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1 Kapi Attawar Partner Relationship Management Driving Multi-Channel Revenues by Using PRM Technologies PRM, a key area of differentiation for vendors, is a rapidly growing market with good, robust solutions available from industry leaders. Across a variety of industries from manufacturing and high technology to chemicals and energy the direct sales model is giving way to new types of distribution channels powered by the World Wide Web. These channels, which can encompass valueadded resellers, systems integrators, distributors, and e-marketplaces, can help efficiently drive revenues without adding to the overhead and cost structure of the original manufacturer or supplier. To preserve and grow these channel relationships, leading organizations are turning to Partner Relationship Management (PRM) technologies. Today s PRM solutions enable these companies to manage, monitor, and empower their channel partners by streamlining common processes; introducing collaborative mechanisms for market development and joint sales; and providing simple, efficient communications capabilities. As the slowing economy forces companies to strive toward true differentiation and increased responsiveness to customers, the functionality delivered by PRM vendors enables these companies to achieve their strategic goals much more efficiently and reliably. As PRM technologies evolve, the focus is on defining and delivering meaningful metrics to provide increased visibility into each company s demand chain. These metrics enable organizations to see the returns generated from their investments and also get an accurate read of their revenue streams. This white paper looks at the opportunities generated by PRM technologies, the market dynamics that influence how PRM solutions can be implemented and important points for suppliers, manufacturers, and distributors to consider. Solutions in PRM For years, channel managers have known that they need to increase sales revenues and reduce costs in the channel while continuing to focus on increasing market share. The Internet has brought new dynamics to the equation driving new levels of integration among information and transaction systems and enabling true collaborative markets for generating revenues. These innovations have helped make channel relationships more productive without raising costs. At the same time, the Web has provided channel and alliance managers with new and powerful tools to address classic channel management challenges such as channel conflict and sales training. Web-based PRM solutions address three primary revenue activities: pre-sales activities, the sales process, and post sales activities. Some functions in partner management are needed across all stages of the sales process while others only apply to one sector. For example, sales force readiness for a new product is mainly a pre-sales activity while partner life cycle management has merit all the way from recruiting a partner to rewarding them for excellence and achievement. Vendors must bear in mind the five key aspects of PRM within the three processes of pre-sales, sales and post-sales. These aspects are Relationship, Productivity, Transactions, Community, and Entitlement. Relationships are the foundation of all PRM activities and process; if properly managed, relationships can serve the key interests of the vendor. A program that uses this philosophy with appropriate metrics will have a highly educated and motivated partner with efficient engagement models. Within each category, PRM solutions must deliver a specific set of functions and infrastructure capabilities. The key functions are: Partner Lifecycle Management PRM solutions must enable vendors to help partners and vendors manage their indirect business. This requires a good knowledge of the partner base and good PRM applications to plan, recruit, monitor, and analyze the performance of registered partners. This analysis can then be used to deliver targeted and relevant information, transactions and services to these channels. Like many parts of PRM, lifecycle management is a combination of process and technology. It involves gathering and managing valid, up-to-date information on partners and then using this information to service them appropriately. Analytics and Insight This is the ability to capture partner information to make relevant decisions based on partner performance and processes. The Internet offers new opportunities to collect and respond to fast-changing data in real time. Vendors that are perceived to be responsive to these changing market conditions will have a significant advantage in the channel and hence gain preference among their key channel partners. Demand Creation A major reason partners choose each other is their joint ability to create market demand and grow revenue and market share. Traditionally vendors have not done a good job of creating demand for their partners and delivering it to the people that matter the channel sales reps in the field. With PRM-derived campaign management, funds management and content creation and delivery tools, effective demand creation is finally an achievable goal. Companies can create leads, add value to them, and deliver them to the people who need them leveraging these PRM applications. Sales Effectiveness Like any effective sales force, partners will sell what they know well. Often the channel will promote a product purely because it s the easiest to sell, not because it s the best or generates the most revenue for them. Using Kapi Attawar is Vice President, Marketing, for, an industry leader in delivering comprehensive PRM service. He was previously Director of North American e-services for Hewlett-Packard. Defying the Limits 169
