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PRM vendor ChannelWave aims to rally best-of-breed supporters

Despite predictions of its imminent demise, partner relationship management (PRM) vendor ChannelWave is still kicking and has aspirations to carve out a comfortable niche for itself.

Systems integrators, value-added resellers and IT vendors that visit CMP Publishing's ChannelWeb can use a tool on the website to match their needs with the skills of companies looking for partnering opportunities. That partner-locating technology was built by a company called ChannelWave, a company singled out by Siebel head honcho Tom Siebel as a company well on its way toward extinction.

Despite Siebel's prediction back in April that the company would be dead by the end of the year, ChannelWave is still kicking and has aspirations to carve out a comfortable niche for itself. While staying below Siebel's radar might seem the most prudent method for survival these days, ChannelWave executives believe that the days of gigantic, monolithic application systems are numbered. If the company can slowly accumulate customer wins until the market shakes out, it believes it can build a comfortable existence. Siebel, Clarify and Vantive roared into the IT world's consciousness by easing the process of selling to customers.

All of these vendors, however, focused their technology on companies using a direct sales model. But in many industries, including the IT industry, a greater percentage of sales goes through some sort of a channel than through the direct approach. In the late 1990s, the fact that the CRM companies did not directly offer a product to manage these channels smelled like a major opportunity to several companies. These firms built what they called partner relationship management (PRM) software.

Unfortunately, at about the same time these PRM vendors began to make inroads with major clients, the CRM and ERP vendors began to take note of the opportunity and looked poised to snatch the gold away from the pure-play vendors. In this maelstrom, ChannelWave hopes a beefed-up feature list and $26.5 million in new funding will help it not only hold its own, but also grow its market share.

The new iteration of its flagship product, version 5.0, is the culmination of heavy integration work weaving technology ChannelWave picked up in its acquisitions -- of ChanneLogic Data in March and Accurus last November -- with its own product improvements. The goal of the new product, according to CEO Chris Heidelberger, is to "tie together external partners back to the front-office systems and the back-office systems to drive more revenue through those partners."

Four major parts

The suite has four main components: plan, certify, market and sell. PartnerPlan was initially the most in-demand part of the suite. It covers recruiting partners, qualifying them and then building a channel sales plan. PartnerCertify centralizes training and certification of partners on the partner extranet, allowing these companies to fill all their preparation needs over the Web. PartnerMarket handles marketing operations such as managing MDF (so-called market development funds that pay for joint marketing programs) and fulfilling literature and marketing material requests. Finally, PartnerSell handles the all-important lead generation and distribution functions that actually drive channel sales.

The new version of the product adds sales and post-sales applications. Companies used to need one portal for managing the partner relationships and another for order management, transactions and service.

ChannelWave built integration tools and its own portal infrastructure so that it can now extract data from transactional systems behind the firewall and present it securely to partners. It isn't the actual transactional system; that is still likely to be technology from the leading ERP and SCM vendors. But companies can now use ChannelWave to create a single partner extranet that covers every interaction between a company and its partners.

As in many other areas that skirt the edges of CRM and ERP, there are several point solution vendors, those that focus just on PRM. But as in the other enterprise application satellite markets, the main application vendors are looking to annex this market. This means that ChannelWave must win accounts against the likes of OnDemand and Click Commerce as well as against Siebel. While ChannelWave dismisses Siebel's technology as just a way to have an extra check on a list of required applications, the CRM giant is already entrenched in so many accounts that it would be unrealistic to dismiss it solely on technological merits.

An opening for two giants?

Even major packaged application companies that aren't yet directly targeting the market may soon lurch into the space and make major waves for the PRM pure plays. Oracle and SAP, two notoriously channel-unfriendly companies, have a harder time claiming to thoroughly understand the issues behind managing and profiting from a partnering channel than Siebel. Ironically, it is often software from the likes of Oracle and SAP that actually power the transactional part of partnering systems. As such, it is likely that these players are at least investigating a way to turn this presence in the partnering workflow into a broader set of deals with customers.

This could then also pose a major threat to best-of-breed vendors such as ChannelWave. Midmarket CRM vendor Pivotal and e-CRM player Blue Martini also toot their horns in this space. In a cruel twist of fate, ChannelWave seems hampered in its success by its own lack of channel partners. The company has signed a deal with management consultants Booz Allen Hamilton, but since the ChannelWave product relies on tying several systems together, the company desperately needs tighter relations with systems integrators and strategy consultants. The problem may be one of deal size.

The average service draw on a ChannelWave contract is about $175,000 -- extremely small potatoes to the likes of PricewaterhouseCoopers or Deloitte Consulting. ChannelWave may also find that many of the larger services firms are focused on working with their enterprise application partners, especially Siebel. If the company can avoid being squashed by the larger players -- and that is no sure thing -- it will need to address its own partnering issues ASAP.

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