2016 Channel Chiefs: Transformation Time

Leading-edge solution providers are taking the first steps toward transforming themselves into strategic service providers. And forward-thinking channel chiefs are giving them a hand.

Strategic service providers are the next evolution of the channel as solution providers morph into independent, trusted technology consultants that drive business outcomes with an emphasis on cloud and managed services delivered via a recurring revenue model. And that evolution is changing the relationship dynamics between vendors and channel partners.

"It's top of mind for us. We're seeing it across all of our partners. It's all around our ecosystem," said Ken Trombetta, vice president of Cisco Systems’ Global Partner Organization. He also noted: "They're all at different stages."

[Related: 2016 Channel Chiefs]

For channel partners, making the jump to strategic service provider "requires them to make some hard choices," said Joshua Waldo, vice president of partner programs and strategy at Nintex, a supplier of workflow automation software. "The people who have not made those choices yet are, in my opinion, behind the eight ball."

Solution providers, for example, have to switch from a project-based business with perpetual software license sales to a recurring revenue model based on software subscriptions and the delivery of centralized, repeatable managed services.

Nintex and its partners are on the leading edge of the trend because businesses are using Nintex software for digital transformation. And if they are changing, so must the solution providers. Waldo said Nintex's partners are in various stages of evolving from project-based businesses to managed services with its 60 Premier partners "really making the shift."

So where do channel chiefs come in? From the products they offer to the channel program resources they provide, vendors and their channel operations are lending partners a hand with the strategic service provider evolution.

Take Eaton, a company best known for its power management hardware, which recently launched an initiative around its Intelligent Power Manager software that's designed to help partners drive software, services and recurring revenue for mid-market data-center-focused partners. The effort goes beyond the software to include tools and training to help partners perform customer assessments and make recommendations.

"It's not about the infrastructure anymore," said Curtiz Gangi, Eaton sales vice president of U.S. channels, data center segment. "The needs of our customers are changing." The company now provides a certification track to help partners not just install Eaton products, but configure them for customers' needs, integrate them with the rest of the IT environment and maintain them through an ongoing relationship with the customer.

"We view that as a great opportunity for the partner to offer professional services around that technology," Gangi said.

In January Cisco took a similar tack with its Cloud Consumption-as-a-Service offering that's sold exclusively through the channel. With CCaaS partners gain visibility into their customers' cloud usage, providing a basis for offering strategic consulting services.

Nintex, meanwhile, is preparing a guide for its partners, due later this year, outlining the steps to becoming a strategic service provider and building a recurring revenue business.

Helping partners stay engaged with customers beyond the initial deal is a critical component of the strategic services provider evolution. Clint Oram, SugarCRM CTO and channel chief, notes that his company accomplishes that by paying partners for subscription renewals. "Two-thirds of our recurring revenue is done through the channel," Oram noted. As of Jan. 1 partners also generate higher margins for additional sales to existing customers as well as driving new business.

Cisco sees its partners segmenting into different types, from more traditional infrastructure VARs to MSPs and cloud service providers, ISVs and mobile application developers, and vertical industry consultants. "And we're changing our partner program to provide for all those roles," Trombetta said.

So which channel executives do solution providers need to know? Here we present the CRN 2016 Channel Chiefs list, our annual roundup of the top channel executives and what they've been doing to ready their channel programs for 2016.

Our 50 Most Influential Channel Chiefs of 2016 are an elite group drawn from the larger pool of Channel Chief honorees each year that represent the cream of the IT channel crop—leaders who drive the channel agenda and evangelize the importance of channel partnerships.