|
Zyme Solutions, Inc. |
|
|
|
|
July 13, 2015 Issue |
||
|
The Most Powerful Name In Corporate News and Information |
|||
|
The New Smart Channel: Improving Decades of Channel Management Practices through Better Channel Data |
|||
|
Founder and CEO
Zyme Solutions, Inc.
Interview conducted by:
CEOCFO: Mr. Sankaran, we have been reading more and more about a business discipline called channel data management or CDM. I understand this is where a manufacturing company, like a consumer electronics or industrial products manufacturer, gathers sales and inventory data from dozens or hundreds of distributors, plus thousands of dealers who buy from those distributors. Then they use that data to manage inventory, sales incentives, marketing and advertising programs, and also to plan their manufacturing and supply chain logistics. Do I have that right? Chandran Sankaran: That’s a good summary. Traditionally, manufacturers have lived without information about what is happening downstream in their indirect sales channels, and have built business processes with lots of “padding” for what they could not see. CDM enables large global manufacturers to automatically collect and manage data from their indirect sales channels, and liberate valuable intelligence and transform old channel management processes. We call this the “New Smart Channel.”
CEOCFO: Is Channel Data Management similar to Customer Relationship Management? Sankaran: Yes, there are many parallels. Over the past two decades, Customer Relationship Management, or CRM, has helped manufacturers get smarter about their direct sales channels. They know what their end customers are buying, and what vertical markets those customers are in. They also know how much inventory they have on hand. A company that did not have this information would be considered very outdated. But when it comes to indirect sales through distributors and dealers, many manufacturers have only the fuzziest idea of what is going on – their visibility into the channel is often very cloudy. A VP of Channel Sales may know what inventory is in the channel – plus or minus 25 percent. And they may be able to tell you by mid-second quarter approximately what first quarter channel sales to end customers in Germany were… but not in France, and certainly not what happened last week, and not to any degree of confidence or precision. CDM solutions create an information backbone for business in the indirect channel in the same way CRM does for direct customers.
CEOCFO: How widely is CDM being adopted, and how fast is this category growing? Sankaran: About ten percent of all technology OEMs have already invested in CDM platforms like Zyme, and we are seeing significant activity to support the view that CDM adoption will grow 40 to 50 percent annually over the next decade or so. Among the companies that have implemented CDM, Zyme is the clear leader with a nearly 70 percent market share. More and more large companies are evaluating the commercial options that exist for CDM, and they are discovering Zyme as an advanced, cloud-based technology that solves their need for better visibility into their channels. There has been a shift in the conversations from “What is channel data” to “What can you do with this data after we capture it and shape it into a useable form?” If you think about some of the most prominent global brand names in the electronics and technology industry for PC’s, smartphones, servers, operating systems, storage, and printers – those are the kinds of companies that have come to us for a solution to their channel data collection, cleansing, and analysis challenges. For the CDM category, I believe we are at the launch point of a multi-billion dollar industry.
CEOCFO: You’re forecasting a multi-billion dollar industry built on channel information? Sankaran: Yes, that’s right. In the early days of Customer Relationship Management, a lot of people dismissed the technology because it was about contact management and managing salespeople effectively – purely tactical information. But CRM has since exploded into a massive front-end enterprise solution, because it provides companies with critical intelligence about their customers, and helps them predict and manage revenue. Channel Data Management started as a niche capability – but now represents a massive opportunity. There is $4 trillion in annual sales moving through the global indirect channel, for just high value industrial and technology products. This is $4 trillion of sub-optimized commerce, hampered by poor visibility. CDM is the gateway to change all that. I believe that the opportunity for CDM-enabled transformation of the channel is as large or larger than the world of CRM. Major analysts, including Forrester and Gartner, are now following CDM as an important, new emerging segment. The advancement of CDM is being fueled by some of the same forces that are powering a lot of industries right now – mobile, cloud, big data, and the digitization of enterprises. With the rise of Google, the smartphone, and cloud-based apps, people are accustomed to having any and all information they want at their fingertips. As a CEO, CFO, or VP of Channel Sales, when you can find almost anything at any time in your personal lives, the historically opaque nature of indirect channels is rapidly becoming unacceptable.
CEOCFO: What kind of successes have you seen at companies that have implemented CDM solutions? Sankaran: The improved efficiencies of CDM helps increase channel sales by as much as five percent – and we’ve seen that happen. Say a salesperson in the Northeast region has a CDM solution that gives her the ability to track her resellers’ sales on a weekly basis. She might notice that six of the top ten are not selling at the same pace as last quarter. She can have a conversation with them to help diagnose and fix the problems. Maybe a competitor has made a price adjustment that needs to be matched to prevent losing the business altogether. Alternatively, she may notice a new reseller has emerged – and through careful cultivation, she can grow them into a top-selling partner. This type of responsiveness can mean the difference between a good quarter and a bad quarter – but without CDM, most companies cannot track weekly reseller sales. The best they can do is look at last year’s performance and, based on that, make guesses about assigning resellers to platinum, gold, or silver tiers. Another successful example is around write-offs. Without CDM, a salesperson may take an order from a retailer and, if there’s inventory on hand in the central warehouse, fulfills the order. With the smart channel enabled by CDM, he would look up channel inventory balances somewhere near that zip code, discover there’s a plenty of inventory at a nearby location, perhaps at another retailer, and fulfill the order with that product. It’s a simple change with a very big impact – and can drive as much as a 25 percent reduction in inventory write-offs. Then there’s the question of incentive payments. Right now, many companies have no good way to validate incentive claims. We estimate that 20 to 30 percent of all payments are “leaky” or paid to the wrong partner, or overpaid based on performance. With CDM, you can bring this enormous waste to a halt. For every $1 billion you have flowing through the channel, there’s $50 million in value that can be unlocked by implementing better channel data management doing the sorts of things I just described. Scale that to $4 trillion, and you can see the immense size of the CDM opportunity.
