E-Channel - Partnering Models for Apps Commerce

Posted: 06/2001

E-Channel

Partnering Models for Apps Commerce
Facilitators Wrestle With Ways To Bring Channels Together
By Denise D’Onofrio and Fred Dawson

The notion of making telecom agents key players in the emerging grid of distribution channels for applications software has moved from talk to action in a series of initiatives aimed at pulling together the local expertise that’s required to make this new approach to IT operations palatable to the business community.

Over the past year or so, as the leading software companies have come to embrace the “network-computer” concept as the driving force in how their products will be distributed and used in the future, the idea of the ASP as an isolated supplier targeting end users everywhere with a specific set of applications has given way to recognition that the marketplace will require a much broader-based channel-distribution model rooted in the local business systems marketplace. That means there must be processes in place that readily bring together the expertise of once disparate local suppliers from the telecom, software integration and computer equipment sectors.

“Applications [software] suppliers and ASPs are now willing to give up a share of their revenues, 20 to 40 percent of the retail price of software, to a channel, depending on how much they can offload Tier 1 and 2 customer support to the channel,” says Cathy Gadecki, vice president of strategy and solutions at Ellacoya Networks Inc. (www.ellacoya.com), a provider of platforms designed to facilitate channel distribution of apps. “They recognize the challenge is to get business customers engaged in this new distribution model, that it’s hard to market and reach out to the potential customer base without partnering with people who are close to those customers.”

Up to now, most of the channel facilitation and outreach effort within the ASP and software manufacturing sectors has focused on value added resellers of computer equipment, systems integrators and IT consulting concerns. But, with the convergence of voice communications and IP-based services, the need for parties with telecommunications services expertise has spawned new initiatives aimed at bringing telecom agents to the party, and, with those efforts, a question of what the best approaches will be to facilitate cooperation across the diverse channel sectors.

One of the first entities

to take on the challenge

is Qwest Communications International Inc. (www.qwest.com), which established Q.Marketplace in October 2000 as an online community where IT and telecommunications solution providers can view profiles of potential partners, rate each other and submit requests for proposals (RFPs) for help on projects. Business partner program vice president Nik Nesbitt describes
Q.Marketplace as an online lead sharing and collaboration tool that allows partners to network and collaborate with other Qwest business partner program members to deliver an end-to-end customer solution.

Hand selecting all of its partners, Qwest creates the environment and opportunity for companies to find each other. “At that point, it is up to the two partners to collaborate,” Nesbitt says. “The assumption is that they collaborate around Qwest solutions, but there is no obligation after the matchmaking opportunity.”

A strong supporter of the value of diversity, Qwest has many different channel partner types in its business partner program, allowing it to pursue collaboration among parties with different skill sets while avoiding competitive conflicts that might arise from a more homogeneous partner base. “Other companies with channel partner programs have partners that are a lot more homogeneous, so there is internal competition,” Nesbitt says.

Nesbitt makes it clear that agents will be able to fully participate in Q.Marketplace. The agents have the connections to the business managers who are deciding how to make telecom part of the packet network mix.

“Once they are in the domain, they can receive and track and close leads and manage the various parts of their partnership,” he says.

Moreover, Qwest believes that 80 percent of the ASP market is ready to accept the role of third parties in supplying bandwidth. To Qwest, a key goal in making applications commerce a reality is to do everything possible to focus ASPs’ attention on the need for better last-mile connectivity to end users.

“They just care about software and its features,” Nesbitt says. “Qwest’s focus has been to educate the ASPs on the bandwidth implication and the bandwidth hosting connection.” The vehicle for doing this is the Qwest Service Provider Advantage Program, in which ASPs act as agents in convincing their own customers to buy bandwidth from Qwest.

With the new name of the game being optimizing collaboration, Qwest is certain its Q.Marketplace will create competitive differentiation for the carrier. “Q.Market-place is a new way of doing business,” Nesbitt says. “We’re further ahead than the competition, and I know imitation will be the sincerest form of flattery.”

Others would argue that it isn’t imitation, but rather the natural course of the evolving applications commerce scenario that is driving them to facilitate channel collaboration. For web-based communication and collaboration application platform provider Bluetrain Inc. (www.bluetrain.com), this trend has brought it to a business model that is focused entirely on creating distribution channels for application services.

“There was no infrastructure to support bringing together telecom agents to work within ASP partner programs in terms of helping small businesses find each other in the distribution chain,” says Jack Weixel, co-founder, president and CEO. “Bluetrain is helping larger providers shape the market.”

This includes the telecommunications community, starting with big carriers and flowing through to their agency programs. “While usually there is a large distributor who takes all the products and distributes (them), in the ASP arena, the telco could be this distributor,” Weixel says. From that point, a product could be turned over to the VAR and SI to be marketed to the end user.

