Why OEMs are inadvertently encouraging disruption in the channel

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By John Street, Operations Director, Agilitas.

Disruption has traditionally been limited in the channel. Organisations have typically operated on fixed contracts, leaving little room for major changes and making the development of an environment ripe for change challenging.

The wider technology space has seen constant change for much of its lifespan, particularly recently with the growth of technologies such as virtual reality and artificial intelligence. Original Equipment Manufacturers (OEMs) play a vital role in the space, supplying the tools and equipment to support the latest innovations. OEMs enable the channel to exist and operate, but they've also been known to undermine the important role resellers play in the channel by occasionally selling direct to end user customers, blurring the lines of responsibilities for all those that operate in the channel.

The challenge for resellers dealing with OEMs and technology manufacturers is that they are reliant on the decisions of the OEM. Earlier this year Microsoft decided to scrap 12 competencies as part of their strategy to become more cloud focused. In a statement on the Microsoft blog, the team behind the decision did recognise that it would be challenging for some partners, however, it highlights the control the OEM and technology makers continue to have over partners in the channel.

When it comes to maintenance and support, the issue doesn't go away. The major negative for customers when arranging maintenance and service contracts direct with OEMs is that they are tied into using just that one company's products. Particularly as we're seeing so many more multi-vendor solutions being sold in the channel, there is evidently little appetite for a simplistic single vendor approach.

Locking down technology, and making it more difficult for resellers, maintainers and service providers to carry out maintenance themselves, will likely damage customer relationships. The relationship between customers and resellers tends to be a lot closer than that of any vendor relationship, purely because the agility of resellers enables them to provide a personalised service. Consequently, rather than generating more business by lowering channel margins, OEM restrictions could inadvertently encourage resellers to change servicing models to be less vendor dependent in order to keep hold of customers.

The channel has always been good at managing and building customer relationships. In today's agility driven technology market, there is little appetite for long term contracts, restricting growth and movement. As a result, it's not just resellers who won't want to be reliant on one provider, particularly for hardware. If a part or product has restrictions on it or gets discontinued, businesses can be left without sufficient IT support.

Altering the way services are sold, to be much more multi-vendor focused and ultimately agile is both a logical step and a sensible reaction to any restrictions placed on technology by OEMs. The SME channel market has to an extent started to adopt this approach ahead of larger resellers.

Agility is key to the SME customer. Businesses need to be able to respond effectively to changing environments, so IT needs to reflect this. We've already seen an element of this in the software market with a pay-as-you-grow revolution. Software-as-a-service is now typically sold on a per-license subscription model, whereby buyers can increase or decrease expenditure at any point during a contract.

The reaction to heavy restrictions on OEM licenses should be to use smaller more specialist vendors or mixed parts that come without license restrictions. These can then be supported on much more flexible models backed up by quality inventory suppliers. In such a fast evolving market, disruption should be seen as a way the channel can take back control from OEMs, and foster an environment whereby growth is supported by a strong mix of vendors and inventory suppliers to provide effective and agile technology solutions.

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