Blockbuster a Goner — Technology Skeptics Unite

It didn’t help that it was a rainy, grey day here in Southern California . . .

After a long draught, the northern San Diego area I call home is finally getting the downpour we’ve so needed and been waiting for.  As I left the supermarket this morning, the ghost of the prior Blockbuster store loomed in the corner like a sad ghost.  Placard gone and windows papered over, the store, once thriving with a bustle of suburban activity, now reminded me of the dramatic change  we’ve undergone as a society in how we consume entertainment and music content.

Now, don’t get me wrong, I love the convenience of Netflix, Amazon Instant Video, Roku and iTunes.  Mine is a 9-device Apple zealot family.  Over the period of 14 months, I have personally converted every CD my husband I had ever owned to digital content.  Not a fun process.  Now, I just need to be able to afford a smart phone with enough capacity to allow me to readily access it all – but, that’s fodder for another blog. 

But, that convenience comes with a price.  A big price.  Individual consumption of digital music, videos, podcasts, and movies can be an isolating experience.  I’m sure I’m not the only mother who has to set very clear boundaries (and police them with a heavy stick) around iPad usage time, in order to ensure my children can actually hold a conversation, make eye contact and relate to current life situations beyond how they would look in “Angry Birds Star Wars.”   

I must admit, I actually used to really like going to the Blockbuster store.  It was a mini shopping experience – around other people.  I could talk to the clerk and get his input about which New Releases were actually worth seeing.  I could buy some popcorn and have a chat with people I hadn’t seen in a while who were there doing the same thing I was.  It’s the same “retail” experience I like about bookstores.  I totally love the smell of new books at a Barnes and Noble stores.   And, I get reaffirmed about society when I see tons of people sitting around, reading and browsing books while they drink their $4.25 Starbucks Venti soy latte.  It feels (literally) like a real community.  Being on Amazon’s web site shopping for Kindle titles doesn’t quite give me that same touch and feel.

I’ve been in technology for 30 years now.  So, to admit that I’m actually a technology laggard takes some guts – but I am.  At least relative to most of the circles I travel in.  It’s ironic to say, but I’m very fearful about what technology is doing to our ability to be interconnected as human beings.  The way digital content is served up now, we never have to leave our houses, our desks, our beds to spend hours and hours staring at a screen.  Even if that staring at a screen involves noble activities such as taking an on-line course, doing research or Skyping a relative somewhere else in the world.   The neurotic in me worries a lot about how much technology feeds the hyper-capitalistic, consumption-based mentality growing insidiously in our society.   Yes, we can read or “Dr. Zhivago” on our Kindles now (not that I’d want to) but doesn’t the real value in that epic piece come when you watch it with 2-3 girlfriends, cry together and lust after Omar Sharif?  Together? 

I know converged communication is happening whether I like it or not.  And, video technology goes a long way to bridge the “personal communication” digital divide.  I do agree that technology can create levels of communication that are innovative and good.  But, only if that enablement is a link to ultimate human connection and exchange.  More communication doesn’t necessarily mean connection.

Share your thoughts with me.  Signed, Blockbuster-less in San Diego.  beth@chiefchannelofficer.com 

CVS No Tobacco Sale – Precedent for IT Solution Providers?

Today, the nationwide chain of 7,600 CVS drug stores declared they will stop selling all tobacco products in their retail stores as of October 1st of this year.  Wow!  Called their “CVS Quits for Good” campaign, my semi-regular visit to their web site to redeem the ton of coupons they send me electronically was met with a video message from the company’s president and CEO, Larry Merlo.  They are the first national pharmacy chain to take this significant action.  http://info.cvscaremark.com/cvs-insights/cvs-quits

Now, whether you’re a smoker or not, you have to know that this is no small revenue sacrifice for CVS. I can’t tell you how many times I’ve been in one of their stores with another person in front or back of me in line waiting to get 2-3 packs of their favorite nicotine.  Despite the fact that I’m sure it was a very high volume seller for more stores (maybe less in California?)  I can’t imagine it was one of their more profitable items.  The stash did have to be kept under lock and key behind the registers for safety — which I’m sure increased the cost of stocking them and managing the cigs.

Merlo noted that this decision “more closely aligns us with our purposes –  working to deliver better healthcare focus while reducing the cost of healthcare.”  The web site indicated that selling tobacco products was “inconsistent with our purpose – helping people on their path to better health.”  Wow, a retailer of thousands of SKUs being committed to a certain mix of products that is consistent with their corporate values?!  He went on to indicate the company was also about to launch a non-smoking campaign with services, pharmaceuticals and in-store assistance to help smokers quite the habit over time.  Now, I’m sure THOSE products don’t hurt the company’s bottom line either.

