Solution Providers Say Vendors, Distributors Less Supportive

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The Channel Insider 2009 Market Pulse survey found that more solution providers are finding vendors and distributors less supportive than they used to be and expect that trend to continue in 2009.

The Channel Insider 2009 Market Pulse survey found that more solution providers are finding vendors and distributors less supportive than they used to be and expect that trend to continue in 2009.

Vendors and distributors may say they are outstretching a friendly hand in this down economy, but IT solution providers paint a different picture.

Participants in the Channel Insider 2009 Market Pulse survey say vendors and distributors are now more likely to charge for services that previously were free and more likely to switch up credit terms.

Four in 10 solution providers surveyed say vendors and distributors decreased availability of technical support in 2008, and 50 percent of solution providers said they expect vendors and distributors to decrease availability of technical support in 2009.

“Some vendors have changed the amount of service they are offering for free, or charging for things that used to be free,” says Ken West, president of Lighthouse Networks. “One of the vendors I deal with used to put me in the queue for tech support when I called. Now they take a message and call back within a couple hours.”

That may not seem like a significant change, but West says he can’t justify charging his customers for tech support wait time that stretches from minutes to hours.

And it’s not just technical support. More solution providers expected several areas of support to be less favourable in 2009, including credit terms, special pricing and surcharges for logistics. Worse, many are seeing vendors take more deals direct.

Dramatically more solution providers expect market development funds (MDF) will be scarcer in 2009 than last year. Other dramatic differences came for credit terms and payment terms.

“Things are a lot of tighter,” says Richard Munger, director of Eiger Creative. “Now you have to beg and plead to find out if there are marketing funds available. Or at least you have to know that you have to ask.” 

And Munger’s firm, which primarily services Fortune 500 companies, says he’s getting squeezed by customers who hire vendor management firms to aggregate and pare down the list of support companies under contract.

“It’s hard to get on those lists once they make those decisions,” he says. “They only review them every two years.”

The Market Pulse survey showed more solution providers expect vendors to go direct in 2009, too.

“A lot of vendors are going a bit more direct and lowering the size of the deal they are willing to go for direct,” says Darrel Raynor, managing director at Data Analysis and Results. “But there are a lot of vendors that are being friendlier, too.

Most solution providers contacted by Channel Insider for a follow up interview said that their experiences varied widely by vendor.

“It very much depends on the vendor,” says M.J. Shoer, president of Jenaly, a solution provider based in Portsmouth, New Hampshire “I have recently worked on a large Cisco deal and they were extremely supportive, both in technical and pricing support as well as end-user financing.

“Regarding credit, some distributors, like D&H, continue to manage their accounts as they always have while others have become much more stringent about terms,” Shoer adds. “We have already experienced a situation where we were late with a payment and had our terms immediately tightened up and our credit line reduced as a result, so I would suspect that tolerance levels are very thin within distribution these days.”