Redefining Partner Relationship Management Inform Transact Serve

2002 Comergent Technologies, Inc. All rights reserved.

Table of Contents
Executive Summary_________________________________________________________________ 3 Introduction _______________________________________________________________________ 4 Traditional Partner Relationship Management ___________________________________________ 5 Challenging Traditional Partner Relationship Management The Information-Centric View of PRM ___________________________________________________________________________ 6 Redefining Partner Relationship Management The Information AND Transaction-Centric View of PRM _________________________________________________________________________ 6 An Expanded View of Partner Relationship Management Empowering Your Channel _________ 7 Making it Easier for Your Partners To Do Business With You While Building Partner Loyalty __ 9 Return on Investment (ROI) of a PRM Solution ________________________________________ 9 Comergent Partner Relationship Management Solution __________________________________ 10 Conclusion _______________________________________________________________________ 13

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Executive Summary
According to Gartner, Inc., by 2010, 65% of revenue for Global 2000 enterprises will be driven or influenced by indirect demand network partners.1 As enterprises increasingly rely on their extended network of partners to grow their business, while reducing the cost of sales and customer service, a major priority is being placed on technology solutions that can help accomplish this. In 1998, Partner Relationship Management (PRM) vendors emerged to address this need, providing a variety of solutions to assist enterprises in improving communication with their partners and managing this extended network. Applications such as profile management, lead management, and training and certification were developed and deployed. However, these solutions have proved to be myopic in their vision of the potential value of managing partner relations. Focusing on making it easier for enterprises to communicate information to their partners, these solutions failed to empower partners to sell the enterprises products and services more effectively, while building partner loyalty. In this white paper, Comergent redefines Partner Relationship Management with a comprehensive suite of applications focused on directly impacting an enterprise and its partners joint-sales. Our market research and extensive customer interviews have determined that the key PRM solution components to accomplish this are: Automation of the lead-to-order process to reduce channel support costs, decrease missed opportunities, and increase sales Easy to use partner portal to make it easier for your partners to do business with you Comprehensive partner profile management to effectively manage partners and respond to their needs, including the distribution of partner-specific information to applications throughout the PRM system to facilitate increased leads, marketing, and sales Automatic channel inventory and sales forecasting to increase visibility into channel business activity and reduce the risk of inventory exposure Comprehensive analytics and reporting to increase the effectiveness of every partner 100% internet and message-based architecture to provide an open and flexible system that easily integrates into internal and external systems through web services

Spanning the entire pre-sales, sales, and post-sales lifecycle, the Comergent PRM solution provides these key components, enabling enterprises to keep partners informed to ensure products are positively and accurately represented, assist partners in the sale of products to drive revenue through the channel, and understand and measure partners performance to ensure the effectiveness of investments in the channel. Today, enterprises need to focus on deploying technology solutions that immediately impact their business, yielding positive results. This next generation of partner relationship management enables enterprises to accomplish this.

Robert DeSisto, Gartner, Inc., Partner Relationship Management: Optimizing the Demand Network Presentation, March 5, 2002. Comergent Technologies, Inc. 3

Introduction
Distributors, resellers, jobbers, retailers, agents, etc. according to AMR Research, today, indirect sales channels represent between 40% and 70% of most enterprises revenue.2 Whether your enterprise falls in the low, mid, or high end of this range, you are relying on your channel to drive revenue, and subsequently, your success. Today, most partner networks function independently, with limited and inconsistent support from the enterprise. And despite the emergence of PRM solutions to address these challenges, they have yet to provide the types of applications that really empower partners to sell your products and services. In this white paper, we will: Describe traditional PRM solutions, discussing their strengths as well as limitations in partner usefulness and adoption Redefine PRM with a focus on the information and tools needed by your partners to sell your products and services more effectively and efficiently Provide an expanded view of PRM, a solution designed to empower your channel, make it easier for them to do business with you, and build partner loyalty Discuss the Return on Investment (ROI) of a PRM solution Describe the Comergent Partner Relationship Management solution

Louis Columbus, AMR Research, Channel Partners for Profit, October 2001. Comergent Technologies, Inc. 4

