Four things the channel must do in 2017 - IDC
By 2020, 30 per cent of today's vendors won't exist in their current form, analyst claims, as it assesses the partner landscape at event
Channel partners, distributors and vendors ought to fasten their seatbelts and prepare for a bumpy ride, according to IDC, which claims that the industry is heading for turbulence. At a breakfast briefing this week, the analyst said that we now live in a "wobbly world" thanks to changing industry dynamics, as well as geopolitical factors such as Brexit.
With that in mind, the analyst's programme director for European channels and alliances, Margaret Adam, assessed the current partner landscape. Continuing the aeroplane analogy, Adam likened IT infrastructure vendors to an airline carrier, and said their partners can be viewed in two ways: as their ticketing and sales agents, and - increasingly - as their in-flight crew.
"When you're going through turbulent times, you need that crew to be keeping customers happy and safe, and reassuring them," she said.
Throughout her presentation, and speaking to CRN afterwards, Adam gave her view on the market and dished out some advice.
1. The channel is having an identity crisis, so work out who your company really is
"We're seeing new partners emerge and it's getting harder to classify partners now," she said. "Digital agencies, niche firms and strategy-consulting companies are competing head on with the IT outsourcers and SIs. We've seen very, very innovative start-ups come to market.
"It's about defining their value proposition. Many partners have an identity crisis right now. We survey them every year and ask them how they classify themselves - are you a VAR? Are you a MSP? Are you a cloud builder? We give them a list of about 10 or 11 items. Increasingly most of them will tick four, five, six, or all of those items. It can be really challenging to have a programme which supports that. It's also difficult for customers to understand what partners are doing now. Partners are changing so rapidly that it's critical that they can clearly articulate what they do; what their role is in digital transformation.
"I talk to partners and I say if you can't explain to me what it is you are, how are your customers figuring it out? Don't expect them to know what you're doing or to avidly watch changes on your website. It's not going to happen."
Four things the channel must do in 2017 - IDC
By 2020, 30 per cent of today's vendors won't exist in their current form, analyst claims, as it assesses the partner landscape at event
2. Realign your vendor strategy, because big change is coming
"We predict that by 2020, 30 per cent of the IT vendors we know today will not exist in the form we know them today," Adam said.
"This is the advice we give to end users and we're telling them they need to realign their vendor strategy. They need to be sure they will be relevant by 2020.
"What does that mean for partners? They've built their business around a handful of vendors. They're going to be constantly assessing and making bets. The good news is that partners won't necessarily change - it's a hell of a lot of work to deal with a vendor. It's a huge amount of effort and enablement and training. But they're very aware of the opportunity and they're looking at the disruptive vendors both as a potential opportunity but also a potential threat to their business that they have to respond to."
Adam said that although there is a surge of new, disruptive start-ups battling for channel attention, partners must carefully consider who they team up with.
She added that 2020 will be a "landmark" year, where the amount spent on off-premise offerings overtakes the amount spent on on-premise kit.
"If you're thinking about how an infrastructure vendor views their channel - as a resale opportunity - the balance of power shifts from a broad channel to a more concentrated channel," she said.
"That has implications for the partner programme, for resources - where do you put your resources? - and it makes for a significant impact from a vendor perspective. From a channel perspective, it means less revenue flowing through the traditional channel. I think that trend is there and partners recognise it. Partners who don't have a strong services offering and haven't minimised their reliance on hardware resale are really going to feel pressure and 2020 will be a crunch year."
Four things the channel must do in 2017 - IDC
By 2020, 30 per cent of today's vendors won't exist in their current form, analyst claims, as it assesses the partner landscape at event
3. Consider linking up with other partners
The 'partner to partner' trend has emerged over the last year, through which resellers link up with fellow partners to complement each other in areas in which they're lacking. Often the vendors themselves can act as a matchmaker and can set partners up with one another - something Cisco and Microsoft have recently said they're actively doing.
Adam said this trend isn't going anywhere.
"We've seen more peer partnering, or partner-to-partner collaboration. There's growing recognition that you can't do everything; even with pockets as deep as Accenture's, it's difficult to acquire everyone," she said. "So people are looking to develop pockets of specialisation through partnering. It has always happened and it was in a sub-distribution manner. But now it is more strategic and we're even seeing partners create their own alliance programme to partner with other partners. That's for areas of specialisation which are non-core, or uncomfortable for partners - things like open source and security. It's coming up more and more in discussions with partners. They want vendors to facilitate it and be a conduit."
She said that partners must have a "trusted relationship" with each other, otherwise teaming up could become tricky.
"Where there is a small overlap in terms of what they offer, that's where the partnerships are pretty successful because there is more of a willingness to share," she said. "Whereas if there is a significant overlap, it's quite tough to do. So it depends. Culture is quite important. Some of the smarter partners are trying to bring in this digital culture and they find with partnering they can bring this into the organisation without having to take a huge risk."
Four things the channel must do in 2017 - IDC
By 2020, 30 per cent of today's vendors won't exist in their current form, analyst claims, as it assesses the partner landscape at event
4. Embrace technical support from vendors, not financial incentives
In years gone by, one of the things partners wanted most from vendors was financial incentives, rebates, and rewards. But Adam said that this aspect of partnership is now often bottom of partners' wish lists.
"In a time of turbulence and transition, what partners value most from you is technical enablement and architectural support - giving them access to your best consultants, to your best architects, help them in the field," she said. "It's far more important than financial incentives. I've been involved in the channel for many, many years and financial incentives used to be very [important]. But that's changing.
"I've asked this question to software channels, I have asked this question to infrastructure channels, I've asked it to managed services providers and CSPs - regardless of the audience, when we ask what it is they most want from a vendor partner right now, the biggest factors are architectural and solutions training and skills development. Incentives and rebates consistently come bottom of the list. Granted, if I spoke to a CFO, I'd get a very different answer.
"I do think there's a growing recognition on both sides - vendor and partner - that they need a deeper, more sustained partnership and a more sustainable relationship with partners. There is so much technology change that the support they need is different."