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TAG: A Road Map for Converged Channel Partners

Posted: 011/2002

A
Road Map for Converged Channel Partners

By Darren L. Spohn and Ron Davis

PHONE+’s
September cover story, "Changing Face of Channel Partners," described
the opportunities VARs, system integrators, interconnects and agents are seeking
in their quest to grow revenues and profits with telecom-related products and
services. It drew a clear picture of the future showing the overlap of the four
business models to form a converged channel partner.

While the destination is clear, you
may be wondering how to get there.

Never fear! We will attempt to give
you the directions and the stops you will need to make along your way. As a
converged partner, your revenue will come from a combination of hardware,
transport, professional services and integration. VARs will gain value-added
service revenue and offset shrinking hardware margins. System integrators and
interconnect providers will be able to provide true end-to-end solutions. Agents
will be able to offer solutions-based value through hardware and software
integration.

Enroute, you will need to make six
stops to gain the core competencies required to become a converged partner.

Stop 1: Business and Sales
Skills.
You and your sales team must trade the transaction-based sales cycle
for the solutions sales approach. Selling solutions requires a combination of
top-down and bottom-up selling. Selling at the top to CEO, CFO, COO and IT
management will require you to do investigative work at lower levels of the
organization. You need to understand the customer’s business and applications so
you can position your products and services in terms of their value to the
company. Value generally comes in terms of return on investment (ROI) over a
period of time, but could also be expressed in how your solutions can help your
customer achieve company business objectives. You also may need to show value
through a Total Cost of Ownership (TCO) study — comparing the cost of your
managed solution against the customer’s inhouse alternative. This approach will
extend the sales cycle, but should net you a higher sale initially and more
recurring sales over time. Put simply, the more business problems you solve, the
more money you will make.

Stop 2: Technical Knowledge.
Most agents and VARs are familiar with local, long-distance, toll free,
dedicated and switched voice services. In the converged world they will need to
expand their knowledge to data services such as private lines, frame relay, ATM,
IP (remote access, Internet access and virtual private network [VPN] transport),
hosting and a slew of managed services. This is a reluctant step for anyone not
familiar with data services, especially voice-centric sales people, because it
involves learning many complex technologies, services and network design
principles. However, with the right training, your sales team can quickly get up
to speed.

Knowledge of routers, switches,
servers, storage devices, PBXs and gateways will enable an expansion of hardware
sales. In addition, customers will come to rely on you to provide WAN and LAN
configuration and implementation services that support their converged data and
IP networks. It is not enough to know the hardware and technologies, you need to
know when to select which product, service or combination thereof to form an
end-to-end solution to an identified customer business need.

Stop 3: Differentiation.
Adding network and systems integration skills to your portfolio of services will
enable you to offer your current products and services to more customers and
with a higher value proposition. Selecting one or more specializations, such as
network security, VoIP, voice and data integration and converged services,
managed services, IP VPN or network storage will help set you apart. Network
integration skills include products or services that span and integrate
traditional telephony, MIS (network systems) and IT (network infrastructure),
while systems integration skills span both hardware and software.
Specializations that are in great demand today include voice over packet,
security and wireless.

Stop 4: Systems, Automation and
People.
Your business must be able to scale. Scalability can be achieved by
hiring or contracting the best people available and outfitting them with the
right tools and systems. Strive for automation of processes and procedures to
lower labor costs. This will allow you to hire fewer, more competent and more
experienced personnel. A service company is only as good as its people, and more
doesn’t necessarily mean better.

Stop 5: Professional Services.
If you are not already cashing in on maintenance, management, consulting and
implementation services you are not yet selling full solutions. Hardware,
applications and data services all require some form of design, configuration,
installation and integration. In addition, most products and services you sell
have some impact on the customer’s network. These two facts open the door for
you to sell a full line of analysis, design, implementation, optimization,
training and security services.

Go through your inventory of
products (WAN and LAN devices like routers, switches and firewalls) and services
(voice and data transport, security, network management) and define what
professional services or consulting services you can add to your portfolio to
broaden the sale. Beware of going too far outside your core competencies or
offering too much specialization per customer; these are both scale inhibitors.

Detour: Build vs. Buy. If you
build too fast without support revenue you could cut into your margins or use up
all your cash. However, if you build too slowly you could miss out on
opportunities by not being able to deliver services critical to the complete
solution. Outsourcing will allow you to quickly graft the training, consulting
and integration services you need for your business without having to hire the
experts. Remember you can always build these skill sets later. The primary risk
to outsourcing, however, is not achieving the same quality your business demands
and causing customer dissatisfaction. Choose your partners wisely.

Stop 6: Training. Revenue
does not materialize until you acquire the blended sales skills of technology
and product knowledge, understanding of systems and competitive knowledge
required to close a solutions sale. Most of your product and service providers
will offer a mixed bag of computer-based training and regional sales support
and, although good for initial and ongoing product training, you also will need
sales, market driver, technical and integration training to become an effective
solutions seller. Seek out training that combines technology and solutions sales
skills and you will do more than just jump-start your sales team, you will give
them the underpinnings they need to get out on the highway and handle any curve
that comes their way.

How to Tell if You’ve Arrived

Don’t just look to top line revenue
growth as the measure of success. Check for other signs as well. Look for
concurrent bottom line margin growth. See if you are achieving a greater
percentage of higher margin services than lower margin transaction sales. Look
for higher new customer acquisition rates and increased gross purchases over
time. Look for new nontraditional purchases made by existing customers. You
should be increasing your share of wallet per customer and thus lowering
business acquisition costs. Finally, look at how you are solving customers’
business problems as this will directly correlate to your success. The new
bottom line is the value you bring to the table for your customers and the value
your customers place on you.

Darren L. Spohn, president and
CEO, and Ron Davis, U.S. director of marketing and channel development, are with
Spohn & Associates Inc., As a converged partner and an AT&T Solution
Provider offering all five key services –transport, hardware/software,
integration, training and professional services.

 

The
Links

Spohn
& Associates Inc.           
www.spohncentral.com
 

 


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