Traditional Partner Relationship Management

In the mid-1990s, a new breed of software applications emerged that focused on improving a sales organizations ability to manage its customers. Customer Relationship Management (CRM) solutions provided core applications such as sales force automation, call center, service, and marketing. All these solutions were designed to improve an enterprises ability to manage and access relevant information on its customers, such as customer profiles, opportunity tracking, service history, etc. However, CRM solutions were limited to focusing on an enterprises internal infrastructure and the customers it directly interacts with. Partner Relationship Management (PRM) solutions emerged to address the extended enterprise the indirect sales channel. In the late-1990s, a few PRM vendors emerged developing their solutions around the CRM framework of managing information. The goal being to create a solution for channel partners, that accomplished what CRM solutions accomplished for sales organizations essentially indirect sales force automation, passing information back and forth between the enterprise and its partners. This information-centric view of PRM helped enterprises improve their communication with and management of their channel partners, with applications such as profile management, lead management, and training and certification (see Table 1: Traditional PRM Solution). While these applications eased the partner information management process for enterprises and their partners, they failed to provide both parties the tools needed to enable actual sales transactions. Traditional PRM Solution
Pre-Sales Information Management Application Profile management Description Enables enterprises and partners to create and maintain partner profile information, including business and demographic data, partner levels, certification levels, entitlements, etc. Enables enterprises to distribute leads to partners and enable partners to track the status of leads. Enables enterprises and partners to jointly manage marketing campaigns. Enables enterprises to manage the education and certification of its partners, including course registrations, online training, etc. Enables enterprises to budget, track, and measure both marketing distribution funds (MDFs) and partner compensation. Enables enterprises to measure and analyze partner information, including leads and training and certification status.

Lead management Marketing campaign management Training and certification Funds management Measurement and Analysis Partner analysis

Table 1: Traditional PRM Solution

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Challenging Traditional Partner Relationship Management The InformationCentric View of PRM

The flaw in traditional PRM solutions is that they place the information vs. the transaction at the center of the solution and do not link to any transaction capabilities such as order management, inventory management, or logistics. In this model, enterprises push out to their partners the information they feel their partners need to be more effective at selling their products and services. For example, if an enterprise is releasing a new product, the enterprise can design a training curriculum to educate its partners on this new product, including the appropriate online course, materials to review, etc. While this initial training is critical to ensure partners are properly educated on the enterprises products, in the real world, only a subset of partners actually take the course. A more common scenario is a few weeks after a new product is released a partner receives a lead from the enterprise. The customer is interested in the new product. The partner has either already taken the training course and remembers information about the product from the course, or more likely, will start a search internally and externally for information on the product that will most likely lead to information on the enterprises website or a hard copy brochure or datasheet. In this real world scenario, the enterprises PRM solution is solely passing the lead to the partner. It is not actually providing the partner, with the lead, the tools needed to access the most up to date information on the new product, compare it to alternative products, evaluate whether or not it is the most appropriate product for the customer, learn about promotions associated with the product, and more. This is just one example of how a traditional PRM solution is limited in its approach. The ultimate goal of an enterprises PRM strategy should be to empower its partners to more effectively sell to and service its customers. Providing them with the tools needed, at their fingertips, to accomplish this. As a result, your partners can be more responsive to your joint-customers and actually increase sales.

Redefining Partner Relationship Management The Information AND Transaction-Centric View of PRM
The goals of a partner relationship management strategy are simple: Improve your partners ability to sell your products and services Increase sales through your channel Decrease partner support costs

A PRM deployment should not be considered successful if an enterprise is merely able to distribute information and leads to partners and manage a variety of ancillary relationship issues. This approach only addresses the pre-sales stage. A high-impact, information AND transaction-centric PRM solution will address the sales and post-sales processes, in addition to the pre-sales process. By providing your partners with the tools needed to actually sell your products and services and convert leads directly into orders, the return on investment (ROI) of your PRM strategy will increase dramatically.

