By Saul Chernos

When Virtek Vision Corp., a Waterloo, Ont., Developer of precision laser and automation applications wanted to strengthen contracts with its distributors and resellers, it installed SalesConduit, a software suite developed by EnTelx Inc. of nearby Cambridge, Ont.

Released last summer, SalesConduit has lead management and tracking functions, a personalized user interface and online training modules and discussion forums. It's an example of Partner Relationship Management (PRM) software-a market that is forecast to grow to as much as U.S. $500 million in worldwide sales by 2003.

Why are PRM applications hot? "The cost of [sending] information, whether it be by burning CDs or making phone calls, is tremendous," says Alain Francq, Virtek's sales and marketing manager for North America. "The objective is increased profitability by increasing sales and decreasing the cost of handling information."

In this regard, Virtek is a typical user of PRM software. Although relatively young, the PRM market is casting its net widely, linking all kinds of companies with their networks of resellers and other distribution partners.

PRM follows in the steps of Customer Relationship Management

( CRM ) software, an earlier system that tracked the workflow of salespeople. PRM expands on this concept, overseeing a full range of activity between manufacturers and their sales channel. The new software personalizes the sharing of product information, administers marketing funds and product certification, and manages leads and quotes.

Jim McFarlane, president and CEO of EnTelx, says relationships between manufacturers and channel partners have traditionally been strained and antagonistic, and PRM has provided an electronic milieu to improve communication and raise contentious issues.

"Vendors tend to work with the 20 per cent of channel partners who drive most of their revenue," McFarlane explains. "They can't offer the same service to the other 80 per cent, who represent only 20 per cent of sales, and so you've got a difficult situation. Then, suddenly, this PRM software pops up promising to address some of this pain."

McFarlane says PRM software automates activity between manufacturers and channel partners, and offers access to these parties over the Internet, increasing efficiency and reducing marketing costs. With most products sold through third-party channels, and because wholesalers, retailers and value-added dealers often represent numerous manufacturers, McFarlane anticipates plenty of demand for PRM.

A sales and marketing consulting firm before moving into PRM software last year, EnTelx hopes to achieve profitability by the third quarter of this year, though McFarlane would divulge only that the company had under $1 million in sales revenues in 2000.

"A year ago we were out knocking on doors selling the software and had to do a lot of explaining about what PRM is and how it affects the business process. Now, companies are familiar with the technology and are talking about it."

EnTelx, though a lead Canadian player, pales in the North American PRM market in comparison to such U.S. heavyweights as ChannelWave Software Inc., Allegis Corp., Partnerware, Webridge Inc. and North Systems Inc. Moreover, software companies in CRM and other sectors also offer products containing PRM capability.

In Cambridge, Mass., ChannelWave is devoted almost exclusively to customers within the high tech industry. Marketing vice-president Drew Williams says the company's enterprise-scale CustomerConnect PRM software brings vendors, resellers and customers into a single integrated channel management system, where businesses can access networks of customers wanting to buy, and associate companies wanting to collaborate on closing deals.

ChannelWave recorded $2 million in sales in 1999 and Williams says it was on track for $10 million to $20 million in fiscal 2000, and that figure is expected to double this year. He adds that backing has been secured from venture capital firms such as Softbank Technology Ventures, ABS Capital Partners and Lazard Technology Partners, and he hopes the company will achieve profitability in 2002.

ChannelWave also established a presence in Toronto with the acquisition of DRUMS Inc., a provider of Web-based sales systems. Williams says the deal gave ChannelWave access to eConversations technology, which extends the PRM interface from vendors and partners to include end users. He says the deal also expanded ChannelWave's market reach and increased its share of the e-business market.

The company also bought Accurus Inc., an e-commerce infrastructure firm specializing in requests for proposals, as well as The Saratoga Group, which offers online training. Williams says ChannelWave is interested in collaborating with e-commerce players, including transactions companies, and also with CRM companies interested in PRM.

At Allegis Corp. in San Francisco, marketing strategy director Kurt Foeller says his company has solid revenues (which he declines to reveal), but plans to increase mass market share first, then achieve profitability. Allegis has announced financing from firms such as J. & W. Seligman, Amerindo Investment Advisors, Benchmark Capital and Pivotal Asset Management."

Foeller adds that the company plans to continue to provide the kind of software services that fall under the PRM umbrella, even if the nature of PRM changes. "PRM as a category will evolve. Whether or not it ends up as a different acronym altogether, the application needs will remain the same."

If this optimism bears out, companies like Virtek Vision, which depend on business-to-business activity, may well experience a renewed relationship with their distributors.