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Whose Client Is It Anyway?

July 18, 2013

I’ve found myself in a position where I’ve had to ask this question quite a lot…

…but is the answer really so complicated?

Let’s take a step back for a minute.

In any typical trading relationship you will always find a buyer and a seller (everyone’s following this, right?). It doesn’t really matter whether we’re dealing with products or services, or whether we’re talking about B2B or B2C (watch out folks, jargon alert). Whichever kind of a relationship you have, there’s a buyer and seller.

The thing we often see in the security industry is companies that get appointed as resellers (or even Value Added Resellers), but this doesn’t change anything. Actually the clue is in the name. Reseller…re-seller. So you sell something once, then you sell it again…that’s a re-seller, but each time the product is “sold” there is only one buyer and one seller.

Take the example of a handful of beans. The farmer (the manufacturer) grows some beans (a product) and takes them to the market. He could sell them to the housewife (an end-user), but he realizes that it would take an awful lot of end users to buy his entire crop, so instead he sells some to a retailer (a reseller) and some to a processing company (a value added reseller).

The bean processing company makes tins of bean soup and sells these to the retailer as well, so the retailer ends up with the same product on his shelves in a number of different forms, and at a number of different prices points for a range of different types of end-user. Some of those end-users have a recipe for bean soup, so they’ll choose to buy the beans and some end-users are just too busy, so they’ll buy the ready-made tins.

Some end-users recommend the beans to their friends, some end-users recommend the tins of soup, and so many of the end-user’s friends end up going to the retailer to buy some more of the yummy produce.

If an end-user who bought beans does not have a recipe, or if an end-user who bought soup does not own a tin opener, they solve the problem in their own chosen way. Perhaps the retailer provides free recipes to customers, or maybe his store has a hardware section where you can buy a tin opener, but at no point – regardless of which route from field to fork might be taken or whatever support the end-user might find that he needs to cook a meal – does the end-user become the client of the farmer. I think this is clear…

Of course the farmer would like more people to buy beans, and of course everything he does to get people to buy bean-related products from the retailer, the better for everyone.

Ok, let’s look at a different market.

A software company (manufacturer) develops a piece of killer code (product) and takes it to market. They think about the direct sales model, but realize that their marketing budget is too small, so decide to work through channel partners to serve a larger client-base instead. They cut a deal with a distributor who’s just going to sell shrink-wrapped product off the shelf (reseller) and also with a systems integrator who is keen to incorporate the functionality of the software into a range of solutions they’re going to sell (value added reseller).

End-users might go to either the reseller or the integrator to buy the software depending on what level of functionality and service they need.

This is perhaps where the parallels diverge a little.

If the end-user decides that he needs some additional functionality (needs a recipe), or needs help getting the product to work in his environment (needs a tin opener), a typical reseller of shrink-wrapped software is unlikely to be able to assist, and so many software manufacturers provide direct end-user support, skipping over the reseller once the sale has been made. (Actually, you could argue that the end-user should have bought the product from an integrator rather than a reseller if he needed these value-adds…but that’s another story.)

If the end-user did decide to buy through the integrator, it’s likely that they recognize the added value the integrator offers, and prefers to deal with a single point of contact (SPOC) instead of having to talk to the reseller as well as the manufacturer.

The hard work delivering the solution to the end-user frequently pays off, and recommendations float about the market. The integrator writes a case-study and gets a nice testimonial from the client, so another bunch of end-users come knocking at the door, bringing more business and rewarding the integrator for the great work they’ve done.

Ok, there is potential for there to be issues that neither the reseller nor the integrator can solve (say you open the tin of beans and they’re all blue…there’s really nothing anyone but the farmer can do about that). A bug is a bug, and the best person to fix it is the developer, but a developer is going to have a much better chance of a rapid root-cause analysis and a successful fix if he’s working in conjunction with experts at the coalface. Integrators, for instance.

If the manufacturer decides that once the end-user has his software installed the integrator is simply irrelevant, or decides that some other integrator is best (one the manufacturer chooses without consulting the end-user), the buyer-seller format has broken down. You would never find a farmer selling beans direct to housewives who’ve decided they liked the soup they bought one day in the supermarket.

There are a bunch of companies in the security industry who don’t get this.

Lenel – part of the UTC Group – are a prime example. They choose not to sell to end-users direct (well…unless they’re big enough, then they break their own rule), and they have a strict reseller program with rigid rules of engagement. Ok, that’s their sales model and it’s really up to them how they decide to sell their products. Of course, they’ve put themselves into a position of influence in the industry originally by having a good product – and any manufacturer that develops a good product deserves to reap the benefits – but those days are gone, and really they retain their strong market position through no more than market inertia. Their product remains “ok” but it certainly isn’t head and shoulders above anyone else (except perhaps in terms of price…). As an organization they’ve become sluggish to respond, arrogant about their market position and they gouge their clients with hefty support fees and overly complex licensing.

But the worst thing about Lenel is that they seem to believe they have the right to choose who an end-user works with, and that is just plain wrong.

A large-scale enterprise with international sites who chose years ago to use Lenel as a security platform may have grown to a point where replacing the core security infrastructure would be extremely difficult and costly. They will continue to buy Lenel – not because they want to, but because they “have” to.

Say this Enterprise goes to a new territory to open a new office. They can go to the local market and shop around with whoever they like to get competitive pricing on office fitout and IT equipment, but when it comes to security they’re given no such choice. Lenel – already smug in the knowledge that the job is there’s – don’t allow you to work with who you choose, regardless of why you choose them. You have to work with the people Lenel choose – and the quantity of Lenel VARs in many territories is dwindling to the point where you’ve got really no choice at all.

And who are these VARs anyway? The criterion for retaining the status is that you hit an annual sales target that is set by Lenel. In many territories where the market size is relatively fixed and the competition for business is high, the only people who can manage to achieve the targets are people who do nothing else, sell no other products and act almost as if they are the manufacturer themselves. For the end-user this means no choice, no breadth of market experience, no flexibility…and every round hole looks exactly like a square peg will fit nicely.

It’s not just Lenel who follow this model, there are plenty of others, but there is nothing so damaging to end-users getting real solutions to their real problems than this dictatorial system adopted by the dinosaur manufacturers from the big groups.


From → Industry Stuff

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