Many IT consultants and their technology vendors acknowledge their relationships could be more collaborative. The kinds of incentives and support that previously motivated consultants are losing their luster. And, as a result, both sides need to step up and change how they help each other.
To garner insight from both sides, Amazon Consulting recently teamed up with Consulting magazine. Jointly, more than 40 IT vendors (more than one-third of which generate more than $1 billion annually) and 100 IT solution providers (of which, more than one-quarter had annual revenues of at least $1 billion dollars) were surveyed.
The results suggest that IT vendors should reevaluate whether they are providing the right kind of support and incentives to their IT consulting partners in order to tap their business process and vertical market insights.
"Our research has repeatedly shown that end-users have a distinct hierarchy of needs they demand of their solution providers. On the top of that list is the solution provider's ability to deliver on time and on budget, have a comprehensive product and services offering, then proactively anticipate the customers' unique needs," wrote Beth Vanni, Amazon Consulting VP and author of the research on IT vendor/IT solution partner relationships. "So the support they get from their leading IT suppliers needs to support that prioritization of building those skills."
One of the ways IT vendors have traditionally tracked the quality and quantity of their IT consultants' relationship is by offering a referral fee for their technology influence and recommendations into their end user customers. It's a common practice across IT solutions providers, but falling out of favor among IT consultants that prioritize independence and the perception of objectivity.
As a result, the traditional referral fees aren't much of a motivation to IT consultants when deciding to recommend one IT solution over another. In the Amazon Consulting research, selling rewards are fifth on the list of most requested sales support from business influencers from their vendors (garnering less than 20 percent of the responses).
Part of the challenge is that the top business influencers—the advisors most likely to sell end-users on a specific IT product—aren't frequent resellers of IT products. In fact, only 12 percent of the IT consultants generate the majority of their revenues from reselling IT vendors' products and services, limiting the overall impact a referral fee could have across the marketplace of IT consultants.
Moreover, many of the larger national and global systems integrators won't accept influence fees because of the administrative hassle and/or the perception that accepting these fees compromises their objectivity.
"Vendors are trying to get their broader channel community to be more business process- and benefit-focused, like traditional consultants have always been. But consultants' understanding of end-users' business pain, especially in key vertical markets, is what makes them so valuable," she says. In recent years, the large systems integrators have refocused on the quantity and quality of services they're offering and are questioning whether pushing a single branded solution compromises their objectivity or independence."
Vendors don't want their carrot to become a sign of corruption, so instead are positioning restructured referral fees as means of offsetting the costs of training, helping to build services delivery assets and maintaining dedicated headcount.
But just because referral fees aren't a key motivator doesn't mean IT consultants aren't looking for other benefits from their relationships with IT vendors.
The top incentive, according to the research, is easy, local sales teaming processes with the vendors' direct sales or service teams followed by industry-relevant solution playbooks from IT vendors
Vanni believes that the data suggests that although these business influencers are savvy salespeople, they're open to solid tools and references from their vendors such as vertical use-cases and references. "The more quantifiable and vertically-oriented the vendors' use cases, demonstrating business benefit, the more the consultants need them," notes Vanni.
Instead of pushing referral fees to build the relationship between vendor and solution provider, Vanni suggests other carrots be considered. IT consultants say they would be interested in expanding their exclusive sales turf, especially among tier one accounts. Among middle-market SIs, vendors are willing to share their previously proprietary methodologies. For those solutions providers that make significant investments in favor of their products, vendors are willing to share their intellectual property. "The knowledge transfer flood gates are now open," she says.
Part of that IP can include technical and staffing support, including on-site and just-in-time training. Vendors are also willing to offer branding and marketing support. "Marketing funds can flow more freely when vendors see investments being made around their products," she says. "But business influencers are picky as to what they do with marketing funds."
And when the relationship is mutually beneficial, vendors are also more willing to relax the product certification rules tied to minimum staff levels. Previously, a system integrator had to maintain a set number of dedicated staff in order to maintain the certification to sell that vendor's products. Because it can take six to 12 months to train new staff, the loss of talent (either through involuntary attrition, such as layoffs, or during a spike in voluntary attrition, such as what firms are now facing as we progress through the current recovery), would have previously compromised a vendor/consultant relationship.
Increasingly, a consulting partner in "good standing" that is short on resources can reach out to the vendor's other partners to help staff an engagement. This change has enabled firms to share the risk on large projects and helped smaller firms better compete against larger consulting firms. IT vendors are increasingly trying to find creative ways to actually foster this partner-to-partner collaboration to create more value for end-users.
IT consultants interested in building that kind of partnership with their IT vendor should focus on vertical specialties, especially in areas like healthcare and financial services. "The more specialized the consultants are, the more attractive they are to IT vendors, because that's the most challenging skill for an IT vendor to build," Vanni says.
—Jess Scheer
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