The New Channel Normal: Why You Can't Talk About Products Anymore


Fresh off our XChange Solution Provider conference in Orlando, Fla., one thing became crystal-clear. It is not business as usual, and disruption, confusion and angst will be the new normal.

If you have five to seven years left in your career, you may be able to ride the wave, tweak your model ever so slightly and earn a good living. But if you need to pass your business onto the next generation or sell your business for your retirement, today's typical VAR model won't work and the valuation you get for your business will be disappointing at best.

Here's why you need to change now: The IT decision-maker is changing and changing fast. According to Gartner, 41 percent of IT budget is outside IT now and the shift has happened more quickly than anyone expected. The implication of this shift is twofold.

[Related: UBM Tech Channel CEO Faletra: Solution Providers Must Target Chief Marketing Officers]

First, you need to change the conversation you are having with clients. You can't talk about products anymore. You must talk about business outcomes.

At XChange, Tiffani Bova, Distinguished Analyst at Gartner, suggested that you take a few cues from the McKinseys and Bains of the world. Look at how they position their practices and their services. They don't sell technology solutions; they sell business outcomes. While most VARs got into the business for the love of technology, you will need to get out of your comfort zone and reposition the conversation around the business. This new IT buyer wants a problem solved, period.

You also need to get in front of this customer with whom you may not have a relationship. To reach the head of HR, or the executive that handles supply-chain, or the marketing executive, you must market your services. Traditionally, VARs have not been good at marketing, but if you want to expand your customer base and grow, you need to bring in some skills and leverage new platforms such as social media, search engine marketing and optimization, and email marketing.

Cloud is obviously forcing this change, too, and you need to figure out where you should play. There will be lots of opportunities to provide guidance in melding public cloud and private cloud, and cloud management will be an opportunity in the future.

With cloud computing comes even more skills that you will need. A recurring-revenue model will force you to think about billing differently and you will need to bring in some expertise there. Bova asserts that you need to fire your sales force if reps can't change and sell in this new world. While it is jarring to hear, there were a few VARs at XChange that said, "I listened to Tiffani and I wished I had done it earlier."

While you need to understand where the model is going, traditional vendors also must encourage the shift. The whole industry is too reliant on the transactional portion of the business. Products make money for the vendor, but they have to be dragged in after the consultative sale. In this model the vendor's brand may be less visible, but if the industry is going to move to IT as a service and to new customers, everyone needs to embrace the fact that disruption is a foregone conclusion.

For more information about what we covered at our XChange event, which featured dozens of renowned speakers, a channel chief round table, our Channel Champions Awards and more, go to our XChange 2013 coverage page.

BackTalk: Kelley Damore, SVP, Editorial Director for UBM Tech Channel, writes a monthly opinion column. You can reach her via email at kelley.damore@ubm.com.