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An Expanded View of Partner Relationship Management Empowering Your Channel

PRM strategies that address pre-sales, sales, and post-sales issues represent the single best opportunity for business impact in the next 12 months. Louis Columbus, AMR Research In early 2001, technology analysts including Gartner, Inc., AMR Research, and META Group began studying existing PRM deployments, analyzing with both enterprises and vendors what worked, what didnt, and what needed to be improved upon. The analyst firms concluded that the initial PRM solutions were too tactical and information-oriented, failing to focus on enabling the entire sales cycle, and subsequently, delivering the applications that could facilitate a complete solution. As a result of these exercises, the analyst firms developed an expanded view of PRM, one that moved beyond pre-sales applications, to include both sales and post-sales. This expanded view of PRM is detailed in Gartner, Inc.s Partner Relationship Management Building Blocks3, AMR Researchs Partner Relationship Management (PRM) model4, and META Groups 11 Point Channel Relationship Framework5. Each of these analyst firms definitions significantly expand upon the traditional information-centric PRM solution to empower channel partners throughout the pre-sales, sales, and postsales processes. In the Information and Transaction-Centric PRM Solution table below, we provide a synthesis of the solutions that these three analyst firms define for delivering this next generation of high impact partner relationship management (see Table 2: Information and Transaction-Centric PRM Solution). Gartner, Inc. Partner Relationship Management Building Blocks META Group 11 Point Channel Relationship Framework
11-Point Channel Relationship Framework 1. Partner management 7. Collaborative order management 2. Brand management 8. Product to price management 3. Marketing management 9. Lead management 4. Commerce capabilities 10. Use of virtual show rooms 5. Service management 11. Industry collaboration initiative support 6. Product management

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Robert DeSisto, Gartner, Inc., PRM Features and Business Benefits, January 31, 2001. Louis Columbus, AMR Research, Channel Partners for Profit, October 2001. 5 Gene Alvarez, META Group, Building a Framework for Channel Management, November 6, 2001. Comergent Technologies, Inc. 7

Information and Transaction-Centric PRM Solution

Pre-Sales Application Profile management Description Enables enterprises and partners to create and maintain partner profile information, including business and demographic data, partner levels, certification levels, entitlements, etc. Enables enterprises to distribute leads to partners based on profile information and enable partners to track the status of leads. In a transaction-centric PRM solution, fully integrated with commerce applications to enable partners to leverage assisted selling tools (product catalog, guided selling, quoting, etc.) to convert leads directly into orders. Enables enterprises and partners to jointly-manage marketing campaigns, including creating and tracking leads resulting from campaigns. Enables enterprises to manage the education and certification of its partners, including course registrations, online training, etc. Enables enterprises to budget, track, and measure both marketing distribution funds (MDFs) and partner compensation. Online assisted selling tools for partners to use to sell the enterprises products and services as they are working with customers. Includes product catalog, guided selling, configuration, and marketing. Enables partners to quote products and services to customers, including pricing and inventory availability, as well as support online price negotiations. Also enables partners to route quotes to customers electronically. Enables partners to directly order products and services for customers. Enables partners to service their customers after the sale, including order status, order change/deletion, returns processing, and warranty management. Enables enterprises to measure and analyze partner information, activities, and performance, throughout the pre-sales, sales, and post-sales lifecycle. Also enables analysis of channel inventory and sales forecasting information.

Lead management

Marketing campaign management Training and certification Funds management Sales Assisted Selling

Quote management

Order management Post-Sales Customer service management Partner measurement and analysis

Measurement and Analysis

Table 2: Information and Transaction-Centric PRM Solution

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Making it Easier for Your Partners To Do Business With You While Building Partner Loyalty
From extensive customer interviews, the number one reason enterprises are investing in PRM solutions is to make it easier for their partners to do business with them. Once this is accomplished, increases in revenue and decreases in costs quickly follow. By supporting your partners with the information and tools needed to sell your products and services, you are making it easier for your partners to do business with you. An information and transaction-centric PRM solution empowers your partners to more efficiently perform the day-to-day business functions such as selling your products and servicing your jointcustomers. The easier it is for your partners to do business with you and sell your products and services, the more loyal they will be.

