Can You Collaborate?
"The term relationship 'management' makes me nervous," muses Basilio Amoro, electronic marketing manager at Extreme Networks. "It sounds as if we own our partners. But that's not how the system works. These are tools for engaging partners in a way they agree to. People who try to manage relationships often don't have time to have relationships."
An oddly pensive remark from someone who has just made a significant foray into partner relationship management.
Remember PRM? PRM systems enable manufacturers to communicate over the Internet with their selling partners--including value-added resellers, distributors and systems integrators. And though analysts had widely predicted its demise, PRM is actually going stronger than ever--though sometimes under a different name.
Extreme Networks, a Santa Clara, Calif.-based network solutions provider, is a case-in-point. The company implemented Sales Partner from San Francisco-based PRM provider Allegis in November 1999 and is now in the process of rolling out the system, which it calls "Turbo Drive," to partners in Asia and Europe. "We originally wanted to do e-commerce," Amoro says. "But we realized that a whole lot happens around a transaction, and lots of what resellers needed wasn't in an e-commerce suite."
Extreme Networks' PRM system now has 2,000 users, both in channel sales and the inside sales force. Based on their profiles, partners can use the system to get leads and messages and obtain pre-approval for market development funds (funds from the manufacturer, which the reseller uses for marketing). "Authorization and entitlement rules, based on the profile, allow us to control what information goes to each class of user," Amoro says. Partners can submit requests for literature and go to a library to get product sheets. Certain classes of users can also click on "buy" and be transported to an e-commerce system.
Partners, too, can exert control by managing their own profiles. Amoro emphasizes that the Allegis system was developed with both Extreme Networks' and its partners' needs in mind.
Not a Crazy Idea
When Extreme Networks went looking for a PRM solution, the space was still undefined. The company talked with PRM specialists Webridge, Partnerware and ChannelWave, before choosing Allegis. "They were all pretty young then," Amoro says.
But now PRM software vendors are coming of age, according to consultant Bob Thompson, president of Front Line Solutions in Burlingame, Calif. "PRM is growing up," he says. "We're seeing maturing suites." Do a survey asking providers whether they have such features as lead management, targeted communications or marketing funds management, and you'll be able to check off almost every provider for every function, Thompson says. "A year ago, [the PRM market] was much nichier," he says.
At the same time, customers are finally figuring out PRM. Companies with what they refer to as PRM projects are coming to conferences on the subject and talking to the media about their implementations. Consultants have inaugurated PRM practices. "It's not a crazy idea anymore," Thompson says.
"Customers and analysts are recognizing that PRM is mission critical," agrees Christian Heidelberger, president of Cambridge, Mass.-based ChannelWave. "A year ago, we were evangelizing. Today we get RFPs [requests for proposals] that focus on the specific business problem. I can see tangible evidence of momentum in the space."
Enter the Gorillas
Thompson points to providers who weren't on the radar screen a year ago who have become strong participants in the PRM field today, like Chicago-based Click Commerce and Denver-based InfoNow. These companies resist calling themselves PRM vendors, though, Thompson says. They have coined a different phrase to describe what they do: ECM for enterprise channel management. "These vendors are saying that they offer more than traditional PRM," Thompson says. "People are talking about 'traditional' PRM, even though the industry is only two years old. Now vendors are jockeying to be seen as leaders of the next stage."
PRM popularity has not escaped the established CRM vendors, either, most notably at this point Siebel Systems. "In January, Tom Siebel identified PRM as an important strategic initiative for his company," says Dennis Ryan, Allegis' CEO. "We see them as a prime competitor."
In the past, established CRM vendors have not executed successfully in the PRM field, says Karen Smith of Aberdeen Group. But the tide is turning. "The offerings of [the established players] have been fluff," she says. "But Siebel is doing better now." Smith also sees interest glowing in the eyes of other CRM players, such as Trilogy and E.piphany. "PRM must be important if big gorillas like that are calling me," she says.
Thompson agrees that Siebel has improved its PRM product, Siebel eChannel. "With eChannel's first release there really wasn't much there," he says. "But the second release was five giant steps forward, and now it's competitive. It really doesn't matter if Siebel eChannel is best of breed. If they can sell it to even one third of their installed customer base, it will still be huge."
But Thompson cautions that Siebel's installations are much younger than those of the PRM specialists, as the software giant started about one year behind. "Siebel's track record is still unproven," Thompson says. "They say they have orders, but I know that to have an order and to have a successful installation are two different things."
