The recent filing for bankruptcy protection by Nortel Networks has raised a few pertinent questions that probably affect the broader industry. One of which — a rather simple and straight forward one is — what happens to the partners of Nortel? But, more importantly, are there other firms, which, like Nortel, can file for bankruptcy protection any time soon? And if that happens, what will be the impact on their partners?

Already, there are rumors in the market that a few other big names may join the bankruptcy list along with Nortel. And every company that is not able to meet its quarterly earnings target is looked at as a potential bankruptcy case.

When partners face severe financial crisis or even become bankrupt, vendors are more or less insulated from the impact as they have other partners to bank upon. But, what can the partners do when their principal declares bankruptcy? They have customer accounts to take care of where they may have installations or even maintenance contracts. Though the vendors say that they will continue supporting their existing customers, it is easier said than done.

This puts the partners in a spot. While the customers depend on them for providing ongoing support, they may not get the same kind of support from the vendors.

So, what is the way out? Since the channel partners are in a way dependent on vendors for their business, perhaps they should look at having some kind of ‘business continuity plan’ in place. In plain speak, this means vendor redundancy or having relationships with multiple vendors for the same product category.

But having relationships with competing vendors for the same product category comes with its own set of challenges. There will be pressures from the vendors to include their product as part of a customer solution. And not including a vendor’s product (which will always be the case if a partner is handling competing brands) as part of an overall solution will mean having a miffed principal, who sometimes can also resort to strong-arm tactics. So, it’s a tricky balance to maintain.

That balance, however, will have to be maintained, whether one likes it or not. And the way to do that is by becoming vendor agnostic. Reasons like “we don’t have any preferred brands and just provide what the customer asks for” or “we don’t recommend any particular brand but just explain the merits and demerits of the products to the customers and let them decide” work most of the time. And one should also practice it for the explanation to be taken seriously by vendors, until and unless one is specifically asked for a recommendation.

Having multiple principals and becoming vendor agnostic at the same time ensures that partners automatically have a business continuity plan in place. So, in case a vendor files for bankruptcy, the partner always has the competing brand to continue his or her business. And in case the bankrupt principal is not able to provide the necessary support to an existing customer, the partner can, over a period of time, always look at migrating the customer to a competing vendor without losing the business altogether.

And if, as the rumors suggest, the bankruptcy virus spreads to other vendors, partners who don’t have a ‘business continuity plan’ will certainly face tough times.