Return on Investment (ROI) of a PRM Solution

Today, technology investments cannot be justified by the soft benefits alone, they must present quantitative justification in terms of either decreases in costs and/or increases in revenue. An information and transaction-centric PRM solution provides far more hard benefits to enterprises than traditional PRM solutions. These benefits include decreased partner support costs, improved inventory management from visibility into demand through the channel, increased sales through closed-loop lead management, and much more. Gartner, Inc. has developed a model that provides a framework and metrics for tracking the potential cost savings and revenue enhancements of PRM deployments (see Table 3: Justifying PRM Deployments)6. From this model, enterprises are able to run their individual business scenarios for justification and/or track the success of PRM deployments. In Gartner, Inc.s model, it becomes clear that applications such as order management and assisted selling, in addition to lead management and profile management, are the essential PRM components to yielding significant ROI. Justifying PRM Deployments*
As Is Cost Savings From Partner Service Customer service representative (CSRs) Resource expenses of a CSR Percent head count reduction CSR expense 1-800 line support Total Cost Savings 50 $90,000 0% $4,500,000 $15,000 ($4,515,000) To Be 35 $90,000 30% $3,150,000 $7,500 ($3,157,500) Variance

($1,350,000) ($7,500) ($1,357,000)

Revenue Enhancement From Improved Selling Effectiveness No. of prospect opportunities 1,000 % of opportunities followed up by partners 50% No. of prospects to sales opportunities 500 Win rate 60% Converted opportunities 300 % of increase in average order size 0% Order size $120,000 Total Revenue Benefit $36,000,000
*Assumption: Manufacturer with 50 partners.

1,000 60% 600 61% 366 1% $121,200 $44,359,200

10% 100 1% 66 1% $1,200 $8,359,200

Source: Gartner, Inc. Table 4: Justifying PRM Deployments

Robert DeSisto, Gartner, Inc., Partner Relationship Management: Optimizing the Demand Network Presentation, March 5, 2002 Comergent Technologies, Inc. 9

Comergent Partner Relationship Management Solution

Comergent was founded on the notion that one of the best uses of Internet technologies is to include partners in your e-business initiatives. Enabling, connecting, and managing partners has been Comergents focus since its inception. Comergent has not only developed the technology to accomplish this but has also developed a set of best practices that can be leveraged to ensure the successful engagement of diverse channels and selling partners. The Comergent Partner Relationship Management solution is the leading information and transactioncentric PRM solution supporting the entire pre-sales, sales, and post-sales lifecycle, enabling enterprises to deliver best-in-class partner sales support, while reducing the cost of doing business. Designed to empower and motivate your channel, the Comergent solution engages your partners, keeps them informed, assists them with the sales of your products, and ultimately enables you to understand and measure the performance of your partner network. Built around the fully integrated lead-to-order process, Comergent provides all the applications to enable closed loop lead-to-order management, as well as support other important partner-related business processes: Lead Management Enables you to manage the entire lead-to-order process (see Figure 1: A Partners Steps in Converting a Lead into an Order) with your channel partners, enabling you to distribute leads to your partners and ensure each lead is proactively followed-up on, increasing sales and decreasing missed opportunities. Includes lead upload capabilities, multi-party assignments and profilebased auto-assignments, e-mail notifications to partners, and online assisted selling tools, including product catalog, guided selling, configuration, marketing, quote management, and order management, enabling partners to convert leads directly into orders. Through this fully automated lead-to-order application, enterprises have real-time visibility into their partners leads status and conversions, including revenue associated with each lead. In a traditional lead management application, the enterprise is dependant on its partners manually updating the status of each lead on a periodic basis (weekly, monthly, etc.) for this visibility.

Figure 1: A Partners Steps in Converting a Lead into an Order Partner Portal Streamlines communication between you and your partners, providing partners with a personalized view into the information and tools they need to sell your products. Partners are able to immediately view and access their leads, quotes, orders, online assisted selling tools, sales forecast information, analytics, and more, making it easier for your partners to do business with you.

