By Margaret Steen
February 15, 2016
Channel Data Management (CDM) gives manufacturers and their channel partners new insights into every part of the sales cycle. But, to achieve clear analysis to fuel every channel decision requires innovation, technology, and a willingness to change.
At a recent Industry Summit in Silicon Valley organized by Zyme, a pioneering developer of cloud-based CDM, participants from technology and consulting companies discussed both the promise of CDM — and what’s needed to implement it successfully.
Channel sales — which account for trillions of dollars in sales each year — have traditionally lacked good data, said Chandran Sankaran, founder and CEO of Zyme. Companies pay huge sums to channel partners in incentives for selling – not always based on solid numbers. They also pay to keep products in inventory, which they might be able to avoid with better information. “All of this is managed blindly, or anecdotally,” Sankaran said.
Changes to accounting rules have pushed manufacturers to get a better handle on their data about product sales by channel partners, data which is often times out of the view of the manufacturers.
“It’s the decade of data,” Sankaran said. The challenge is to make that data clean, simple, and consumable so that manufacturers and channel partners can act on the information they receive.
Major Manufacturers Speak on the Importance of CDM
Speakers from several large tech manufacturing companies explained how channel data management is improving their businesses. These included personal computing, printer, peripherals, enterprise software, and tech services companies.
“We are very channel-based,” said the director of channel data at a major Fortune 100 technology manufacturing company. Its old tools created an inconsistent partner experience and had high operational costs, she said, as well as a lack of visibility into channel performance.
With many products being sold in multiple countries by many different partners, “we didn’t have a single vision around how to approach collecting that data and how we’re going to use it,” she explained. Her company is now working with a large international consulting firm and Zyme to create and deploy a system to provide useful data to finance, sales compensation, supply chain colleagues, and channel partners.
By just automating manual channel processes at her company, she estimates a 25% savings in operational costs.
At Microsoft, the realization that channel data affected everything from marketing to supply chain management to finance made the company want to improve its data collection and analysis.
“Channel data became paramount,” said Frank Martin, senior program manager for Microsoft.
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Microsoft’s acquisition of Nokia, which implemented Zyme’s CDM solution, helped move the process along. “That was our first glance at how channel data could work successfully,” Martin said.
In a pilot program, the failure rate from manual submissions was 50%, but with the Zyme platform the failure rate dropped to zero. Martin added: “That’s one of the huge benefits of Zyme’s CDM. Before we pull data in, it’s clean, it’s standard, and it hits our systems without a hiccup.”
IDC Research Results
Gerry Murray, research manager with IDC’s CMO Advisory practice, told the audience of manufacturers that “there’s a lot of very sloppy decision-making throughout that whole channel chain of decisions. Data is the way you fix that.”
Channel data management can help manufacturers understand which partners are getting the best return on investment, for example, and why, Murray said.
Murray also recommends that manufacturers evaluate partners based on growth potential as well as how much revenue they produce now.
“The reason most companies don’t do any of this is that they don’t have the data,” Murray said. “You want to be able to see all the partners, and the data is the thing that turns on the light.”
Reliable, Accurate Data Empowers Manufacturers and their Partners
Better channel data management can lead to a more effective incentive program. It can arm sales people with information about recent changes in their territory. It can help companies lower channel inventory. And, it can give manufacturers better information on who has bought their products so they can sell upgrades and service contracts, for example.
To take advantage of CDM benefits, however, companies need to manage increasingly large amounts of data.
“The challenge of managing the channel at scale is getting bigger,” Murray said. As new product categories emerge — for example, with the advent of the Internet of Things — companies find themselves with new competitors.
Decisions need to be made more quickly, as well, Martin said. He said it has been a challenge for Microsoft to get a handle on its channel data in an increasingly competitive, rapidly evolving landscape, with time-perishable products such as the Surface.
And although collecting accurate data is an important first step, the critical factor is “having the know-how to make that consumable to the user,” another executive said.
Implementing a new system for channel data management isn’t easy. “Our processes don’t match the tool,” she added, so they are having to make adjustments.
Improving channel data management is not a one-time process, either.
The landscape for channel sales is changing rapidly, said the managing director at a large international consulting and IT strategy firm, due to the proliferation of cloud-based services, the increased complexity in incentives and partner offerings, and an increasing need to recognize value as well as volume when evaluating partners.
“The channel programs are not going to stay static,” he said. “The expectation of your sellers and channel partners is that manufacturers are going to be more of an insight engine to them.”
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Margaret Steen is an independent business writer based near Silicon Valley.