Gavin Smith is director of Element, a value-added reseller of travel technology and software to travel management companies
'Do not
waste a good crisis' has become something of a mantra for many of us over the
last year. Are corporate tech providers wasting this crisis? No, I don’t think they
are, but there is one area I believe they are not giving the attention it
deserves – indirect distribution and the growth that an indirect partner channel can
achieve.
There are two things I'll say right away. Firstly, you may
well be thinking ‘well, he would say that, wouldn’t he’ and you are quite right
to. We are a value-added reseller (VAR) of travel tech and we wouldn’t be doing
what we do if we didn’t believe in it, but sometimes the benefit of such
intermediaries is lost at both ends of the relationship – supplier, buyer (the
TMC) and, ultimately, the buyer’s clients.
And secondly, you might be wondering why it matters to you, as a travel buyer, where your tech comes from. We'll get on to that later.
In the meantime, let’s
consider some non-travel examples where the role of VARs is perhaps better
established.
Look at
the likes of Cisco, SAP, Zoho etc and how they distribute their tech. They worked out a long time ago that
they 'cannot be everything to everyone'. How
do we reduce support overheads, drive growth and deliver innovation, they asked themselves.
What they
did was look at their clients and prospects and segment them. They worked out
that if they own a specific segment of customers, and then partner with others
to sell and support their products, they can achieve these goals.
Now that
change in thinking was not without cost. They had to invest in their tech stack
to allow others to work in it. They had to create, train, and support a new
indirect sales and marketing channel. This took forethought and a change in
accepted technology distribution methodology, and there was a substantial amount of
risk associated with this new idea.
The
challenging work and innovation paid off for these businesses, their clients
and partners and a new business practice was born – the value-added reseller.
But what
does that mean for corporate travel tech?
The major suppliers in our sector, such as SAP Concur, Cornerstone
and until recently Amadeus, have
unwittingly created an elite club of users and clients, as they have
dramatically reduced their indirect sales partners to the point where they are
not taking on any new TMC reseller partners.
New
entrants like Zenmer and Troovo have come in to fill the gap created
by TMCs not getting access to their clients’ preferred solution, but they too
have fallen into the same trap.
They build
their products without thinking about future distribution. They invariably do
not have a solution that allows for indirect distribution. Have a search for
VARs that support corporate travel tech – you won't find many.
What
should these technology companies be doing now? They need to be looking at how
they can get their products into the hands of the people who want it. The likes
of SAP (though not SAP Concur), Oracle, Microsoft and many other IT and
software companies have been using VARs or channel partners for many years. SAP
and Microsoft invest heavily in these indirect sales channels.
So what does
it all mean for travel managers?
As a travel
manager you want your TMC to have access to your preferred
technology. Given the current situation with technology distribution, you could find yourself in a position where you have access to the tech you want at your current TMC, but you have chosen to move and your preferred new TMC cannot get access to that same tech as the primary supplier is not taking on
new partners.
What do you do then? Stay where you are? Move to another TMC who has
the tech? Try to do a direct deal?
The current
situation is not a level playing field. There is limited choice of who has access to what tech
across TMCs, especially across the smaller business travel agencies. Ideally
all primary suppliers should make sure their product is where their customers
are. Customers should not be forced to change supplier because the supplier
cannot get access to the tech.
How should
tech suppliers address VAR opportunities?
• Research
and talk to tech companies in other industries about using VARs to drive growth
and share of market;
• Invest
in their tech to create a true reseller product;
• Segment
their clients and prospects to get a clear understanding of where direct or
indirect relationships work best for them and their clients;
• Create a
channel partnership team that includes relationship management and marketing
support.
The
three-year ROI on this new strategy comfortably beats the cost of the lost
opportunity by not doing it at all.
What's stopping tech suppliers opening up?
No change
in direction is without its challenges. Many tech companies are not ready to lose
control because of the opportunistic tendencies of their sales teams.
Meanwhile,
resellers can be seen as being negative to the business and devaluing the
direct offering, rather than adding value to the products and services of the
primary supplier.
Two of the
key advantages of creating and supporting a partner channel, however, are that
VARs have an intimate knowledge of the market and can penetrate different segments
with ease compared to the primary producer.
Secondly, this sales channel gives
the direct sale teams the opportunity to focus on larger accounts.
Tech
companies have clients who want their product, so they need to make it easy for
them to get access to it. If you are building tech solutions for our sector and
are in the early stage of your plans, ignore the indirect channel at your
peril.