Like Smith, Thompson is seeing other big CRM vendors get serious about PRM. Companies like Oracle, SAP, PeopleSoft, Nortel, E.piphany or Kana will want to buy the PRM piece, he thinks. "I predict that in one year, one of the [PRM] pure plays will be gone," he says. "I don't have any inside information. It's just dynamics. The big players are looking at the PRM space, and when you buy a company, you get instant traction at a reasonable price."
Big companies are not the only ones in an acquisitive mood. The smaller PRM specialists have also made some notable purchases. ChannelWave bought the Saratoga Group (e-training), the Canadian firm Drums (e-selling tools) and Accurus
(e-marketplace engine technology). Austin, Texas-based Partnerware acquired elantix, a mid-market PRM player.
Big Fish, Little Fish
Another way to get instant traction is to form alliances with software vendors of complementary talents. In 2000, the PRM industry saw lots of that type of activity, too. Allegis hooked up with a host of partners to offer Allegis eServices, providing value-added services like printing and mailing, creating marketing materials, Web conferencing, sales force automation and corporate training. Its partners include eLetter, Layout Wizard, PlaceWare and salesforce.com. Partnerware formed alliances with companies like Perficient and Comergent in the areas of technology sharing, training and cooperative marketing to offer its PartnerNet service.
Perhaps the most high-profile partnership news of 2000 was the deal, announced in December, between Siebel and Menlo Park, Calif.-based OnDemand. As a Siebel premier partner, OnDemand will resell Siebel eChannel in conjunction with OnDemand's technology and services as a hosted solution and in the mid-market. The deal gives Siebel a PRM partner in the mid-market and in the ASP (application service provider) environment. The caveat, according to Scott Creighton, general manager for Siebel partner management solutions, is that on the enterprise level, most customers still prefer to have software in-house, not hosted. There, Siebel will continue to go it alone. PRM seems to be moving away from the purely ASP model where most vendors, with the exception of ChannelWave, started. Allegis' Ryan says, "After a year, we realized that customers wanted the option of deploying our software internally." He still contends, however, that it is more cost-effective for customers to have Allegis run the solution out of its data centers.
Alliances and acquisitions are an important development in the PRM space, say both Aberdeen's Smith and Front Line's Thompson, but they are not unique to PRM. There's lots of M&A and alliance activity across all areas of technology. "The big fish get bigger and they eat the little fish," Thompson says. "It's what industries do as they grow." Many of the partnerships Thompson has seen over the last year are not worth the paper they're printed on, he says. They're pragmatic, marketing deals. You have to ask yourself whether they really will work, he says. Will the sales forces of both partners get behind the deal? Or are the complexities of fairly compensating the two groups of salespeople overwhelming? Thompson does admit that the Siebel/OnDemand deal is well engineered, however.
He sees good value on both sides. OnDemand, a relative latecomer in the PRM field, can get a full PRM suite to market without building one from scratch. And Siebel has a strong partner for the mid-market and in the hosted environment. "There's real meat to the deal," Thompson says.
Expanding the Footprint
With PRM suites maturing and reaching parity, what exactly are they offering? "PRM 101," as Siebel's Creighton calls it, is recruiting and registering partners, establishing their profiles, assigning them leads, finding out what they do with the leads, approving market development and co-op funds and handling marketing campaigns. "At first, that was what vendors and partners were screaming for," says Kapi Attawar, vice president of marketing for OnDemand. Once vendors have established a PRM system, though, Attawar says, they want a full range of solutions, including opportunity management and e-commerce. "They want everything from registration to service," he says.
"We're expanding the footprint of problems solved," says Ryan. One year ago, Allegis, for example, had 10 or 11 applications. Today the company has 25. Allegis divides its applications into five categories:
1. Partners, including registration, profile management and business planning
2. Marketing, including campaign management, funds management and promotions
3. Sales, including team selling, catalogs, needs analysis and ordering
4. Services, including partner training, support and demo and collateral requests
5. Intelligence, including analytics, surveys, channel sales forecasts and feedback
"As part of our intelligence service, we also offer an OLAP [Online Analytical Processing] tool to drill down through all the sales data," Ryan says.
One of the additions to note has been training. "Training is definitely a value-add," says Aberdeen's Smith. "You don't want someone selling your product who doesn't know your product. That would drive customers away." Several PRM companies have formed partnerships with online training companies to offer more complete and efficient training and certification for partners. Allegis signed up with Via. ChannelWave bought Saratoga and partnered with Synapsis. In Februrary 2001, OnDemand announced it was teaming up with Hewlett-Packard to integrate HP's E-Learning-on-Tap to its Partner Accelerator PRM system. With the various online learning solutions, a partner can get trained on a certain product, become certified to sell the product and then the PRM system will know to route that partner leads for the specific product.
