IT Associations:A Paper Tiger Shows It Claws

From a time when there were just a couple of channel associations in the
country, to a day when virtually every A, B and even C-class city in India being
a home to a local body. IT channel community has come a longway. Some of these
associations are highly active, while others are dormant and wake up only when a
crisis emerges.

Irrespective of their level of activities, vendors prefer handling
associations with kid gloves and acquiescing to their demands most of the time.
Who would want to antagonize an entire group of the prominent channel partners
in a city, after all? There has been an increase in the number of instances
where associations have taken strict steps against a vendor and has compelled
the latter to agree to their demands that are favorable to the channel

at large.

On their end, partners are also realizing the need to tackle issues on a
unified front and the benefits of having an association. They have understood
that a body of people will have louder shouting power and stronger position than
trying to address issues individually.

This is probably the reason why cities like Bhopal and Jamnagar have started
associa­tions and others like Thrissur and Mangalore are also considering doing
the same. There are around 36 associations in the country, though not all are
highly active.

Most of these associations act as a catalyst in resolving partner issues with
vendors and a few of them have taken strong steps against the big companies.

Taking stringent actions

There was a time when it was virtually unheard of associations taking on a
vendor and banning business with it. But these days, though, it has almost
become fashionable.

A recent example of such a case is when partners in Tamil Nadu boycotted
Lenovo when the vendor offered laptops to the Electronics Corporation of Tamil
Nadu (ELCOT) at a subsidized rate with the objective to increase PC penetration
in the state. Eventually, Lenovo decided to discontinue its association with
ELCOT. Samsung too ran into rough weather when it offered longer warranty period
for its products sold through ELCOT. When the channel rebelled, the vendor
decided to bring parity in the warranty period on products sold through the
channel and any other source.

These are classic examples of David and Goliath and have sent very strong
message to the entire vendor community. But is it not possible that with these
victories, associations are becoming a threat to the vendors, worrying about a
ban for the smallest issue?

S Karthikeyan, President, Confed-ITA does not think so. “Associations are not
against any vendor but they are concerned about the issues that affect the
channel community on a broader scale and need proper attention. They raise their
voice only when there is no option available and it helps in solving serious
issues,” he said.

Rajiv Khanna, President, Jalandhar Computer Dealers Association (JCDA) too
admitted that with associations becoming stronger, vendors are scared to take
any step against the welfare of the channel community.

“Associations have grown to a status where they can exhibit their guts to
stand against a big company and vendors realize this very well. As they know
that they get all their business through channel community, any unfavorable step
could make them fall entirely,” Khanna commented. But he does not think that
associations will arm twist vendors for their personal gains.

Chetan Shah, VP, Trade Association of IT (TAIT) noted that vendors are not
threatened by associations and rather value it. So local bodies should take this
as an opportunity to sort the differences, rather than misuse their strength.

In regions where associations are strong, the local branches of the vendors
and distributors avoid unethical practices and take necessary precautions.

Mutually beneficial

While vendors do admit that associations have become forces to reckon with
and they do fear it to an extent, they have been quick to leverage on their good
relationships with partners to benefit from the presence of these local bodies.
The association gives them an easy access to a larger base of partners in a
city, especially when they are trying to foray into smaller cities.

Puneet Chadha, Country Manager-Commercial Sales, Imaging and Printing Group,
HP India commented, “A vendor need not worry or be frightened by an association
as far as it has clean intentions and the policies are fair. If there is any
issue, whether on side of channel or vendor's part association is the right
platform to bring it to force. It needs high level of engagement and it is a
healthy sign of business.”

Most vendors agree that they are not really worried about associations
manipulating them, but they admit that they are not happy with the recent trend
of banning companies. They felt that any issue goes out of hand only when there
is misunder­standing or the escalation process of issues within the association
is not transparently defined.

Sanjeev Soni, Country Manager, Amconics said that associations take such
steps not because the matter could not be solved but because the escalation
process is not proper.

Hari Pandey, Senior Manager-Marketing, Samsung India stated that no genuine
vendor deliberately hurts the channel community and if any issue comes up, it
should be solved together.

Line of control

Associations have reached a stage where they enjoy considerable clout. While
enjoying this, a responsible body should ensure that its members do not breach
the liberty they possess and do not use associations for fulfilling their
personal agendas.

Saket Kapur, Secretary, The Progressive Channel Association of IT (PCAIT)
commented, “Every single matter is discussed among the board members and only
after everybody's agreement, we proceed with the action.”

An association has to maintain its credibility in the market and it should
enjoy a position that makes it trustworthy for vendors as well. Such status quo
could be gained only if the association holds an unbiased approach. It has to be
the voice of the channel since its main objective is to bridge the gap between
partners and vendors. Any kind of arm-twisting or wrong use of power would lead
the association to lose its importance among the vendors.

Amrita Tejasvi

amritat@cybermedia.co.in