Google Sues Feds over Microsoft Deal
Lawsuits between vendors isn’t uncommon, just look to the legal row between Oracle and SAP over the theft of intellectual property. Google, however, went to court last week against Microsoft, but it didn’t sue Microsoft. Instead, Google sued a Microsoft customer: the U.S. Department of the Interior over its unfair contracting practices.
The Interior Department chose Microsoft BPOS for its cloud-based email and collaboration system to serve its 88,000 employees; the deal is worth nearly $59 million over five years. Google and its Apps reseller partner, Onix Networking, are crying foul, claiming the bid specifications unduly restrict fair competition because it specifically names “Microsoft” as the platform of choice.
Under federal procurement guidelines, government agencies are not allowed to list specific vendors in requests for proposal. The Interior Department said it did so because it determined only Microsoft could provide the features and security required.
The lawsuit hinges on whether Google can prove its claim of unfair competition. Even if the contract award is reversed, Google still will have to prove its product worthy of adoption. At stake is the way federal agencies seek and procure cloud-based services. This is definitely a lawsuit the Channel-Lands will want to keep an eye on.
Sirius Reaches for $1 Billion in MSI Deal
Sirius Computer Solutions of San Antonio became the latest member of the Channel-Land’s billion-dollar club after its acquisition of fellow IBM partner MSI Systems Integrators of Omaha. Both companies may be based in the Midwest, but they’re national resellers with hooks into storage, networking and middleware systems.
The two companies have strong synergies considering their lineage. Sirius, which reported nearly $700 million in 2009 revenue, was founded by former IBM sales executive Harvey Najim nearly 30 years ago. MSI, which had more than $350 million in revenue in 2009, is captained by Jim Simpson, another former IBM sales executive. When the two companies wrap up the merger, the company will have revenues tallying more than $1.1 billion.
The merger of these behemoths is more than just the creation of a new mega VAR, but an example of what becomes of sound business practices. Both Sirius and MSI have strong cultures dedicated to growth. Each is a big IBM partner, but they also have strong connections to other vendors – including Cisco and HP. They’ve both weathered the economic storm well, and Sirius has spun off at least one other VAR 500 company – Mobius Solutions Partners. These are definitely companies that the rest of the Channel-Lands can learn from.
Reshaping Rebates and SPIFFs
If you’ve ever sought market development funds or tried claiming a vendor SPIFF, you know the hassle of trying to collect money from these marketing programs. TechTarget’s Search IT Channel had an interesting report on how vendors are changing their approach to MDF and SPIFFs to reflect the changing channel dynamics.
TechTarget’s report is correct in its analysis that many MDF and SPIFF programs are unfocused and difficult. Vendors often resort to SPIFF as a short-term motivating tool for pushing a particular product to meet unique performance numbers. MDF is a different situation entirely, in which many hundreds of millions of dollars annually are left unclaimed because it’s too difficult for solution providers to meet the claim requirements.
The TechTarget report says vendors are changing their strategy regarding MDF and SPIFFs to reflect the changing nature of the channel. As solution providers move more toward services and systems sales, vendors increasingly are rewarding value rather than volume performance. Channel-Lands should check in with their channel account managers to get the inside of any changes to sales incentive programs.
Channel Performance: By the Numbers
A new study by Amazon Consulting reveals some interesting new statistics in channel performance and operations. Here are a few highlights.
- 62% of solution providers are selling six or more vendors opportunistically (meaning unplanned)
- 52% of solution providers generate more than three-quarters of their revenue through one or two vendors
- 56% of vendors say they generate more than 80 percent of their revenue through 20 percent of their reseller partners
- 40% of solution providers would like to see a two-time return on their investment in a new vendor within the first year
- 27% of solution providers believe it’s “OK” to break even with a new vendor in the first year of a relationship
Interesting numbers, indeed.
Well, that’s all the week’s news from Channel-Lands where all the technology works, all the deals are profitable and all of the companies are above average. If you want to follow me on Facebook or Twitter, feel free to connect. Share your suggestions and news with me at lmwalsh@the2112group.com.
