Advice on Growing a Human Resource Software Business Channel

A value added business partner, a.k.a.VAR or business partner, is an independent business that sells, implements and supports other vendors’ software applications including HRIS and HRMS applications. The software vendor directly pays the VAR, BP or Business Partner a percentage of each deal they sell. The benefit to the software vendor of having VAR’s or having a channel, as it is sometimes referred to, is the software vendors add numerous organizations that will sell and support their application and they pay the VAR nothing unless they close business. Actually, the VARs often pay the software vendors to participate in the service. An additional benefit to the vendor is if they have a large enough channel they gain a localized support base nationally, or internationally, for their application. Given the benefits, I am certain just about every HR software company wants to do a better job creating a channel.
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A number of HR software vendors have asked me questions about setting up a partnership channel so I thought I would take this opportunity to offer my two cents on the subject. Allow me to be very frank, I have never setup an HRIS channel. I am only offering advice based on what I have seen while working for others, what I have noticed in the industry over the past fifteen years, and what I believe it would take to entice current value added resellers to offer your products.

Let me provide a warning. I have seen many HR software, HRIS, and HRMS vendors attempt to set up a channel and I have seen almost all fail. Most love the idea of setting up a channel and see the advantages of doing so, but don’t put in the effort and money to make the concept work. The strategies I lay out in this article may be far more aggressive than what you are willing to take to setup a channel but I feel many of my suggestions, if followed, would greatly increase the potential for setting up a successful channel. With these suggestions, I looked at what it would have taken to interest my firm into selling a new system. I can tell you for certain that if a vendor had contacted my firm and offered some or all of the suggestions I have offered here, they would have gotten my attention.

I worked for a manager many years ago that told me the secrets to channel management are to show value and gain mind share. If you can show that the BP will either make more sales or earn more on each one by offering your product, you will be successful with a channel management program. Mind share, as I use the term, means getting to the forefront of systems the partners are selling. Let’s say, for example, I am selling X HRIS product and making X amount of dollars per sale. If you can offer the BP a plan or product that will increase their income per sale and their overall number of sales, you will have an easy time showing value and gaining the VAR’s mind share. This, whenever possible, should be the main objective.

Why is now a great time to grow an HR software, HRIS, or HRMS BP channel?

1. With a slowing economy, many resellers are, or will be, looking for additional products or product groups to offer prospects and their clients to supplement their declining revenues. If you have a solution that does not require a tremendous up front investment and offers additional income, you will have no problem finding BP’s to offer your system. Now more than ever, it will be important to show how investing in your system can increase their revenue.
2. There are a hand-full of HRIS BP’s who have established a model where they offer a number of systems within the same market. This concept makes sense because no single system is going to meet the needs of all prospects. Offering a handful of products allows a BP firm to act as a consultant and present the product that offers the closest match to the prospect’s needs. There is no reason for a partner to lose a deal to a hosted solution or one with an integrated payroll option when they can easily create a partnership with another HRIS application to address that need. I have heard a lot of buzz about this model in the industry. There are a few HRIS partners who are having great success with this model. Many others are looking at and talking about it, as well.