Tuesday, June 02, 2009

Capture reseller channel

Word out of Kofax, as you'll see in our upcoming issue, is that while its direct sales business continues to grow - now making up like a third of enterprise software sales, sales through its channel partners is on the decline - at a rate that has pretty much offset the revenue gain brought through increasing direct sales. In a recent interview with CEO Reynolds Bish, he indicated that he thinks mid-market sales, those historically perpetuated by the channel, are being affected more by the economy than the higher-end direct sales. As a result, Bish presents the transition to direct sales as pretty much having saved the company some significant revenue shortfalls.

This is, of course, a perspective that makes him look like a hero, and there is nothing wrong with that. On the flip side, however, it's quite possible to blame Kofax's increasing direct sales as negatively affecting channel sales because it has potentially alienated some VARs that have been very loyal to Kofax, because, in part at least, Kofax has always been very loyal to the channel. So, are Kofax VARs' capture sales really declining, or are these VARs just moving towards other capture products and away from Kofax?

Any feedback is appreciated.



Ron said...

I think that Kofax has alienated a lot of VARs who were very loyal to them. Having been one myself, I noticed that as soon as the new CEO came in, the whole organization changed. Many people that I worked with in the channel either left or were pushed out. Now the head to head competition between direct and channel is worse than ever and many VARs are looking for other solutions. Not a good way to drive sales, unless the goal is to rid themselves of the channel entirely.

DIReditor said...

So, Ron, have you moved to selling an alternative capture product? I know it's kind of a big deal for VARs to switch product lines, but I'm just wondering if a significant number of Kofax VARs have become fed up enough yet to make a move.


Interested observer said...

From my perspective, as a Kofax partner, their move to a sales model that includes a team focused on enterprise named accounts was an important move for them. They needed to carry their messages upstream to IT management and out from the "scan rooms" of individual lines of business. I believe that the account and use case knowledge that is gained can and will be shared with the right channel partners. That said, I think two additonal thoughts: there are definitely VARS that made their primary living off of Kofax that are expanding their portfolio or diversifying to protect themselves. Secondly, Reynolds is kidding himself if he attributes this behavior primarily to the economy.

DIReditor said...

Right, and this is all good if Kofax can continue to increase its direct sales at a faster rate than some of its lower-end sales fall off. It's not only good for Kofax, as it moves them further upstream, it's also potentially good for their higher-end VARs, who hopefully move upstream with them, and it's also potentially good for companies that have products to replace the VARs sales that Kofax is leaving behind. Lot of moving parts here, let's hope they can all keep moving in the right direction.

Anonymous said...

I would love to get interested observers opinion of the new Kofax reseller contract now that it has come out. He may not be so keen on Kofax now.

Seems like they want resellers to leave voluntarily to get their maintenance stream and direct business and it is a very sly way to achieve that.

This is purely a short term model Bish has implemented to increase revenues and sell the company only to have the buyer get caught holding onto a sinking ship. (Ask DMC if they think they got a great deal with Captiva)

Sad to see the destruction of a perfectly great channel model/Company for the sake of Wall Street and the need to make a fast buck.

DIReditor said...

What are some of the details of the new reseller contract? Lower margins?

You're right, Kofax had a great reseller model, but it didn't seem to be driving the valuation they wanted as a public company. Hence the change. And, yes, it's a shame for a lot of reasons that the family atmosphere at Kofax had to break up, but Kofax is a fairly big business and we're talking about more than "a" fast buck being at stake here. We're talking millions and potentially hundreds of millions of bucks (and it's not Wall Street that has the money on the line, it's whatever they call the London Financial District.)

Anonymous said...

It seems everyone is looking for a new option. PSIGEN seems to be bringing on a large number of resellers, as they treat their resellers very well, provide a feature set that goes way beyond kofax, and have an attractive pricing model.

DIReditor said...

I'm not disputing the validity of the previous statement, only pointing out that is an opinion and has not been verified by the editor of this blog. Whoever posted that, could you please identify yourself. If you are indeed a happy reseller, it will add some credibility.