Bluetrain is working with service providers to put in the capability to offer products for VARs and SIs to build a basic offering and sell, including the billing and other back-office mechanisms essential to making the supply chain function smoothly. “You can’t just go with the theory of sell a product and one day you’ll get paid,” Weixel explains. “Telcos and service providers aren’t equipped to handle the billing down to granular detail.”

One of the latest entities to join in the push to bring telecom agents into the app services channel mix is Cable and Wireless Communications plc
(www.cableandwireless.com).

Staking claim to coining the term “partner community network,” senior director of product strategy Simon Angove describes C&W’s program as “a complex ecosystem that involves the contribution of multiple partners.”

“We build out the relationship between our partners and help provide them with the tools that enable them to evaluate leads, perform site assessments and work together during all phases from scouting to delivery,” Angove says. “We see the notion of partner community as one of our strengths.”

C&W announced a global relationship with Compaq Computer Corp. (www.compaq.com) in November 1999 with the intent of forming a business to offer small and medium-sized enterprises complete end-to-end e-business solutions. Up to that point, ASPs only offered one or two components of the total solution, leaving the end users to source and integrate solutions from multiple vendors. In September 2000, C&W established a-Services in partnership with Compaq and Microsoft Corp. (www.microsoft.com).

Initially C&W said telecom agents wouldn’t be involved in its a-Services channels program, but now it has changed course. According to Angove, the agent’s role is to find the lead. Joining the agent in C&W’s community are service sellers or VARS that generate the lead and close the sale, credited delivery agents that deliver services, and the a-solution partner that performs services such as mail migration, but does no selling at all.

“We have a very rich partner tapestry to support delivery into the market,” Angove says. But he acknowledges that the easiest part is signing up and recruiting the channel partners. Getting the channel to be effective when it comes to selling products is another story. “A huge challenge is getting the partner to aggressively work for us,” he says.

C&W utilizes dedicated channels and regular training events. “On the service side, we have dedicated sales engineers who work with the partner through the first few weeks of implementation,” Angove explains.

In April, C&W introduced three versions of the a-Services Webtop suite of managed computing services, expanding on the range of applications to be delivered. The company currently is considering recruiting application integrator partners into its channel program with details to be announced in the third quarter.

C&W has a channel account management force that is responsible for tapping into the partners the company has identified as the best in terms of moving ASP services. Currently participating in nationwide road shows from New York to California, Angove says, “The ramp at which we recruit will slow down, but we’ll continue to recruit.”

With growing recognition that channel programs will be essential to selling effectively the business community on applications services comes the question of how deeply the facilitators of such programs should be involved in sensitive points of potential conflict in the business dealings of channel partners. Who gets leads, who gets prompted to collaborate on an RFP and who gets tapped to come into a deal as supplier of a needed piece of expertise or service at the local level are questions that many players are wrestling with.

Acting as the broker, C&W believes it’s in a position to facilitate different types of channel partners. “When things come into a-Services, we coordinate how the companies will best fit into our channel,” Angove says.

According to Nesbitt, Qwest jointly collaborates on RFPs. The company foresees joint interactive participation down the road on RFPs. Within its partner locator are software and hardware companies, web integrators, professional services firms, consulting firms and distributors.

Qwest has positioned itself to be able

to facilitate partnerships between the channels by reorganizing its channel programs and arranging them under one organization–Qwest Business Partner Program. “This encourages cooperation,” says Nesbitt. “It acts as a philosophical commitment to integration and translates into a physical commitment.”

While Qwest is doing things like facilitating collaboration on RFPs and supplying partners leads, putting it right in the thick of its third-party partners’ business dealings, Sprint Corp. (www.sprint.com) considers such involvement an extremely sensitive matter. “We’re looking at what Qwest is doing with some degree of skepticism as to whether it’s the right approach for us,” says a senior executive at Sprint, speaking on background.

“Do we want to be in a position where any of our valued partners could question whether we’re giving favored treatment to someone else?” the executive asks. “Obviously not; so how do we get around that and still play a meaningful role as a facilitator of collaboration across these various channel categories?”

Sprint is weighing what approach makes the most sense in light of the fact that channel collaboration is going to be essential to driving value-added services into the small-to-medium business community, he adds. “Maybe the solution is some sort of third-party mechanism,” he says.

Whatever the solutions individual carriers arrive at, the fast-evolving applications commerce marketplace is clearly a new arena where telecom agents will have an opportunity to participate. In fact, if the market turns out to be as big as many people expect, the revenue potential alone could be the biggest facilitator to collaboration among various local channel entities.

That’s why, to companies like Ellacoya and Blue Train, the mantra is: “Supply the tools and they will come.”