CEOCFO: Are these global numbers or US only? Sankaran: Global, definitely. In most of the world, the channel plays an even larger role than in the US. In the US, the channel is relatively concentrated and easy to manage – a few large retailers, a few large distributors, and a second tier of resellers. In Europe, the channel is more complex, because there are many more countries and a slightly different way of doing business with the channel in each one. In the Asia-Pacific region and other emerging markets, the channel might be three or four tiers deep, with the lower tiers being mom-and-pop shops that are small enough to slide under the radar. Leading companies in industries like technology and industrial automation are disproportionately investing in channel development in emerging markets. There’s a lot of natural growth in those markets and, to tap it, knowledge related to the indirect channel is mandatory. There’s real value in taking a strong position early, but to get the ROI on those investments, companies need information to monitor and manage the channel, so they’re turning to CDM solutions. Right now, we’re giving several large consumer technology companies visibility to the sales in the third and fourth tier of their channel in places like smaller Asian countries. That’s important because it’s where much of the growth is being seen.
CEOCFO: I can see how this would be useful for folks in channel sales and marketing, but what about executives in other roles? Sankaran: Companies that have transformed their businesses with CDM make the information available to everyone on the management team. Once they have the data, they come up with all sorts of ideas on how to get value from it. Every time I call on a customer, I hear of new ways they have found to unlock the value in the data. As an example – we have a customer who spent $30 million a year expediting overnight shipments into the channel because, at the very last minute, they would be running out of inventory at a particular location, get a panicked call for a hot-selling product, and would need to ship it overnight. Thirty million dollars a year is a sizeable number, but I have since learned that it is not unusual. Now that the company has better channel intelligence, they can see four weeks earlier that a particular channel partner is on a trajectory to run out of inventory, and they make a standard shipment at a much lower cost. This saves 70 percent of the shipping cost, which is more than $20 million a year for them. We ask company leaders, “If you had data about where your products are selling, what parts of your business could be positively impacted?” For product planners, as an example, we can abstract the data from multiple companies selling through the channel, to analyze products in various price bands and determine the average diffusion curve and half-life in the channel. How does inventory build? At the three-month point in the product lifecycle, how much inventory is in the channel? At the six-month point, how much inventory is there, and what does the average end-of-life look like? If a product planner saw that, they would know “Okay, it’s week 12 for this product, so I should be at 60 percent of my peak sales.” This is critical planning information for them. But they need to have complete, accurate data from their channel to accomplish this.
CEOCFO: When you collect channel data, it’s not just from distributors and dealers in North America, but from everywhere. Is that right? Sankaran: Yes. We collect data from 200 countries all over the world. We have built a global channel directory of one million channel partners, with unique identity information, and that database is growing significantly every month. We are opening data quality centers in various places around the world where we employ data experts – we call them data stewards – who speak the local languages and help our customers collect, cleanse, and perfect the quality of the data.
CEOCFO: How does a company know where they are in terms of their channel data capabilities and what their opportunity to improve might be? Sankaran: Zyme has developed a Channel Visibility Diagnostic, which in a few hours, allows companies to do a self-analysis on several key dimensions of channel visibility. They self-score a report card, which we then use to provide them with industry metrics. These metrics allow them to quantify where they fit on a channel visibility scale. They may be at a basic level, a developing level, or a star level on these different dimensions. In this way, they can see what a 20 percent improvement in their channel visibility could do for their business, in terms of quantifiable value. In many cases, a 20 percent improvement translates into millions of dollars of cost savings, greatly improved efficiencies, and higher profits for large manufacturers.
CEOCFO: Thank you, Mr. Sankaran. |
“Zyme is the global leader in the channel data management (CDM) space, with
a proven approach to creating visibility to actionable knowledge that
manufacturers need to accelerate partner sales and optimize marketing
program ROI. We replace outdated, ad-hoc systems with a state-of-the-art,
cloud-based platform, data steward services, and a worldwide channel
directory of more than 900,000 partners, to deliver guaranteed data quality
and best practices that enhance reporting compliance.”
Zyme Solutions, Inc.
|
||
|
|
|||
|
|
|||
|
Channel Data Management, CDM, Zyme Solutions, Inc., Global Companies, CEO Interviews 2015, Chandran Sankaran, The New Smart Channel: Improving Decades of Channel Management Practices through Better Channel Data, solutions for manufacturers that accelerate partner sales and optimize marketing program ROI, better, targeted MDF, co-op, and rebate programs, plus improved segmentation, Technology Company, Recent CEO Interviews, cloud-based products that facilitate enterprise-grade decisions by responding to real-time, granular channel intelligence, Zyme has offices in Texas, Pennsylvania, China, India and the UK, CDM enables large global manufacturers to automatically collect and manage data from their indirect sales channels, and liberate valuable intelligence and transform old channel management processes, CDM, Zyme Solutions, Inc Press Releases, News, Tech Stock, Companies looking for venture capital, Angel Investors, private companies looking for investors, technology companies seeking investors, channel data management companies needing investment capital |
|||
|
|
|||
Chandran
Sankaran