ISPCON: How to Build Successful Channel Partnerships

ISPCON brought together ISPs and some key channel builders in this very successful session.

by Alex Goldman ISP-Planet Managing Editor [December 12, 2008]

The session description was written by Al Senia of IT Channel Planet:

In hosted services, no provider works alone. In this session, we will answer the following questions: What do channel partners really need to be successful? What elements of a channel relationship are most important—marketing support, sales leads, technical support, product training or other elements? What are some common mistakes that are made in forging channel relationships? What do channel partners look to vendors to provide and what barriers stand in the way of success?

The participants: Peter Radizeski, president of RAD-INFO as moderator. Panelists: Stephen Cho, director of product management for Google Apps; Douglas Pollei, vice president of internet strategy and corporate development for IKANO; and Joel Silberman, vice president of business development, North America, for Optenet, a Spanish filtering company that is building a U.S. channel program.

The idea of selling through the channel is this: with partners, providers of hardware and software reach a wider audience and get more sales, and companies such as ISPs and consultants, who have a strong local presence, get another product to sell to existing customers.

However, Radizeski pointed out, the ISP typically doesn't have a dedicated sales force that work with the traditional hardware channel model. "How do you help your channel partners sell," he asked the panelists.

Pollei pointed to an IKANO webinar program. "We're helping the channel educate end users," he said.

Silberman pointed out that a pure software product competes well with hardware security vendors by enabling flexible pricing and revenue sharing instead of a rigid pricing model based on licenses.

Cho pointed out that with SaaS, ISPs are now able to provide services that used to be the exclusive domain of experts such as VARs. "If you're the technology expert," Radizeski said, "people will go to you."

One thing ISPs like to hear is what Silberman of Optenet said: "Optenet has no direct sales. It's all channel sales. We'll never compete with you."

Real questions about the channel
An attendee asked Silberman if Optenet provides a portal like IKANO. Silberman said that not is in place yet, but it will be added if channel partners demand it.

Another attendee said that immediate pricing incentives were less important than the long term relationship. "We worry about your pricing power. We're in it for the long term, and we're also letting go our control. We are looking for APIs. We like Google Apps, but we want to customize them. For example, we'd like to allow our users to sign on directly, and not require they have a separate Google password."

Pollei pointed out that IKANO has a Google Apps channel program and said IKANO can help with single sign on. Cho said that the channel will evolve in such a way that ISPs and customers can switch, as APIs become commonplace. This answer did not satisfy attendees.

"But they've got all they're stuff in there!"

Cho replied, "we provide an open API and a way to take out the data."

"We could really take out thousands of customers?"

"Yes," Cho said. "It's about choice."

Radizeski pointed out that there are already some VARs putting people on Google Apps for free and making money on support. Do a little Googling and you'll find some big players doing that. For example, a year ago, Capgemeni started offering a service (no reports on whether it's profitable).

"Channel conflicts are insidious," warned one attendee. "I remember at WorldCom that there was no commitment at the top to the channel."

"The difference between Google and WorldCom," said Cho, "is that we don't have a big sales force."

"Bad things happen when ours is not the favored channel," noted another attendee."

"When there's a 'war in heaven' between dueling channel vps, we lose," said another. "Our rep team was constantly changing and we didn't get the good prices or experienced people."

Conclusion
My conclusion is this: ISPs have learned tough lessons in the past, and were burned by telebomb companies like WorldCom. Google is generally getting the benefit of the doubt, except from ISPs who were longtime subscribers of Postini and are angry at the new pricing model.

However, Cho and others are right to point to the differences between copper resale and SaaS. There should be no natural monopoly in software offered online, especially if companies adhere to principles and actually allow ISPs and their customers to take their data out after it's been put in. Enterprise services may allow this. Social networking services, such as Facebook and MySpace and even LinkedIn have shown no inclination to enable it.

— End