A Path To The New Channel

There is no question that the solution provider channel is more nimble, scrappy and capable of morphing to the market conditions and needs than the vendor community whose products it takes to the street.

But like every other business, remaining profitable and healthy requires constant adjustment. As part of our ongoing research and content creation, we are constantly measuring and predicting the trends with which solution providers and vendors alike must deal.

The adoption of cloud computing, while not yet universal, is growing and a path to a new channel will require extensive work by the partner community to remain successful.

Historically, solution providers have delivered on-premise solutions that have been sold in a resale type transaction. But that model is changing as customer organizations look for ways to drive down the cost of their technology infrastructures and look to use technology in different ways to get product to market more quickly.

The ability to buy some services and capabilities on a monthly fee basis from an off-premise supplier rather than acquire the infrastructure and distribute it through an organization is a true game-changer.

The result is line-of-business managers who will, in the future, be making many more decisions on IT deployment than they have in the past.

This is a huge opportunity for the channel on many levels. First off, it’s an opportunity to find and develop many more customers inside an organization. Nearly every line of business executive is a potential customer. These LOB managers generally make decisions more quickly when given a need to drive revenue or cut costs. This means partners can go after the operating budget instead of the capital expenditure budget, which is generally an easier hurdle to get over.

To capture these new opportunities, solution providers are adjusting business models, selecting new supplier sets, nudging up to telco suppliers, and deciding whether they need to build their own managed and cloud services or resell someone else’s.

The business model adjustments will be difficult, but partners need to commit now. Our research shows that while IT spending will remain relatively flat over the next two years, the spending on cloud solutions will double over that time frame. We see solution providers fitting in one of three categories. The vintage player is focusing its efforts toward traditional on-premise resale deployments that are not generating recurring revenue; the progressive partner is moving on the path to cloud by pushing managed services, selecting cloud applications and services, and investing heavily in sales, marketing and technical skills; transformative SPs are driving their sales entirely in a recurring revenue model and are focused exclusively on cloud deployments.

In the customer arena, we see small business and midmarket players being aggressive in moving toward the operating expense type purchase in an effort to cut costs and come to market more quickly with new product.

Longer term, we believe we’re going to see large transformative and progressive solution providers form through both organic growth and mergers. This is going to be hard work, but the end game sure looks like a more stable and impressivebusiness model.

BACKTALK: Make something happen. Robert Faletra is CEO of Everything Channel. You can contact him via e-mail at [email protected].