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Is PRM playing monkey in the middle?

Adrian Mello ZDNet US

Published: 19 Sep 2002 15:07 BST

In recent years, many companies were captivated by the concept of disintermediation -- using the Internet to interact directly with customers, thus saving money by cutting out the middlemen's slice of the revenues. Of course, it didn't happen.

"Traditional middlemen organisations that populate sales and distribution channels create far too much value to be dispatched into the annals of economic history," says Aberdeen analyst Kent Allen.

As it turns out, most businesses need middlemen -- the resellers, dealers, distributors, wholesalers, and outsource service partners that companies use to reach customers.

Indirect business partners are usually better at serving local markets and specific customers than companies that focus on developing and marketing product lines across a broad spectrum of markets.

Seven out of ten enterprises earn the majority of their revenues via indirect channels, according to AMR Research. In some industries, such as consumer package goods, discrete manufacturing, and high technology indirect sales account for between 60 to 70 percent of all revenues, according to the Yankee Group.

Most enterprises now recognise that instead of trying to marginalise their indirect channel partners, they need to find ways to work more effectively with them. The result is a whole new crop of software products.

In the last couple of years, an application category called partner relationship management (PRM) has arisen to help companies collaborate more effectively with their indirect channel partners. PRM tools are available from a variety of vendors including Allegis, ChannelWave, Click Commerce, Comergent, Haht Commerce, InfoNow, Oracle, and Siebel Systems.

These vendors have done a good job of implementing functions to help companies work more effectively with their partners. However, it's not clear that PRM can stand on its own as a separate software category.