"We see training as a natural and necessary part of the PRM lifecycle of recruiting, certifying, collaborating with, marketing with and selling with partners," says ChannelWave's Heidelberger, explaining his company's purchase of Saratoga and alliance with Synapsis.
But more than just adding functions and applications to their offerings, the PRM specialists say the very definition of PRM is widening in several important ways. Analysts, such as Aberdeen's Smith, agree. First, she says, companies are moving from departmental deployments--involving only the channel sales organization--to enterprise deployments--linking channel sales with internal marketing, sales and service, sometimes on a global level. "PRM was first deployed divisionally in pilot programs," she says. "Companies now want to deploy on an enterprise level." Therefore, one important question companies should ask when shopping for a PRM solution is, "Is it scalable?"
Ryan firmly stakes out his company's claim in enterprise deployments. "Enterprise deployments and departmental deployments are very different things," Ryan says. "Price points and the professional services you offer are not the same. We're not going after the mid-market. We're interested in global 2000 enterprise sales." Siebel is another competitor in the global enterprise market. "Last year we had lots of departmental installations," Creighton says. "Now we're seeing more global buying." Siebel eChannel is available in 20 languages. And in 2000, according to Creighton, 35 to 40 percent of Siebel eChannel sales were outside North America. "There's lots of interest in EMEA [Europe, the Middle East and Africa]," Creighton says. "We've had a trained sales force on the ground there for a year and a half." Allegis has opened an office in London. "I see the opportunity for PRM in Europe to be as big, or bigger, than that in the United states," Ryan says. ChannelWave, on the other hand, continues to go after both markets, Heidelberger says. "We're now contesting for enterprise licenses," he says, "but departmental implementations are a bigger percentage of our business, and, to be honest, that's fine with us."
As more divisions of companies get involved in PRM, integration with existing CRM and ERP systems becomes paramount. "Every one of our implementations has at least one integration," Ryan says. "Some have five or six." Extreme Networks integrated Allegis Sales Partner with its Baan ERP system so that resellers could check on orders. "They were calling every day to get order status," Amoro says. "Now they can click on a button and see where the orders are. It adds real value. They don't pick up the phone and bombard our order folks with inquiries."
Thompson counsels his clients to decide what information they have to have--for example, order information needs to link with the back office or leads need to get into an SFA (sales force automation) system. Then let the PRM vendor explain how all the systems can work together. Integration is getting easier, he says, thanks to pre-built integration tools and the fact that XML is becoming the norm. "With enough time and money, enterprises can integrate anything," Thompson says. To Amoro, linking systems was not a problem. "The [Allegis] system is so open, we could probably integrate it to a snow cone machine if we needed to," he says.
Successful integration among an enterprise's systems brings us to the brave, new world of PRM. "Vendor-sponsored partner extranets are the bread and butter of PRM," Heidelberger says. "But [PRM] is expanding to include e-marketplaces." An e-marketplace enables partners to collaborate with each other and with manufacturers to mutually serve the needs of end customers, Thompson says, who calls this new concept "collaborative e-business."
A good example of the new paradigm is Qwest Communications, a Denver-based broadband Internet communications company, which implemented ChannelWave's Partner Loyalty System late last year. With the ChannelWave solution, Qwest has created what it calls the "Q Marketplace." "We have multiple partners," says Craig Schlagbaum, Qwest's director of channel management, "and they all add value. Multiple partners are required for our solution to serve end users." Both Qwest's direct sales force and its indirect sales force can log onto the partner site and work together to serve Qwest customers. Take, for example, a large petroleum company on the West Coast that needed additional bandwidth, hosting and someone with experience on AS400s and application development. "Our direct sales guy was on the account," Schlagbaum says, "but we know nothing about AS400s. So that salesperson could log on to the [PRM system] and find a partner in L.A. who has both AS400 and application development experience."
Schlagbaum says, "Nirvana for us is for the system to take on a life of its own and be a place where partners can find each other." Qwest plans to add a feature in phase two of the ChannelWave implementation that allows partners to rate each other's performance. "Relationships between big manufacturers, like IBM, Microsoft and Cisco, and their partners used to be linear," says Schlagbaum. "But now the Internet has brought collaboration. One partner can't do it all, anymore, so collaboration is absolutely essential."