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A new channel has emerged, but are you in it?

James Henderson | June 13, 2017
Non-traditional vendors and partners have established a beachhead in the market, threatening the status quo of the ecosystem.

But what can partners expect to see as the channel evolves?

"The balance of power between vendors, solution providers, distributors and end customers
will shuffle and flow," Herbert said. "New cloud vendors with no channel presence at launch will recognise the need for indirect partners.

"The types of partner programs, benefits and incentives those companies design will differ significantly from legacy vendor programs.

"And finally, we will continue to see IT and business consulting take a lead role in the value proposition and revenue streams of channel firms."

New partners

No longer dominated by resellers of products, Herbert said much of today's channel is shifting to a services focus and specialising across vertical industries and/or solutions niches.

"In the year ahead, more channel firms will be developing their own intellectual property too, whether that is a piece of custom code or a business process they replicate across customers," he explained.

"And the players will keep changing: digital agencies, marketing firms, accountants and other non- traditional partners are selling or recommending IT solutions, a development that has upended the traditional competitive landscape."

In short, the SaaS ecosystem alone is reinventing what it means to be "in the channel", with a new take on vendor relationships, selling strategies and compensation demands.

"Partners are now playing exclusively in one SaaS ecosystem and are hyper-focused on a particular technology, in a specific sub-industry, segment, line of business and geography," Channel Mechanics global advisor Jay McBain added.

"I don't think the channel ever went out of vogue but the difference in today's emerging channel is the level of specialisation and loyalty to one (or a few) vendors.

"I think the early leaders of the emerging channel are SaaS companies such as Salesforce, NetSuite, Workday, Marketo, Hubspot, etc."

Of this line-up of traditionally non- channel vendors, McBain said partner recruitment is based on key criteria, covering hyper-specialised, vector players that are running project-based consulting, implementation, and integration services.

For example, the average services revenue for Salesforce partners is US$4.14 for every dollar of SaaS software spend, according to IDC research.

"Agencies have grown up working with lines of business, specifically marketing," McBain said.

With 72 per cent of all technology decisions now made at the line of business level - according to Gartner research - McBain said market conditions made it natural for agencies to expand businesses into reselling technology and wrapping profitable services around them.

For McBain, digital agencies are an example of shadow channels.

"Shadow channels are defined as those influencers who help line of business professionals make business technology decisions," he explained.

"There are also ISVs [independent software vendor], start-ups, born- in-the-cloud partners, and industry specific consultants."

 

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