IT channel partners in India have rated product margins as the most important parameter in vendor engagement for their company – ahead of brand image and turnaround time for solving issues – reveals a new study from Springboard Research,. The company’s report titled “ChanSat India 2009: The Voice of India’s IT Channel Community,” adds that margins are a greater focus and challenge for channels in Tier II cities compared to those in Tier I cities.
According to Springboard’s report, IT channels reported highest overall satisfaction on technological strength of products, whereas lowest satisfaction was reported on availability of vendor-provided financing, rewards & incentives and credit period. The findings of this study are based on Springboard’s survey of 333 IT channel partners in 12 Tier I and Tier II cities across India. For this study, channel partners were asked to rate their satisfaction on a total of 32 parameters, divided in the five categories of Financial Metrics, Product, Sales & Marketing, Social Interaction and Support.
“The area of greatest channel importance is also the area where the industry performs the worst –financial metrics,” says Tirthankar Sen, research director - Partnering Research at Springboard Research. “Vendors should clearly understand the financial considerations of channel partners and seek strategies to address their concerns. If vendors can help their partners become more successful in offering services – where margins are higher – they can help address margin and pricing challenges more successfully.”
HP Leads the Industry in Channel Satisfaction
According to Springboard’s report, HP is rated by the channel partners in India as the overall industry leader in terms of channel satisfaction; the vendor is also rated above the industry average on the five key rating categories. HCL, IBM, Microsoft, SAP and Lenovo are other vendors who ranked above the industry average. Channel partners have cited ease of doing business, followed by reputation, good support, and quality products as the top reasons why they prefer a particular vendor.
HP was also rated as having the industry’s best enablement programs, ahead of Microsoft and IBM among others. In terms of brand trust, IBM and HP appear to lead the market within their channels. Interestingly, hardware vendors (including IBM and HP, but excluding Sun) score relatively lower than enterprise software companies when it comes to vendor loyalty ratings, while SAP, Microsoft, Symantec and Sun steal the show on this parameter.
Hardware Still Means Business in Tier II Cities
While most Indian channel partners sell a range of hardware, software and services, the Springboard’s report reveals that hardware alone contributes 63% to revenues of all channels. Channels in Tier II cities are more dependent on hardware revenue than those in tier I cities.
“For channels in Tier II cities, hardware is more vital to business and building sustainable software and services businesses is more difficult. At the same time, service provision and turnaround time is a more pressing issue for them and service-center location is an important consideration vendors should evaluate,” Sen adds.
The study also notes that IT channel partners are struggling with competition as their top business challenge, followed by generating growth. In response to these challenges, channels are most focused on cutting costs, improving services, increasing share from existing vendors and growing geographically.
“Most channels appear to be focused on growing with existing vendors rather than adding new ones. As such, vendors should properly measure the effort of adding new channel partners and ensure investments in existing partners is not stretched too thinly. Helping existing channel partners expand their geographical footprint is a strategy worth evaluation,” Sen concludes.
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