Business Development

If you are with a reseller, you’ve probably heard the dire warnings about the impact of “the cloud” on resellers. Among the warnings are:

  • Look out. Everything is moving to the cloud.
  • If your business is just selling products, your business is going away.
  • If you don’t have a cloud strategy, your business is going away.

Resellers are getting plenty of advice on how to transform their businesses to a recurring-revenue model. Here’s a recent sampling:

Last summer, I had breakfast with a friend; someone I have known for more than 20 years.  When we first met in the 90s, she was with one of the big systems companies, and I was manager of IT Procurement at State Street Bank. Now she is with one of that same systems company’s direct VARs.  For our breakfast, she arranged to have two people from a cloud-gateway company join us.  The company, apparently, had been pitching her current company on the benefits of reselling their gateway to the storage cloud, and she wanted my opinion regarding their technology.

As it turns out, nothing about the company’s technology really mattered. The technology could have been the greatest thing ever to hit the technology road, but she wasn’t going to sell it. What mattered was how she got paid. She had a sales number, and that number wasn’t based upon closing recurring-revenue opportunities. Selling a gateway plus a service was going to get her maybe 1/4 of what she would have gotten staying on her current path of telling customers that “the cloud is unproven and too risky.”

Cycle forward another nine months, and I just met with a local reseller. I was exploring opportunities for one of my clients that offers a software solution to a vexing problem of delivering affordable, highly-available applications in an environment that lacks on-site IT resources. After listening politely, this reseller told me, “Yours would be the last solution I would sell.” Again, it had nothing to do with the quality of the product, but rather, how he got paid. Turns out that he got better revenue and quota retirement for selling a service, than he did for selling a product. Management at this particular reseller was very focused on covering operating costs with recurring revenue streams.

This takes me, now, to a friend, who quotes this Bahamian saying:

Never mind the noise in the market.
Pay attention to the price of the fish.

The channel equivalent of this is:

Never mind the noise in the market.
Pay attention to how the sales reps get paid.


From time to time as a favor to friends, I will contribute as guest blogger.  So let me direct your attention to this Guest Blog on Countdown.2.Storage ExpoRose Ross, who also attended the BDEvent, asked me to provide a write up on the one session that she missed, which was the one that I co-chaired with Mike Miracle.  For reference and completeness, here’s Rose’s very-excellent post on the rest of the event.

Rose has been a friend for many years, so, of course, I said, yes.  For those of you who don’t know her, Rose is an accomplished PR professional, who carries many titles, including:

It seems I’m not the only one who is a Rose fan.  I see on her bio that she is the 2005 winner of the Toigo Award for Best Storage PR Professional.  For those that are looking for PR support in Europe, take a look at Omarketing, and for those looking to expand a European channel, take a look at Launchpad Europe.

And under the  FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising, which focus on “Testimonial Advertisements, Bloggers, and Celebrity Endorsements,” let me assure you that I am not paid by, nor do I receive commissions or referral fees from Launchpad Europe or Omarketing.

Oh, yes, the next BDEvent will be held at the Sheraton in Palo Alto, CA, on January 25 – 27, 2011.

After we got past our initial reactions to the “Man up and buy them,” comment from George Crump, at theBDevent last week, we  got down to some practical discussions about how to make OEM agreements work for both parties.  One of the big items that comes up in negotiations is the Source Code Escrow Agreement.  The party that wants to make use of some element of software, the OEM-In, wants to ensure access to the source code from the supplier, the OEM-Out, under a variety of scenarios, including defaults by the OEM-Out.

Of course, since the source code represents the crown jewels of the OEM-Out, they will typically do whatever possible to limit the conditions under which the OEM-In gets access to the source code.  The OEM-In, on the other hand, wants the broadest possible range of triggers for access to the source code.   (more…)

The most provocative statement I heard at  The BD Event in Boston last week came from George Crump, when he said, “OEM agreements don’t work.  If a company wants the technology, they should man up and buy it.”  Mike Miracle and I chaired the Business Development Roundtable discussion where George made his comment, and I have to say, it sparked a lively debate.

Although I make my living largely by helping companies establish strategic partnerships, including OEM agreements, I thought it would be helpful to list some reasons why potential partners would say “No” to an OEM agreement. (more…)