Techaisle’s landmark survey of 2,115 channel partners, representing a cross-section of the partner community, indicates that while pressure for change is mounting, partners have not yet coalesced around a path forward. The Techaisle channel survey shows that the partner community members are searching for a roadmap to success. That roadmap will vary across partner models, as will the opportunities and requirements for suppliers. In this time of transition, effective channel collaboration will determine growth and viability for both individual channel businesses and their vendor suppliers.
The early years of this decade have been challenging for individuals and businesses in all sectors. In some cases, the pandemic – or, more recently, rising interest rates and declining consumer confidence – have caused tremendous upheaval, with suppliers finding that traditional definitions of the market, sales motions, and fulfillment no longer applied.
The current decade has brought an even thornier set of challenges to the IT channel. In addition to the macro conditions that apply to all businesses, and against a backdrop of changing business models, shrinking product margins, and the need to build profitable services practices, channel members need strategies to cope with:
• A shift in core customers – from technologists to an organization-wide mix of personas, including businesspeople who define technology in terms of business rather than IT functionality.
• A shift in buying and selling models – from fee-for-product/service to approaches that involve outcome-based evaluation and contracting or shared risk agreements that tie payments to achieving defined business goals.
• A shift in solution composition – from monolithic systems to modular stacks that address target functionality via APIs – as well as a corresponding change in the underlying business approach, from “design once, deploy many” to a need for individualized solutions tailored to a fluid set of customer needs.
These conditions have combined to place the channel under tremendous stress. Channel members have explored different business models, different product mixes – accompanied by demands for new skills and service capabilities – and other marketing, selling, and partner relationship configurations.
Both channel businesses and their vendor suppliers are vested in understanding how solution portfolios are changing and how the channel and vendor communities can best work together to bring solutions to market. These are complex questions, but their answers are at the heart of a wide range of sales, marketing, and executive imperatives. This study provides valuable input to those discussions.
Aligning to Changing Solution Portfolios
The starting point for an analysis of alignment to changing solution portfolios is the portfolios themselves – what is the channel selling, and how fast is revenue associated with these offerings expected to grow? Data shows that more than 80% of partner firms are selling cloud and/or collaboration, and more than 60% sell customer experience, employee experience, or analytics solutions. From a growth perspective, 80% or more of channel members anticipate growth in cloud and 5G, and 70% or more expect growth in collaboration, analytics, SD-WAN, virtualization, and/or SD-WAN.
Variations by business model
The data shows that firms pursuing specific business models and of different sizes have different approaches to portfolio construction and planning. Highlights from this analysis include:
MSPs have broad portfolios: they are more active than the all-channel average in 17 of the 20 solution categories and are much more likely than peers in other segments (more than 20% above the all-channel average) to be selling hyperconverged systems, SD-WAN, employee experience platforms, and VDI/DaaS; they are much less likely than peers (less than 80% of the all-channel average) to be selling artificial intelligence solutions. MSPs are generally bullish on growth prospects for the solutions that they carry: asked about revenue increases, MSPs are above 90% of all-sample averages in all but one category (open source) and much more likely than peers to be expecting revenue increases in AI, virtual reality, and employee experience platforms.
Data for VARs shows that this channel is more active in time-and-place product provision than solution selling. VARs are much less likely than average to be active in eight of the 20 solution areas and much more likely to report that they are neither carrying nor planning to carry the vast majority (18 of 20) of these solutions. High proportions of VARs anticipate increased sales of security, unified communication, and virtualization solutions. In contrast, a very low proportion of VARs currently selling hyperconverged systems (17% vs. an all-channel average of 57%) expect revenue growth in that category this year.
CSPs occupy a different spot on the solution portfolio spectrum than either MSPs or VARs. In terms of the current portfolio, they are only 20% or more above all-channel norms in two categories. However, they are at least somewhat above all-channel averages in 12; they are also active in adding new solutions, above average for expansion plans in 13 different solution areas. Like MSPs, CSPs are generally optimistic regarding growth in the solutions they carry, particularly concerning hyperconverged systems. Contrasting this finding with the VAR data point listed above, customers may be more inclined to buy hyperconverged systems in a managed environment than as a stand-alone offering.
Portfolio data for consultants portrays a group determined to be at the leading edge of technology. Consultants are much more likely than peers to offer AI, open-source, and virtual reality solutions. They are 10%-20% more likely than peers to be active in unified workspace, security, and virtualization solutions. Like CSPs, consultants are aggressively expanding their portfolios, particularly in cloud, employee and customer experience solutions, SD-WAN, managed services, and mobility and remote/hybrid workplace solutions. IT consultants are the most bullish cohort within the channel community. They have above-average growth expectations in 16 of 20 solution categories and particularly strong growth expectations for open source, IoT, SD-WAN, and AI solutions.
SIs are primarily clustered in the center of the solution portfolio. Mostly, they are neither substantially above or below all-channel averages for current products. SIs indicate accelerating interest in cloud, managed services, and open-source solutions. In contrast to IT consultants, SIs are very pessimistic about solution growth prospects. The average proportion of SIs expecting growth in a particular area is below all-channel averages in 17 of the 20 solution areas and more than 20% below these norms in hyperconverged systems (adding credence to the earlier point on this category), unified communications, AI, employee engagement platforms, VDI/DaaS, SD-WAN, IoT, managed services, virtualization, and customer experience solutions.
Variations by size
Portfolio variations are more distinct by company size, largely because small channel firms lack the resources to support extensive solution portfolios. Small channel members are at or below 80% of all-channel averages in nine of the 20 solution areas. They are much more likely than average to report that they neither offer nor plan to offer 13 of the 20 solutions examined in the survey. In contrast, large (1000+ employees) channel firms are much more likely than average to offer nine of the 20 solutions and much less likely than peers to neither offer nor plan to offer solutions in 17 solution areas.
Growth expectations largely echo the portfolio breadth data. Very small channel firms register above-average growth expectations in only one category, while midsized firms (100-999 employees) are above peer averages in 17 of 20 solution areas. Very large partner growth expectations for specific solutions are mostly above all-channel averages. However, this group is only much more likely to expect increased revenues for collaboration and virtualization solutions.
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