By Pedro Pereira | Posted 2006-07-26
One of the toughest challenges IT vendors grapple with is keeping tabs on inventory once it reaches the channel.
How much product is sitting in channel warehouses and how much has actually reached users on any given day is often a mystery. Discrepancies between vendor records and those of partners are more common than anybody would like to admit.
Jeff Brobst is no stranger to the challenge. As vice president of financial planning and internal reporting for security vendor Symantec, Brobst knows all about the time and expense involved in maintaining a true picture of inventory in the channel.
He has solved the problem by partnering with Zyme Solutions, of Redwood Shores, Calif., a two-year-old company that takes over the process, reconciles discrepancies and collects data that vendors can use to sharpen their channel focus. Gathering data and making sense of it had become a daunting task for Symantec, of Cupertino, Calif.
"We were spending so much time trying to correct the data that we weren't doing any analysis of it," he said.
Zyme Solutions CEO Chandran Sankaran equates his company's offerings to that of companies such as Automatic Data Processing, which takes over payroll processing services for employers.
"Think of us as the ADP of channel operations," he said. "Once we're brought in by a company, we become their channel operations department."
Zyme's services benefit not only the vendors but also the partners. Vendors can free up staff to focus on other functions by handing over the process to Zyme while partners benefit from a more efficient process, which translates in getting payments for product sell-through in a more timely fashion.
Partners also can take advantage of a help desk Zyme offers on behalf of its vendors to handle questions and issues. To keep them current, Zyme provides partners with monthly and quarterly financial statements.
Zyme's vendor services center around its "channel visibility" core of offerings. The company collects and digests partner data, reconciles discrepancies, and maintains a database of who buys the vendor's product and how often. Typically, vendors hire Zyme to handle the process in North America, then expand to other regions, such as Europe and Asia.
Channel partners submit claims to Zyme for rebates and other payments, and the company, acting on behalf of a vendor, researches the validity of the claims and moves them through the approval process.
Zyme also handles price-protection claims, which partners file when vendors drop their prices while product is still sitting in distributors' or resellers' warehouses at the older, higher prices. Depending on a vendor's policies, partners are entitled to collect on the original price for a certain amount of time.
With price protection, volume-based rebates, price-affecting promotions and a host of other practices, the financial relationship between partner and vendor grows to a level of complexity that could challenge the most meticulous of minds. As a result, says Sankaran, vendors typically have done a poor job of managing the relationship.
"This is an end-to-end management problem," he said.
Brobst said hiring Zyme is more economical than adding internal staff to the levels necessary to achieve what Zyme delivers. The data that Zyme collects on behalf of Symantec has proven invaluable and enabled the vendor to boost its partner ranks.
"We've added hundreds and hundreds of partners since we got on with Zyme," he said.
To increase the value of its offerings to vendors, Zyme also has started to track the results of promotions by correlating sell-through statistics to the length of marketing campaigns while factoring in such things as location and advertising medium, Sankaran said.
Vendors can use the information collected about their promotions to discern which programs work, which should be discarded, and which should be improved upon.
Zyme charges vendors for its services on a month-to-month basis. Sankaran said there is no need for contracts with set amounts of time because once a vendor realizes the value of the services, it will not want to end the relationship.
"We have been in business for two years and we have not lost one client," he said. "On average we have more than doubled the amount of business we're doing for a client over a period of 12 months."