IT supply chain is small. In IT many times the product/service is directly provided by the original equipment manufacturer to the end customer.Sometimes, there is atmost one Intermediary between the OEM and the end customer. So, in short sales channel in IT is simple. Whereas, in other industries like Fast Moving Consumer Goods the sales channel is complex and with large number of intermediaries in between. For eg. Dell products can be booked online, so in this case there are no intermediaries.
Types of Channel Partners
Referral – Referral Channel partners just do lead generation for the OEM or another partner, they also participate in lead qualification and earn commission on successful sale.
Services: Services channel partner render implementation and peripheral services. Eg. training services.
Reseller: They sell the same product at a margin. Reseller’s business is dependent on license sales rather than services.
Value Added Reseller: VAR sell the product after adding some value to the product. For eg. A company which is a partner of SAP may want to sell ERP in India.For that may they customize the product according to Indian Financial standards.
System Integrators: SIs are the companies which specialize in wide range of IT related product and services.
Independent Software Vendors:ISVs build their own solution using OEM’s technology as a backbone. For eg. a vendor may build a product that may run only on Microsoft .NET. Microsoft may offer a partnership to the vendor and provide its technology and support at a cheaper cost because every product sold by the vendor, leads to selling of Microsoft product too.
IT sales channel doesn’t involve an inventory management as in IT software industry we deal with intangible products.
Importance of channel in IT
Channel in IT allows the OEM a wider market reach.An OEM cannot reach its entire customer base alone.It has to take help of channel partners.Some channel partners have a stronghold in areas where the OEM cannot directly reach.It allows buyers to have the convenience of place.
Channel in IT have it deficiencies too.Ineffective channel management can lead to channel conflicts.Channel conflicts may arise due to goal incompatibility.For eg. The goals of OEM and partner may be different.The goal of the partner must be aligned with the OEM.Indepedent Software Vendors have high dependence on manufacturers.
