Burning Questions: Channel Dollars and Drag

I am starting a new category of posts called Burning Questions – each on an technology industry issue to generate, hopefully, spirited reaction amongst my readers. Like last week’s Bluebird post. I have always liked the way Rich Karlgaard (editor at Forbes) posts leading questions and readers debate the topic.

 I am kicking this off with the role of channels in technology sales. How do vendors balance the benefit from channel partners with the impact they have on TCO?

• The first time I met Dave Duffield in early nineties he launched into me about how my firm Price Waterhouse was making PeopleSoft look bad because of our large implementation proposals. Of course, I had to defend PW but I liked the fact he was thinking of his customer dollars. 

• In the mid-90s, SAP faced with huge consulting bills around its projects, introduced its ASAP (Accelerated SAP) methodology to expose its customer base to vanilla implementation paths - to the annoyance of most of its SI partners which were proposing much more elaborate implementation paths

• In 2000, when I was running IQ4hire, a marketplace for IT projects, Cisco asked us to consider private labeling the exchange to monitor their implementation partner proposals and certifications. 

I bring out these examples to contrast against others than do not appear to worry as much about partner impact on TCO.

• Do telecom vendors care how hotels add significant premiums to their WIFI, long-distance and other  products - much to the annoyance of their customers? 

• Take Apple’s iPhone relationship with AT&T. The base pricing over two years of the mobile service is over $ 1,400. Add texting, Hotspot charges if you travel, international calling and roaming, international data plans. Over 2 years, you could easily be at 5X to 15X the cost of the iPhone . Did Apple try to influence the cost of the service to its customers?

• Back  to SAP. ASAP has been out almost a decade and its systems integration partners      continue to charge decent sized implementation fees. For the field sales person does a partner who may bring him/her in to other deals matter more or does the customer TCO? 

So here are some questions for my readers:

As a vendor how do you handle conflicting priorities between customer TCO and channel driven business? Has business development/partnering become easier or more difficult in the last few years? As a buyer do you depend on vendors for recommendations on partner products or do you make your own independent assessment? 

Other thoughts?