Commonly Used Definitions in the Software Industry Front Office – 2
In a business model context, as defined by Alexander Osterwalder & Yves Pigneur in their book ”Business Model Generation,” (John Wiley & Sons 2010), the Channel is the way you take (sell) your products and services to your customers.
In the software industry, the term Channel is often used to describe the situation where independent 3rd party companies resell the software vendor’s products to the final customer.
In order to comply with the business model definition, the Channel must promote your brand to the customers. The customers must perceive the software vendor as their “supplier” even though the delivery, the invoice and the support come through an independent 3rd party company.
If your brand is not visible to the reseller’s customer, then the reseller is not your channel, but rather your final customer.
A Value Added Reseller combines the software products from ISV’s with other products and services providing solutions for his customers.
The VAR has a clear interest in promoting the brand of his ISV partners. As a VAR grows his business he may represent several competing ISVs and the ISV brand promotion may receive less attention compared to the promotion of the VAR’s own brand. However, the VAR will always clearly communicate the support of his ISV brands.
Value-Added Resellers is a beloved Channel in the software industry.
The reseller is typical “just” reselling the products of the ISVs to the customers.
As the software industry provides millions of products the value of the reseller can be in marketing and sales making it easy for the customer to find the most appropriate product matching his needs. It also makes it easier for the customer to perform the purchase transactions.
Smaller ISVs, especially with standard products, go through resellers leaving them all the sales and marketing “hassle.”
About this series of posts
This series of posts provides a definition for the most commonly used abbreviations and terms used in the software industry front office.
Please check out my boob Building Successful Partner Channels also.