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Falling Margins In Storage Business
 
Vendors maintain that service will primarily enable partners to earn more revenue. But the latter argue that there is a dearth of technical talent in the storage industry and want vendors to invest more in training the channel.
 

 
Wednesday, August 04, 2004

 

Vendors maintain that service will primarily enable partners to earn more revenue. But the latter argue that there is a dearth of technical talent in the storage industry and want vendors to invest more in training the channel.

Margins dipping due to competition...
Storage is one of the high growth areas in the IT industry today. Customers are highly sensitized about storage and don't want to take any risks as it could result in huge losses. Despite this, partners are witnessing a steep drop in margins due to an increase in the number of players in the market. Partners are therefore compelled to offer good after-sales support to survive.

“There are not enough technically trained people in the industry. Vendors should conduct HR workshops to help partners retain technical talent”
Ranjan Chopra, Chairman, Team Computers

Shortage of skilled manpower...
While offering good post-sales support is not a bad practice, the problem is that there are not enough technically skilled people in this country, who really know the nuances of storage. Demand for good manpower is more than the supply. Vendors need to get aggressive on training and certification, which would ensure that there are more qualified people in the storage vertical.

Promotional programs routine activity...
Promotional programs are of great importance, as they are introduced when vendors feel that margins are low in certain products. These campaigns are routine activities. It actually acts as a win-win situation for both the principal and the partner if these programs are designed to perfection. Vendors should, instead, hand-hold partners, to enable them to retain customers.

Close vendor interaction needed...
We look forward to one-to-one interaction with them on a regular basis. Moreover, vendors should be sensitive to the fact that since there are very less technically trained people available in this business, attrition is a key issue that the channel community is facing. They should organize HR workshops which would help a partner retains his technical guys.

Certifications shouldn't be too expensive...
Vendors should realize that it is not possible for all partners to go for certification if it is too expensive. It is the principal's job to ensure that they charge the partners nominally or provide it free of cost, which would ensure more participation. With more certified people in the market, employees will not be tempted to leave their organization. Partners too can get easy replacements of manpower. But all this is possible only if the vendor's co-operate and take measures in this regard. 

“We are investing heavily to train and certify partners, which ensures that they can gain a customer's confidence and earn more through services”
Pushpendra Kumar Gupta, Director, Strategic Development, Intercontinental Operations, Legato Software

Margins drop as business grows...
When a particular business is on the growth mode, margins for the channel partners start dipping. This is what is happening in the storage business as well. Today, storage is one of the high-growth areas, growing at 100% on a year-on-year basis. For partners complaining that margins are dipping, we have been constantly saying that it is the after-sales services, which would earn them the maximum profits.

Regular training sessions...
The competition is getting tougher and we have realized that the more we train our partners technically, the more beneficial it is going to be for them. This is precisely why we have regular training program for our partners. We recognize that only if our partners are profitable, then we will be successful too. These regular training sessions help partners train as many of their employees on the latest technology, as possible.

Activities enhance profitability...
Partners who purchase products directly from us earn cooperative marketing funds monthly based on 3% of net purchases. These funds may only be used for lead-generation or customer retention activities around Legato solutions as well as the partners' value-added solutions and services. Moreover, there are constant promotional programs, which go on around the year and partners can earn lots of rewards for good performance.

Certification must for growth...
Providing certification is very important for us. Our certification programs are internationally valid for two years and the partner can renew it after it gets expired. More partners are going for certification as they realize that customers' are very selective and would only be secure with somebody who is a certified person. We have been investing heavily in this exercise and our storage partners are well trained to give the best support to customers. This ensures that the customer retention rate increases, thereby boosting their business.    

Training at nominal rates...
We give the best possible margins for partners and constantly train them. We even make sure that they get trained at nominal charges, as India has been identified as one of the key markets by Legato. Those partners who want to purely sell storage products are not going to last long in the market.

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