutions solves resource and time/complexity challenges, not to mention mitigating risk factors. When new functionality can be delivered more rapidly, and integration with other solutions, particularly other cloud solutions, is out of the box, it drives rapid time to value and high channel process ROI.

3.)   Align internal groups with the benefits – Sales and finance are focused on solving problems around control and visibility; ensure they have real-time insight into partner performance and revenue recognition.  Top among channel operations responsibilities is to make sure that products are in the right place at the right time across the channel; provide visibility into inventory availability, days or weeks on-hand, and gray market leakage.  And marketing must have the tools to effectively manage channel programs in a claimless process that encourages partner participation and clearly highlights program ROI. The bottom line is that everyone, regardless of function must rely on a common set of timely, accurate and complete channel data, which allows them to optimize their particular business processes.

4.)   Leverage the learnings of other channel organizations -  Participate in a shared global network of channel partners.  No one company can know and understand all of the information about channel partners and relationships.  A common clearinghouse of cleansed partner and end customer data will allow your organization to move to the next level in visibility and insight.

The benefit of trying to drive toward optimization of channel operations is added visibility across channel partners as well as the control and agility to react and make better decisions about channel activities. Ultimately, to have the channel function at its best or most effective – grow revenue, reduce costs and achieve competitive advantage.

Optimize = to make something function at its best or most effective, or use something to its best advantage.

Executives are constantly looking for ways to optimize different parts of the business. Accordingly, as channel management professionals, we must ask ourselves – can we optimize?

For companies that sell through indirect channels the problem of optimization is complex. These companies face the unique challenge of not having sufficient visibility across the channel to accurately identify the end-customer, let alone who the second tier resellers are, in their sales chain. Add to that the need to manage incentive programs, correctly position channel inventory, eliminate gray market activity and address a variety of other pressing channel issues, and you face the near impossible task of intelligently and cost-effectively targeting scarce resources on the right problems to maximize channel ROI.

Following are four reasons that companies say “No, we can’t optimize” and some ways to overcome these challenges and get a step or two closer to achieving channel optimization.

Top challenges to optimizing the channel:

1.)   Resources – Budgets, people, IT support, compliance requirements. Resource constraints always top the list in any discussion about changing processes or procedures. Almost all organizations face a variety of factors that impact resources, particularly today.

2.)   Time/Complexity – As more and more companies turn to indirect channel sales to increase market coverage, accelerate time to market, and reduce direct sales costs, channel complexity increases as well.  Combine this complexity with shortened product lifecycles and increasing global competition, and you have a recipe for poor channel visibility and the proliferation of manual reporting and processes.

3.)   Unifying all stakeholders – When it comes to the channel and the customer there are always several internal organizations that have a stake in, or are impacted by, channel business processes: sales, marketing, operations, finance. How do you bring all of these groups together when looking at improving channel operations.

4.)   Where do you start? It is often times easier to maintain the status quo rather than overcoming the challenges on this list.

Next, we will examine the top ways to overcome these challenges and start to achieve optimization.

How has channel incentives “claiming” survived decades of process reengineering and years of scrutiny from six-sigma black belts? Claiming for channel incentives remains the standard practice in the marketplace. It puts the onus on the channel partner to submit a “claim”, or a request, to receive a rebate or incentive payment such as a special-pricing debit.

However, claiming is the consummate non value-add activity, the type of activity that’s the poster-child for process improvement efforts. Claims not only require manual effort on the channel partners’ part to restate what should be obvious to the supplier (how much they sold), but it requires manual processing by the supplier (or the costly out-sourced service firm of their choosing). Not to mention the wasted effort on dispute resolution.  During higher-growth eras this type of inefficiency could be tolerated, but now it is clear that leading companies are recognizing that the time has come for a “claimless” incentives structure.

By collecting and accurately processing POS data in a timely manner, leading suppliers are moving toward claimless incentive payments. This best practice entails automatically calculating the rebate, special-pricing debit or other incentive and pro-actively issuing payment to the partner. Monthly statements are provided to channel partners detailing the sales volume and the resulting payment (like a bank statement).  On an interim basis, as frequent as daily, performance scorecards are provided to ensure continuous communication regarding sales activity.

The “claimless” process leads to more accurate and timely payments (days rather than months), 60% – 80% less manual intervention, and higher partner loyalty ratings. With the proper system support, exceptions can be handled on a timely and efficient basis at a far lower cost than traditional out-sourced services.

http://www.infonow.com/channelincentives/

“ … the most important force in the IT market next year will be the continuing build-out and maturing of the cloud services and consumption model,” IDC said. “The emergence of enterprise-grade cloud services will be a unifying theme in this area … — the most strategic real estate in the cloud for the next 20 years.”

Enterprise-grade cloud services will dominate the IT market for the next 20 years. Installed client-server software, BPO services and other legacy platforms represent the past 20 years of IT computing.  Cloud services represent a disruptive technology and as such cannot be embraced by legacy vendors in an incremental fashion … you’re either on the bus or you’re under it. The losers are businesses that try to navigate these shifts with a toe in both technologies paying lip service (e.g., being buzzword compliant) to the new-technology but still delivering their solution with the legacy approach.

Enterprise-grade cloud platforms provide 99.9%+ availability, and utilize multi-tenant, web-service based architectures that can easily integrate cloud-to-cloud. They not only sit in the cloud, but they provide incremental business value enabled by their position in the cloud (e.g., salesforce.com’s Chatter and InfoNow’s Global Trading Partner Registry).

The challenge for buyers will be to weed out the posers and engage the vendors with a true commitment to the future of enterprise-grade cloud services.