Rapid advancements in technology over the past two decades have not been matched by equivalent improvements in the ways that technology manufacturers and their channel partners work together. Leading manufacturers have lacked visibility and accurate, complete data from their channels. Reseller relationships have often been managed with a patchwork of ad-hoc tools including Excel spreadsheets, local vendors and disparate IT systems.
Channel Data Management (CDM) is now fast becoming as critical to mainstream manufacturers using indirect sales channels as Customer Relationship Management (CRM) has become essential to companies selling directly to their customers.
With improved channel visibility enabled by CDM, manufacturers are successfully reducing expenses, increasing revenues and improving partner experiences overall. From the moment a product leaves the factory, until after a sale is made by a channel partner, CDM enables accurate data collection and deep business intelligence for manufacturers and partners.
Gillian Campbell, director of channel data at HP Inc., summed it up like this: “We have always had a pretty good view of what goes into the channel, but we did not have a great view of the back end of the channel.” HP Inc., the newly formed personal computer, printer, peripherals and services company, relies on the channel for more than 80 percent of its revenue. Campbell spoke at a recent Channel Data Management Summit in Silicon Valley, describing how her company is deploying a new CDM solution to collect data directly from partners.
IDC exposes a broken business model
At the same industry gathering organized by Zyme, a developer of cloud-based CDM solutions, IDC released a new report, “Channel Data Management: Enabling Data-Driven Decision Making.” IDC research manager Gerry Murray said the number of channel partners and their diversity is increasing, as new product categories emerge, such as cloud, SaaS, mobile, big data and the Internet of Things.
“There’s a lot of sloppy decision making from corporate, to channel, to sales and management,” Murray explained. Accurate, complete and timely channel data provides decision makers the facts they need to improve decision making. Channel Data Management is transforming the manufacturing business, which, Murray said, “requires a lot of change, a lot of organizational willpower, commitment and technology.”
How CDM is reinventing Microsoft’s channel business
The CDM payoff can be substantial for manufacturers and their distributors, resellers, VARs, integrators and retailers. Best-of-breed cloud-based CDM platforms validate and enrich data collected from partners to provide unprecedented visibility into channel transactions.
“Data is the common denominator, whether it’s marketing information, sales, loyalty programs, supply chain management or financial compliance,” said Frank Martin, senior program manager at Microsoft, who gave details on Microsoft’s rollout of Zyme CDM. Microsoft is now implementing one platform that collects data from partners around the world in multiple formats and local languages.
A foundation for data, insights and new channel relationships
During a recent pilot, Microsoft successfully reduced its manual data submission failure rate from 50 percent to almost zero, using the Zyme CDM platform. Immediately after implementation, Microsoft’s on-time reporting of channel data increased more than fourfold to 85 percent, which Martin reported, made “our partners much happier with us.”
New partner enablement capabilities
IDC’s Murray believes that as channel partners become much more than fulfillment houses, manufacturers will move more into an enablement role. Companies armed with a wealth of data, improved visibility into channel sales and richer insights from their partners, can become strategic channel advisors. This is a way to rethink the whole partner relationship, because the manufacturer is at what Murray called “the center of a universe” of partners. The IDC report, commissioned by Zyme, also noted that information sharing could succeed only if there is an effective policy to avoid releasing partner data that aids competitors.
IDC also noted that partners should be required to provide data attributes needed by manufacturers to support online and digital sales. With the influence of social selling growing rapidly, manufacturers are spending more on digital commerce, which needs granular data from channel partners to close the loop on customer campaigns. Smart manufacturers are giving all partners access to aggregated channel data to help the partners better run their businesses.
Return on investment from CDM
While many companies are in the early stages of CDM adoption, initial results show significant returns for both manufacturers and their partners. According to Zyme client data, business results experienced by companies that have deployed CDM include:
- Average revenue growth of 5 percent across managed channels
- Data error rates reduced by 98 percent within 90 days of implementation
- Incentive overpayments cut by 15 percent
- Incentive payout time to partners accelerated by 54 percent
- Sales reports delivered 40 percent faster
- Inventory requirements lowered by 52 percent
Manufacturers experience a tenfold increase in their ability to respond to changes in their channels by leveraging the accuracy and granularity of improved channel insight delivered by CDM. Dispersed international channels especially benefit from deeper channel visibility and data accuracy on a common global platform, according to an analysis by Zyme of enterprises using CDM.
To receive a free copy of the IDC report referenced earlier, please go to http://bit.ly/1niTtk7.
Ken Edwards is a consultant at Zyme, a pioneering developer of Channel Data Management (CDM) solutions. He previously held positions at PwC, Capgemini and Deloitte Consulting. He worked with major software, hardware and component companies to implement enterprise management platforms including Salesforce.com, SAP, Oracle and Siebel. Contact him at kedwards@zymesolutions.com and follow him on LinkedIn and on Twitter.