The analogy here for me is with next generation solution providers taking a stand on something their company values.  What if your local VAR, PC fix it shop or Office365 agent locally dedicated some percentage of all their profits to a local charity?  Or what if they were actively involved in an organization like “Girls for a Change” that helps young women prepare themselves for professional success and clear career paths?   Or, even better, what if solution providers eager to propel themselves into a leadership position with cost effective and environmentally conscious cloud services actively collecting old PCs and IT equipment and gave customers credit toward new tablets or a discount on design services for a virtualized desktop solution? 

The message here is about the value of taking a stand for something meaningful — not just as individuals but as corporations.  There’s tangible value in propelling yourself and your company into the future.  A future where technology isn’t about brands and boxes but about making significant social change and connecting people in positive, healthy ways that haven’t existed before.  It seems to me if savvy solution providers could take this stand their challenges with using social media effectively and better differentiating themselves in the world of cloud and managed services providers would be a little bit easier, don’t you think?!

Here’s to a world a little more free of addictions, of all sorts!  Send me your thoughts at beth@chiefchannelfofficer.com. 

Zero – Literally Zero Chief Channel Officers?

Wow, I’m amazed!  Amazed and wildly disenchanted.  A search of both LinkedIn (now with 259 million members) and Google produces no returns (yes, zero) for the title “Chief Channel Officer”.    In the first page response from Google, I do, however, get a detailed YouTube video on “Chief Household Officer”, exalting the role of homemakers and stay at home moms, as well as a wordy BLOG on what to look for in your next “Chief Digital Officer”, if you’re a digital-savvy marketing organization.

When I last checked, on average, the top 5 IT companies derive apx. 60% of their revenues from/with their indirect channel partners.   Microsoft, IBM, HP and Cisco have in excess of 50,000 global channel partner, each.  This “volunteer army” of channel partners is asked by most tech companies to represent the full, cross-functional support of their companies — including channel sales (in most cases with a strong emphasis on partner-led selling), channel marketing and demand generation, and channel-delivered technical and professional services.   Yet, there is no C-level executive responsible for recruiting, engaging, training and managing the productivity (and satisfaction) of this army?!   Really?

Isn’t it more typical that there are indeed several people responsible for this level of support and engagement of indirect channels.  But, yet these fearless leaders are often buried several layers below their C-level superiors.  The “Channel Chief” we most often hear about is a sales leader, with an enormous quota (equivalent to all his partners’ sales potential) , and usually with the added responsibility of making those deals be totally incremental to anything the vendor’s direct sales force might touch or be involved in.  In addition to this day job, he/she has the main responsibility of driving visibility for the value of the company’s partner community with all other functional areas (marketing, support, services, operations, finance, etc. ,etc.) and then tin-cups these same folks to offer up resources (people, funds, processes) to help the company actually engage an indirect sales force.

It’s sort of like asking the President of the United States to right-size the US economy and defend our borders with no Joint Chiefs of Staff, only volunteer campaign supporters, no command of our armed forces and about a $10million dollar budget.

With today’s market demands of customer influence, line of business selling models, the rise of cloud technology and consumption-based economic models, why don’t more IT vendors centralize and elevate the role of the channel/alliances management team?  Do they not see the value of a centralized chief with unique accountability to global sales, marketing and services-delivery results?   Do they still doubt the value of having an indirect channel community impact their market penetration goals?   Or do they just think all of their senior management staff (CXO’s and VP’s below) all intrinsically understand the value of partnering and will therefore offer up appropriate resources and support?

I have lots of answers to this question in my mind.  What do you think?   Send me your thoughts…..

Dyson — Cornered the Market on Promoting Price Value, in Vaccum Cleaners?

After consuming as much holiday gnoshing and family-politics as I could tolerate one evening this past Christmas season, I found myself one afternoon paging through a consumer magazine trying to numb my head.  In the process, I saw a print ad for a Dyson vacuum cleaner that stopped me in my tracks. It had their premium vaccum on one side and several leading vacuums from other manufacturers on the right.   It boldly stated their vaccum costs as much as 30% more than the other leading brands.  And then asserted that with more than double the sucking power and a rock-solid warranty, it was worth every penny and with price performance that outpaced all the other brands shown, combined!   Now I knew James Dyson had a reputation as a cocky British engineer with a passion for innovative industrial design. A man who has his own foundation for supporting next-generation engineers and designers.  But, I didn’t know that spirit had made it through to the company’s assertion of its brand value, to this extent.  To that, I say the proverbial British, “Brilliant!” 

