In these challenging economic times where every business expense is under scrutiny, the cost for running a channel program is also under the microscope. Every aspect from headcount to administrative processes to partner funding is being assessed for value and ROI. In some cases, whole channel programs are being sacrificed to preserve other mission critical functions within the company.
Outsourcing -- the practice of using outside firms to handle operations normally performed within a company -- is a familiar concept to many businesses. Companies routinely outsource their payroll processing, accounting, distribution, and many other important functions - so what about channel management programs?
From experience in serving our own clients, we have determined five compelling benefits for outsourcing channel program management:
1. Controlling costs
Cost-cutting is arguably the most significant factor in outsourcing a channel program. Companies can realize savings in two functional areas: funding budgets and operational efficiency. Reducing errors in payment calculations alone can often justify the investment in outsourcing.
2. Increasing efficiencies
Companies that do everything themselves have much higher rates of interaction between their marketing, administrative, financial, and executive departments. The time spent on communications and manual processes among program stakeholders can be cut in half through outsourcing.
3. Reducing labor costs
Adding and training full-time staff can be very expensive and temporary employees don't often live up to expectations. Outsourcing channel experts such as account managers, creative consultants, and compliance auditors can reduce time to perform administrative tasks and their associated labor costs.
4. Focusing on core business
Every business has limited resources, and every manager has limited time and attention. The outsourcing of management services can help companies shift their focus from peripheral task-related activities to strategic actions that better serve the channel partner and ultimately their customers.
5. Reducing risk
Markets, competition, government regulations (including Sarbanes-Oxley), financial conditions and technologies all change very quickly. By outsourcing to subject matter experts with strategic and tactical knowledge in managing channel incentive programs and their funds, companies can avoid unnecessary risks and maximize opportunities for program success.
A necessary first step to begin your evaluation of outsourcing is to identify each existing channel program process and assign a time (how long does it take?) and cost factor (how many dollars spent in labor and materials?) to it. Even if you ultimately choose not to outsource, this benchmarking step will consolidate all costs associated with your program and ideally illuminate processes where savings can be realized. In my next blog, we will discuss these processes and offer examples of how you can estimate time and cost.
Michael DeBarros is the Business Development Manager at CCI. He is a veteran of 22 years in technology sales and has held channel management positions at two leading software companies. Michael's experience in working for both partners and vendors offers unique insight into today's channel challenges.