2 Partner Relationship Management Supply and Demand Chain CRM Web Call Center Supplier Direct Sales Vendor ERM Customer Partners PRM The Components of Integrated PRM CRM ERM Customer Demand Creation Transaction Efficiency Partner Life Cycle Management Service & Support Sales Efficiency Re 170 Defying the Limits la tio A n a ly nsh ti c s & R e p o r t i n g t ip M ras anage m ent an d Inf tu ruc re
3 PRM-Enabling Functionality Components PRM Application Best of Breed B2B Application B2B Application Suite Demand Creation Campaign Management Content Management Market Development Funds Management (echannel) Sales Effectiveness Sales Training Partner Forecasting Opportunity Management Interactive Selling & Cross Selling Lead Management Sales Configuration Proposal Generation Partner Compensation (echannel) ATG Broadvision Blue Martini Delano E.piphany imediation Promptu SoftAd Vignette Order Efficiency E-Commerce Sell-Side Transaction Platform (echannel) Azerity (Intellic) Calico Commerce Firepond MarketFirst MarketSoft Promptu SoftAd Trilogy Service & Support Service Training & Certification Order Management Service Level Management (echannel) Ariba ATG Broadvision CommerceOne IBM (Websphere) Vignette SAP Partner Life Cycle Management Partner Profiling Partner Registration Partner Analysis Partner Matching Partner Planning Partner Monitoring Partner Recruitment (echannel) Azerity (Intellic) Firepond (Brightware) Primus Nortel PeopleSoft Analytics & Insight Analytic & Reporting Capabilities Leverage of Insights to Enhance Performance (echannel) Brio Business Objects Cognos Kana (Broadbase) E.piphany Microstrategy Relationship Management Services and Infrastructure Supports modeling of many-to-many relationships Role-based distribution of applications and content distributed throughout extended demand value network Thin-client administration and customization tools, and secure data schema Collaboration and workflow tools for tasks, projects and processes Back- and front-office integration, including multiple touch-points (echannel) imediation MarketSoft Gartner Group, May 2001 Defying the Limits 171
4 Web-based training methods as well as sales and opportunity management tools, vendors can help partners to effectively cross-sell and up-sell. In addition, PRM tools can help vendors to forecast demand, thereby enabling vendors to plan better and manage costs. Transaction Efficiency Vendors often hear from their channel partners that they are difficult to work with and that channel partners have trouble dealing with vendors complex internal processes and systems needed to deliver solutions to customers. The advent of the Web has added an additional channel to contend with the Web commerce site. This means it is important to have solutions that enable sell-side transactions that provide comprehensive integration of partners systems into the vendor s front and back-office applications, including sales force automation (SFA), Customer Relationship Management (CRM) and Enterprise Resource Planning (ERP) systems. In other words, the channels need a single access point with a consistent view of all applications that are required for them to do business. Service and Support Vendors need to consider service and support from two aspects the service from vendors to partners and also the service customers receive from whichever channel they encounter. For the channel this means pre-sales and post-sales support as well as order management and entitlement management. For the customers and channel, service training and certification become key to ensure the quality is delivered and the vendor s brand is protected. PRM Infrastructure Across all sales and service functions, the user needs a consistent infrastructure with a common look and feel. This should deliver all aspects of enterprise scalability while catering to the end-users needs as a consumer. For a vendor it is important that uptime, security, and scalability are addressed; meanwhile the end user needs a single log-on to multiple back-end and front-office systems featuring a user-friendly interface. As economic uncertainties force a new pragmatism about the return on investment for all IT spending, PRM providers are already embracing analytics and metrics as both a differentiator and an opportunity to prove the viability of their applications. WEBLINK Learn more about Partner Relationship Management in a white paper by Gartner Inc. s Wendy Close at The CRM Project website, The platform should automate the management of multiple relationships as defined by the vendor organization and distribute services and transactions through a reliable and secure environment based on the roles of the people accessing the services. There should be only one secure database and schema across PRM, CRM, and, if possible, ERM (Enterprise Relationship Management) systems. Administration should generally be biased towards selfmanagement to reduce the overhead of a large IT maintenance staff and collaboration and workflow tools should be available for all key projects and processes. These functions are fundamental to the success of any PRM implementation, but it can be difficult for many organizations to successfully implement all the functions at once. This is partly due to technology issues such as legacy environments but also because of people, process, and bandwidth issues. So it is important to look at the state of the market and match the available solutions and services with the priority needs of your company. Then, based on a long-term vision, start at the point of greatest need to get a quick success under your belt. The rest of the PRM solution can then be implemented with the blessing of the whole company. Market