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Profile Management Provides a comprehensive repository of all channel partners business and demographic data as well as commerce activities. This information is leveraged throughout the system to support lead distribution, partner selection and matching, sales and marketing activities, and more. Assisted Selling and Ordering Ensures your partners have all the sales and order management tools needed, at their fingertips, as they are working with customers. This includes product catalog, guided selling, side-by-side product comparisons, configuration, targeted marketing, quote management (including real-time pricing and inventory availability), and order management. In a traditional PRM solution, once a partner receives a lead, he/she has to search through and use different, disparate systems, to find product information, price, inventory availability, and complete the ordering process. Through the Comergent solution, all sales, quote, and order management capabilities are resident in a single system. Channel Inventory and Sales Forecasting Enables enterprises to collect inventory information from all channel partners, providing a global view of inventory in the channel. Sales forecasting enables enterprises to gather periodic (daily, weekly, monthly, or quarterly) sales forecasts from channel partners, review forecasts by partner, region, product line, and more. Together, improving an enterprise and its channel partners sales and production planning. Measurement and Analysis Delivers comprehensive analytics on the activities and performance of channel partners to improve channel understanding and effectiveness. Out of the box reports include lead tracking by distribution and partner performance, partner transaction history, top performers, and more.

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Through Comergent, your enterprise is able to deliver its partners a comprehensive solution to keep them informed and assist them in the sales of your products. With the order being the ultimate goal, providing a fully integrated solution to drive more orders through your channel for true closed loop lead-to-order management. In addition, Comergent provides full analytics and forecasting capabilities to help you measure your channel partners.

All Comergent applications are seamlessly integrated into an open/standards-based Comergent platform, with native support for web services, including XML, SOAP, WSDL, and UDDI standards. This messagebased architecture enables enterprises to collaborate with their partners and customers, across the extended enterprise, supporting their entire range of external business processes, while integrating into your existing IT infrastructure to leverage information from existing systems.

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Conclusion
PRM is, first and foremost, a business strategy aimed at improving sales and productivity between companies and their partners. With 40% to 70% of business coming through indirect channels, growth, profitability, and competitiveness depend on the strength of the relationships with partners. -Louis Columbus, AMR Research Today, enterprises need a Partner Relationship Management solution that can support the entire presales, sales, and post-sales lifecycle. Automation of the lead-to-order process to reduce channel support costs, decrease missed opportunities, and increase sales Easy to use partner portal to make it easier for your partners to do business with you Comprehensive partner profile management to effectively manage partners and respond to their needs, including the distribution of partner-specific information to applications throughout the PRM system to facilitate increased leads, marketing, and sales Automatic channel inventory and sales forecasting to increase visibility into channel business activity and reduce the risk of inventory exposure Comprehensive analytics and reporting to increase the effectiveness of every partner 100% internet and message-based architecture to provide an open and flexible system that easily integrates into internal and external systems through web services

The Comergent Partner Relationship Management solution provides the most comprehensive and visionary suite of applications enabling enterprises to directly deliver and measure results through their channel partners. Gartner, Inc. also listed Comergent in the Visionary quadrant in its February 2002 Magic Quadrant report on the partner relationship management market7. Today, Comergent is the only technology company able to provide all key PRM solution components and a proven track record of customer success.

Robert DeSisto and Claudio Marcus, Gartner, Inc., Partner Relationship Management: 1H02 Magic Quadrant, March 1, 2002. Comergent Technologies, Inc. 13

About Comergent
Comergent is a leading provider of e-business software that enables large enterprises to sell more, get closer to their customers, and make it easier for their customers to do business, all through a single system. The Comergent Distributed E-Business System includes four suites of customer- and partnerfacing software applications that enable interactive selling and marketing, order management, partner relationship management, and private marketplaces. Comergent is a privately held company. Customers include such industry leaders as Cisco Systems, DuPont, General Cable, Maytag, Seagate, Symbol, and Toro.

Comergent Technologies, Inc. Corporate Headquarters 1201 Radio Road Redwood City, California 94065 USA phone: +1.877.610.6801 direct: +1.650.232.6000 facsimile: +1.650.232.6010 http://www.comergent.com European Headquarters 200 Brook Drive Green Park, Reading Berkshire RG2 6UB United Kingdom phone: +44.118.949.7022 facsimile: +44.118.949.7222

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2002 Comergent Technologies, Inc. Printed in the United States of America. All rights reserved. This product and related documentation is protected by copyright and distributed under licenses restricting its use, copying, and distribution. No part of this product or related documentation may be reproduced in any form by any means without prior written authorization of Comergent Technologies, Inc. The products described in this white paper may be protected by one or more U.S. patents, foreign patents, or pending applications. Comergent Technologies, Inc. 14