I just returned from Channel Focus North America in San Diego-the annual event that is the Mecca for all channel marketers in the Technology B2B space.
A common theme in the event was focused on the fact that Channel Partners are continuously reinventing themselves and are now focusing on service and solutions as a basis for their GTM model. (Note: Those as old as I will remember that the channel initially was a hardware-centric distribution model born out of the need to sell 286 desktop PCs to the emerging SMB market some 30 years ago –displacing IBM Selectric typewriters as the desktop appliance of choice. ) Making real money by relying on hardware margins has gone by the wayside in terms of providing a sizable revenue stream for resellers. In response to this, new channel segments have emerged in the last few years to capitalize on the service/solutions revenue trend. Managed Service Providers, Consultants, Agents, and hosting companies have joined the fray of existing channel models (ISV, OEMs, Resellers, SIs, DMRs, and others) to form a dizzying array of channel segments. In fact, the term “VAR” is almost passé-as most resellers are labeling themselves something other than that to find their niche. This shift adds complexity for the average vendor: Keeping up with Partner profiling and segmentation is a full-time effort. Incentive and training programs must be aligned to conform to the GTM strategy of these models. Plus, vendors must manage yet one more form of possible conflict with their channel partners-service-which now joins Vendor/Channel sales ownership, and Channel/Channel conflict as areas that vendors must sort out. This last point is interesting to me, as service revenue really hasn’t been that profitable for many vendors anyway, so why wouldn’t this be viewed as an opportunity to strengthen their relationship with the channel? Well, the answers to this question are too numerous and complex for this column, so that will have to wait to be answered until another time.
While the impact of the shift to service revenue from hardware revenue isn’t exactly up-to-the-minute news, the impact that “The Cloud” is going to have on the industry as a vehicle to deliver “virtual” solutions in the next few years will accelerate changes both further AND faster. For instance, new questions will have to be answered, like: “Who really owns the client?” across the various phases of the client lifecycle. Or, “How will commission and margin structures work?” and “Will partners be responsible for subscription billing?” The growth of the “cloud” model will impact some vendors more than others, of course, but it will be a strong catalyst for more dramatic changes in the channel nonetheless. It is my prediction that “Agents” will emerge as the growth channel segment in the IT industry to capitalize on this trend (Note: “Agents” are already prevalent for the telecommunications service providers as a partner type).
Finally, there was a standing-room-only crowd in the session covering “Are you easy to do business with?” hosted by this author. It seems that vendors are becoming more aware of the shortfalls and selfishness in program design that makes it hard for their partners to take full advantage of their expensive channel programs. The increased awareness of program complexity in the vendor community will yield good things for everyone, of course. The session specifically addressed “Easy tips you can use” to make doing business with you easier for your partners-and a more mutually rewarding experience. Stay tuned for those tips in a future article. I hope I have your interest piqued.