Cyberspace
Partner Relationship Management
By ManMohan S. Sodhi
A company that I am familiar with did not know whether they were making or losing money with their distributors, resellers and other sales partners; in fact, they could not even tell the total sales to each partner. To avoid this, many companies that sell their products indirectly through sales partners are considering a relatively new category of software called partner relationship management (PRM). The research group IDC has predicted that this new software category will reach $500 million in 2003.
Difference between CRM and PRM
Just as an enterprise can use customer relationship management (CRM) software to obtain a single view of each of its (direct) customer's interactions and information, it can use PRM software to get a complete picture of each of its (indirect) sales partners. The processes for selling through indirect channels are different from selling direct. According to Dennis Ryan, CEO of Allegis, a PRM software vendor, "The fundamental difference between CRM and PRM ... is that PRM is focused on B2B collaboration rather than on managing customer information and customer life cycles. That means PRM applications ... integrate the business processes and business systems from one company to another so that they can sell as a team. CRM, on the other hand, is principally focused on managing customer information."
Allegis' Ryan says that the likely buyer of such software is "a company (that) creates a good or service and sells it through some form of a value-added distribution network." More than 50 percent of all high-tech sales are indirect; indeed, more than 21 percent of software vendors and 45 percent of hardware manufacturers are considering the purchase of a PRM application according to Technology Channels Group, a consulting firm.
Ryan gives the example of high-end hardware where the enterprise selling, say, an e-commerce server also needs (through partners) to "offer software that makes the server 'come to life' in addition to support, peripheral devices, or networking hardware and software." Thus, there needs to be a network of partners around the server manufacturer that will add value and resell the servers.
There are three types of vendors: those dedicated to PRM, CRM vendors with PRM offerings, and ERP vendors moving into this space. The first category includes Allegis, ChannelWave, Partnerware, Radnet, Ten North and Webridge. Other software companies are Asera, Backweb, Intelic, MarketSoft, Callidus and Trilogy. The CRM vendors with PRM offerings include Siebel, Pivotal, Onyx, Saratoga, SalesLogix and YouCentric (formerly Sales Vision). Finally, Oracle, PeopleSoft (which recently acquired Vantive Corp.) and SAP are beginning to look at the indirect sales channel space.
Challenges with Deployment
The two major challenges to deploying PRM software are system integration and partner distrust. As with CRM or ERP, any software that intends to provide a "single view" needs integration with existing systems. A company with both direct and indirect sales may deploy both CRM and PRM software that will need to be integrated. Integrating with the company's ERP system is a must and in some cases with a partner's ERP system as well. As for partner mistrust, there are issues of data security as well as how much information should the partners provide about their own sales.
The Future
As partners expand a company's reach to customers, the software will enable an enterprise to extend collaborative selling beyond simply providing leads to partners. This naturally dovetails into private hubs and other B2B e-marketplaces. A natural extension is collaborative supply chain management, and this is where OR professionals could help. Partners for a large enterprise may not have any significant supply chain capability, so this could be an incentive an enterprise could provide its partners via the extranet.
The company I mentioned before chose to implement CRM software having been told a good story by a leading vendor. With two-thirds of their sales being indirect, the benefits of this implementation are anybody's guess.
|
ManMohan S. Sodhi (MohanSodhi@AOL.com) is Senior Director at Gandiva. He is president of the Logistics Section of INFORMS and founder of the OR news group, sci.op-research.
OR/MS Today copyright © 2001 by the Institute for Operations Research and the Management Sciences. All rights reserved.
Lionheart Publishing, Inc.
506 Roswell Street, Suite 220, Marietta, GA 30060, USA
Phone: 770-431-0867 | Fax: 770-432-6969
E-mail: lpi@lionhrtpub.com
URL: http://www.lionhrtpub.com
Web Site © Copyright 2001 by Lionheart Publishing, Inc. All rights reserved.