How great would it be if today’s IT solution providers had created their own integrated technology solutions and/or software IP such that they could make the same assertion about their customer value? If the value they’d created in their managed services offering in terms of customer time and operating expense savings was so significant that they could make the same bold assertion as Dyson? 

I understand that integrating IT vendors’ finished goods into a customized IT solution is different than building a vacuum cleaner from scratch.   But, on some level, the amount of efficiency and satisfaction created in the ultimate user by a good engineering and customer-focused organization is no different.  And, as custom on-premise IT architectures move to more standardized, datacenter stacks and ultimately cloud services, solution providers are going to have to figure out equally good ways to quantify and assert their customer value — and the associated price premium it demands over direct-to-vendor IT consumption option. 

Is the cost of your solution providers’ IT services worth a 30-50% premium, based on the quality of engineering and customer service?  If so, let’s all encourage these companies to tell their story about THEIR ability to deliver twice the suction …. 

The Ultimate Hand-off in Getting Cloud-Ready: Vendors and Channel Partners Mature Professional Services Engagement

The passing of the baton from vendor to solution provider around effective and profitable professional services delivery is what we call the “last mile of being a channel-centric company”.  It’s hard stuff.  And, it calls into focus the intentions and revenue goals of the vendor’s direct delivery of professional services.   We see 2012 as a turning-point year in vendors getting this issue right, and striking the balance between how to share IP and learnings from their own large-account engagements without interfering with the partners’ own unique and often multi-vendor solution approach. 

And there’s a lot at stake in professional services execution this year.  Customers are demanding their suppliers and solution providers understand their technical and business pain points and understand their core business process better than ever.  Plus, many agree that success with virtualization and other application integration professional services projects paves the way toward solution providers building a successful cloud practice. 

In our 6^th Annual State of Partnering Study, we saw some definitely maturity in the teamwork between vendors and their channel partners around services delivery.  Here’s what we see as their top priorities in the area of professional services for each group in 2012:

VENDORS	SOLUTION PROVIDERS
Increasing partners’ pre-sales skills, including formal professional services assessments Finding the right sales and technical talent to staff their P.S. practices Do focused co-selling and technical mentoring of services-centric partners to help accelerate customer success Getting access to capital to build their P.S. practice Packaging the right IP and methodologies to share with partners about successful P.S. offerings, especially in managed services or cloud Building capabilities in managed services and cloud services, especially around mobility and virtualization solutions

One of the bigger issues for solution providers in the past has been clarity in the engagement models with the vendor around services delivery.  Defining “who does what” in facing the ultimate customer can be a complicated but absolutely critical discussion as these recurring services become more common and diversified. Increasingly, vendors have moved up the customer pyramid and reserved their best architects and delivery staff on their biggest and most strategic accounts.  They’ve also published more formal and clear rules of engagement to smooth their relationships in the field with their service-delivery partners.  One notable example here was Cisco’s recent release of its Services Rules of Engagement which covers everything from what services flow through the channel to processes for resolving conflicts between Cisco and its partners.

And by the vendors’ and solution providers’ own assessments, their conflict with each other is decreasing.  It was not noted by solution providers as any meaningful impediment to investment or profitability in professional services practices for 2012.

Vendors did indicate their top priorities for partner skill development in the area of doing effective pre-sales assessments.  Some of this is being addressed through the vendor community’s increased focus on field level services mentoring and sharing of services intellectual property much more openly with partners.  At VMware’s Partner Exchange event this week, virtualization solution providers were very favorable around VMware’s open sharing of IP in the form of their Solutions Enablement Toolkits (SETS).  Many I spoke with indicated how it has helped their practice structure and accelerated their ability to drive incremental virtualization services revenue.

But, why is effective professional services delivery not a bigger priority for vendors in their performance expectations of their partners?  Why aren’t enablement and training higher on the list of overall skills development priorities as well?  Do partners not need or want vendors’ help – or is there still too much vendor direct conflict?

 

We think there are three camps of partners on this issue.  The first are large, national solution providers who already have sophisticated P.S. practices built around best-of-breed products from multiple vendors and frankly don’t want the interference from any one vendor in their services approach. The second group is the larger regional providers with enough cash flow to invest and who are a bit more supplier dependent on practice development assistance.  This is the prime target for vendors wanting to influence their partners’ services practice structure.  The third group is small, regional VARs who may not have the resources to invest in new methodologies, staff or technology to build out a new services practice.  They need to differentiate and build a stronger services revenue stream, but they don’t have the capital to pull it off.

