Software vendors say partnering is difficult

According to Pricewaterhouse Coopers (PwC's) recently released report titled, 2009 Report on emerging Canadian software companies: The CEO perspective, almost half of the survey respondents (48 per cent) stated their most challenging business issues over the next two years will be on increasing revenues and developing effective sales channel partnerships.

There are a number of reasons why businesses may find it difficult to establish relationships with channel partners, says Peter Matutat, partner and national emerging company practice leader for PwC in Canada. The company conducted this survey between December 2008 and March 2009 to gain a better understanding of some of the challenges and issues that are being faced by today's emerging Canadian software companies and their respective CEOs in the marketplace, he added.

The survey results were based on the responses from 145 CEOs in Atlantic Canada, Ontario, Quebec and Western Canada. The respondents and their organizations also represent skills in different solution areas, such as, application development, enterprise applications, IT consulting, systems integration, and more. The staff size of each respondent's company averaged to be about 41 employees.

Matutat said many of the CEO survey respondents are also the founders of the company they work at and only about 25 per cent of them have had previous CEO-type of experience, which means, he continued, that the majority of the CEOs surveyed are still new to the managing, sales and marketing spaces.

For the most part, companies establish channel partnerships to increase their sales, geographic, customer and product reach, Matutat explains. Some of these companies, he adds, may also be looking to partner with OEMs in the hopes of having them eventually buy them out as a potential exit in the market.

"It's hard to manage a channel properly and it's a difficult thing to make work," he said. "Some CEOs may think they can just sign up an agreement with a reseller and then their job is done, but there's a lot of effort and investment that needs to take place, like training and incentives to make sure the channel's effective because they have to work to maintain this long-term relationship."

The survey found that 63 per cent of the CEOs surveyed have at least 90 per cent of their sales going through direct channels. Furthermore, although 70 per cent of the respondents say they're actively pursing channel partnerships today, only 51 per cent of them have actually had sales and success through them to date.

Michelle Warren, president of Toronto-based MW Research & Consulting, said developing effective channel partnerships is not only an issue that's been around in Canada for the last little while, but also the rest of North America too.

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