Dynamics The Partner Relationship Management arena is changing rapidly, driven by an urgent need to turn distribution channel relationships into a sustainable competitive advantage. There are important market trends now influencing the market, making PRM a critical element to enable companies to compete effectively. Support for the full lifecycle of a PRM strategy is now essential. What is becoming very clear is that PRM vendors need to embrace all aspects of the Partner Relationship Management spectrum, including pre-sales, sales, and post-sales activity. Vendors focusing only on one of the three areas of PRM run the risk of greater competition from vendors with related technologies and potential consolidation. Demand chain metrics and analytics have arrived. As economic uncertainties force a new pragmatism about the return on investment for all IT spending, PRM providers are already embracing analytics and metrics as both a differentiator and an opportunity to prove the viability of their applications. Partner Selectivity is also driving the vendor need for stronger bonds and preference in the channel. As partners move higher up the service value chain, they cannot afford to service many vendors. Statistics show that many major distributors get the majority of their business from their top three vendors and that this gap is currently widening. The race is on to gain channel mind share; once the battle is over it may be too difficult to win a majority position in any market space. Partner Relationship Management is not new in concept but this is the first time channel management technologies have combined with promise of the Internet to fundamentally enhance and enrich the channel relationship. In the past, forward-thinking vendors such as Cisco attained market leverage by building IT solutions including Partner Relationship Management solutions themselves. Today these same solutions are available from a combination of vendors. This enables suppliers, manufacturers, distributors, and others to get to market faster, with more affordable and practical solutions than at ever before. Pragmatism drives this market. Ultimately those technologies that deliver the ability to retain customers and grow a customer base through responsiveness and 172 Defying the Limits
5 predictable execution will survive today s uncertain economic climate. Global 2,500 companies want pragmatism and proof of execution over promises. So, if the solutions are available and the market is ready, what do you need to consider before you embark on a PRM implementation? Points to Consider First, it is important to reject a series of common misconceptions about PRM. Vendors cannot think of partners as extensions of their own sales force but rather as extensions of their customers. They must distinguish between partner companies and the real end users within these companies who sell all vendors products. It is also important to keep in mind the following key points when planning to deploy PRM: Start with your goals in clear focus. First, decide what you want to accomplish with a PRM system and move forward with the integration strategies to make internal and partner systems work together seamlessly. Many companies use PRM applications in conjunction with their Customer Relationship Management (CRM) prospecting tools, so be sure to think through the role PRM can play with regard to all areas of your organization. The opportunity to gather greater input into product lifecycle management (PLM) is also perfectly attuned to the data captured by PRM. Focus on metrics. Especially in these tough economic times, it s critical to develop a solid business strategy based on the actual performance that occurs in your channels of distribution. Metrics on the development of sales for a new product, the sell-through rates on specific products, and the definition of new strategies based on the results of promotional strategies are all necessary to create a consistently effective PRM strategy. Think Scalability. Since many PRM vendors both have an ASPfocused hosted model in addition to a license model, be sure to budget a significant amount of time to assess how the applications are hosted and with whom. Exodus is clearly a leader in this area, as their commitment to security is one of the most aggressive in the industry. Think Easy, Think Self-Manage. Many vendors deliver solutions that require complex training and huge investments to manage the implementation. The Web now offers the ability to reduce training to minimum and to allow end-users new levels of self-management. This reduces the overhead of implementing and managing solutions while delivering significant time-tomarket advantages. If all users need to get onto a system is knowledge of the browser and they can implement personal changes in real time, they are more likely to feel empowered and to use the system consistently. Conclusions The PRM marketplace is undergoing fundamental shifts, as companies increasingly focus their revenue strategies on customer and demand chain relationship management. The ability of PRM systems to help cultivate and drive sales from the earliest pre-sales processes to post-sales service and support has combined with PRM s ability to deliver key metrics for ROI measurement. The result is clear value from PRM implementations for companies in a wide range of industries. PRM is becoming a key area of differentiation for vendors and as a result is now a rapidly growing market with good, robust solutions available from the PRM leaders. WEBLINK Learn how helps companies accelerate sales, reduce channel operation costs, and increase channel inventory efficiencies at Defying the Limits 173
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