In 3-5 years what is a professional service versus what’s a cloud service will be a lot harder to distinguish.  Partners’ biggest value-add will be their ability to do great pre-sales work and thereby understand the customers’ overall IT architecture and pain points better than any one of their competitors (or vendors) can.  Mature professional service offerings will directly impact their ability to succeed in that way, especially in today’s cloud-focused markets.  We think this is especially true in that a lot of the solution providers from group #2 and #3 mentioned above (based on our 2012 data) are taking a wait-and-see attitude toward building cloud offerings in 2012. Contrary to industry hype, over 50% said they are not likely to start offering cloud services this year.

 

Vendors are smart to keep all engagement models open and share as much IP to ready, willing (and well-capitalized) partners as possible.   As we move more directly to cloud, vendors recognize that the stronger the partners’ existing services practices, the more likely they will be to build a viable practice around the cloud ….. whether that be at the pure IaaS level or whether they move over into SaaS application delivery.  

Interested in hearing more about the solution provider-focused results from the 2012 State of Partnering study?  Sign up for our free webinar on Feb. 23 here  For more information on PartnerPath, visit us at http://www.partner-path.com.  

Service Provider – Partner of Today (not the Future) for VMware

Many channel pundits agree that service providers are the channel segment to watch for innovation in cloud services delivery. Whether they’re coming from an existing MSP business model, a telco carrier profile or a built-on-the-cloud orientation, vendors have been shifting their field teams, pricing models and technical support to help these providers be set up for cloud success. 

VMware started beating this channel drum about 24 months ago in a big way.  And, at this year’s Partner Exchange event, it seems this community (labeled VSPPs by VMware) is a key pillar of VMware’s cloud partnering strategy aimed at helping it compete for partner investment and mindshare against its more traditional enterprise software competitors.

Now boasting a rank of over 1500 service providers globally, VMware has attracted quite a diverse community to this program.  Everyone from CSC, Verizon/Terremark and ACS down to more niche players like Hosting.com, Bluecloud, iLand and Colt Technology Services have jumped on the virtualization-to-cloud infrastructure journey bandwagon.   Newest to the VSPP ranks and announced this week is AT&T.  There are also a host of traditional infrastructure VARs (for lack of a better term) like Logicalis and CDW who have formed divisions that are part of this program.  

As the company has evolved its own customer segmentation and recently reorganized its management teams, service providers have commanded their own formal market segmentation, right alongside the company’s legacy enterprise and newly reenergized SMB/commercial segments.   Scott Aronson, the newly appointed SVP of Global Channels and Alliances, owns this segment and has a dedicated team focused on marketing, enablement and field execution.

The transactional model with these providers is a new one for VMware, and is based on a consumption-based licensing model.   So, it’s largely a sell-in model, as is the case with many other infrastructure hardware and software vendors with such partners.  However, the VSPP program also offers relatively extensive set of go-to-market support for these providers, many of whom are actively trying to build their own downstream ecosystems of ISVs and partners. 

VMware’s Andy Hunt, Vice President of Partners and General Business for EMEA, raves about the impact these service providers are having in his region.  With over a 250% year-over-year revenue increase in fiscal year 2011, Hunt sees these players as strategic to his partner ecosystem, especially in the SMB space, in the coming year.   Colt Technology Services seems to be pulling ahead of the pack in terms of building their own partner engagement models and program http://www.colt.net/uk/en/become-a-partner/index.htm, whereas iLand seems to be the frontrunner in the U.S. focused on engaging other VMware partners as agents and resellers.   iLand was recognized as the  VSPP Partner of the Year at this year’s event http://iland.com/partners.

As VMware has grown and quickly diversified its partner community, the company is wisely working hard to foster relationships between these service providers and their traditional solution provider community.   Carl Eschenbach, VMware’s Co-President of Customer Operations, noted in his keynote, “We highly encourage you to seek out the right strategic alliances among our service provider community here at this event”.   In fact, there are private 1:1 collaboration sessions orchestrated here at Partner Exchange between the company’s leading solution providers and service providers – dubbed “speed dating” exchanges.  Without dictating engagement and transactional models, VMware is trying to suggest ways the service providers can move from informal one-off deal making with individual solution providers to formal channel program support models.

It will be interesting to see if VMware can continue to invest what it will take to make these solution providers critical components of its long-term channel strategy. That includes being patient enough to wait for other VARs and technology partners  to engage with them and leverage the cloud selling models and infrastructure they’ve already built.   No doubt VMware has a broad portfolio of infrastructure, end-user applications and management tools for the providers to build a practice around.  The proof will be how well the virtualization giant embraces them in their direct and indirect selling motions and supports their sales and marketing evangelism of the customers’ “journey to the cloud.”