A year after Sybase appointed its first resellers in the UK, it has moved to a two-tier distribution model.
It aims to appoint several value added distributors and 200 new resellers over the coming months, seeking to increase volumes of its database and tools products pushed through indirect sales. It will mount a campaign to recruit resellers from rivals Informix and Oracle, which have more developed channel activities.
Sybase plans to cut the number of UK accounts with which it deals directly from 3,000 to 300. Until it bought channel oriented tools maker Powersoft three years ago it only sold direct, and did not appoint resellers for its own database and software products until last year. But like many companies, it has found that direct sales alone create huge overheads and make it hard to sell in volume, especially to smaller companies.
Chris Howgego, director of products and channels at Sybase UK, said that the distributors will be selected according to the value they can add to their resellers in terms of training, consulting and joint sales activities. The first to be appointed is Clarity, a Manchester based distributor which is part of the #100 million Horizon Group. Howgego said Sybase will not necessarily work with the largest players, but with those that are prepared to commit investment upfront to the products and to share risk and reward.
"We spent six months researching this, and it is tempting to go with the big players. One criterion that emerged is they should have no big history with a major supplier, as this clouds the focus. We want to introduce a new generation of value added distributors," he said.
"Many distributors were demanding sole status, 50 per cent of the takings and that we do all the marketing work - that model just won't survive," he added.
Contracts for new Vads and resellers are currently being drawn up, which will include stipulations on the level of value to be added, and will guard against overstuffing of the channel - something that had a disastrous effect on Sybase's traditionally channel focused rival Informix last year.
The two-tier model is likely to be rolled out across Europe. The US is already implementing such a structure, although Howgego points out that it faces a larger challenge there, because of the size of the direct salesforce and the geographical diversity.
In Europe, some countries that have never had significant direct sales, such as Spain, will go straight to two-tier distribution.
Howgego was vague on how the new structure would affect pricing, conceding that revenues now have to be shared out among a larger number of parties. However, he claims that, if customers are weighing up options on price, Sybase will "assist the channel so we will not be undersold". He also pointed out that, although Sybase' margins may fall, it would have to have spent vast sums to service a mass market directly.
In the UK, the company currently has about 600 resellers on its books but only 50 are actively promoting its products and generating significant revenue. Howgego believes some of the dormant Vars will be converted to active ones by the new system, because they will have increased support via the Vads. By combining these with new recruits to the channel, he hopes to boost the number of Sybase Vars by 200 this year.
"There are probably 300-500 resellers out there wanting to specialise in client/server and databases," he estimated.
He will directly appeal to resellers working with competitors, claiming Sybase offers a better deal than Oracle or Informix. "We will not compete with our resellers," he said. "Sybase will not, in the foreseeable future, produce applications. Nor do we have 1,000 consultants. We will offer no threat to our Vars as long as we continue to produce the goods, maintain the network and don't stuff the channel."
The customers selected to remain on the list of direct named accounts will be chosen on the basis of their preference for a direct relationship, a long standing relationship with Sybase, and a need to buy a complete architecture involving multiple data sources and high levels of support. They will not be chosen according to the money they spend, Howgego claimed.
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