Phoenix Rising Blog – Channel Development
Posted Thursday, September 28, 2017 at 12:00 AM by Norma Watenpaugh
Business models have fundamentally changed from selling and buying gear to responding to how customers consume technology and how it changes their businesses.
We are experiencing seismic changes in the tech industry driven by the convergence of SMAC (social media, mobile computing, analytics and cloud technology), the change in technology consumption, the rise of Digital Transformation (DX) and the Internet of Things (IoT). Though the industry has experienced massive disruption before, the changes underway now seem to be different. Why? One reason is that business models have fundamentally changed from selling and buying gear to responding to how customers consume technology and how it changes their businesses.
For a clearer picture of what’s happening, consider the following:
- Channels are consolidating: According to the 2016 CompTIA study, there has been a 30% decline in the number of partners transacting since 2008.
- Despite this decrease, channels remain productive: 70-80 percent of IT products and services continue to be sold through channels in North America, according to a 2016 CompTIA study.
- Channel partners face increased competition due to the convergence of partner types, including traditional solution providers and telecom agents.
- While the number of traditional channel companies has declined, it’s been offset by the rise of influence/affiliate channel models and new partner types including marketing and digital agencies, accounting firms, private equity companies, and HR firms.
- Amid this upheaval, traditional IT/networking solution providers are transforming their business models to accommodate for cloud, IOT, SDN and SaaS applications.
What else is driving change? The new buying paradigm led by line of business (LOB) managers for one thing. They are now in the driver’s seat and their motivations are keenly focused on business outcomes. IT in certain software applications and solutions may be an influencer, or taking a back seat in the sourcing of technology solutions. Similar paradigm shifts are also happening among infrastructure vendors who have responded by reorienting their organizations around business value, software, and not allowing their businesses to become plug-and-play commodities.
The conversation is also shifting regarding who is a vendor, who is a partner and who is a customer. Vendors may be hardware, software or services-oriented, and channel partners may be cloud providers, master agents, solution providers or some combination thereof. Vendors, service providers and solution providers are all partnering together to create additional value for end customers and to ensure long term solvency and success.
All of these trends, changing business models and buying dynamics amount to an incredible transformation happening in partner ecosystems. We must rethink how vendors and partners go to market as an ecosystem. Partners once on the fringes are now more powerful as influencers. Often, they are becoming orchestrators of the ecosystem. With their established customer relationships and trusted advisor positions, they are diversifying their revenue streams to incorporate managed services, API innovation and integration.
As we see more and more consolidation in the traditional IT channel, we see an influx of new players centered on particular industries. For example, GE Digital is becoming a powerhouse in IoT and industrial transformation. Today, there are over 1,000 new VC-funded entrants into the IoT space. This is a space where digital transformation and IoT require a more verticalized approach and level of expertise.
So what does this mean for companies seeking to transform their current partner ecosystems to meet the challenge? TCC & Phoenix Consulting Group have recently engaged in extensive research to understand how companies are engaging with new partner ecosystems. We have interviewed partnering professionals across a “Who’s Who” in the ICT industry to glean their insights so we can better understand their actions.
Here are three trends that stand out from our conversations and research:
1. Organizational Structures Are Evolving Vendors are compelled to think more holistically about their different routes to market. As partners adopt a more blended business model of services, homegrown IP and recurring sales streams, vendors need to break down silos between their channels, ISVs, alliances and services business units. Companies are beginning to organize their various partner communities under a single reporting structure and framework, and a unified partner program.
2. The Meaning of Value Has Changed Partner programs need to restructure to accommodate the changing nature of value. Instead of sales volumes, they must think in terms of rewarding new definitions of value prioritized by end customers. Thinking value means reevaluating incentives. Vendors can no longer subsidize partner profitability through back end rebates or discounts. They must instead reward skills, competency, vertical expertise, customer relationships and sustained engagement. These behaviors are the new leading indicators for partnership success.
3. Encouraging Peer-to-Peer Collaboration Since no single vendor or partner can deliver DX or IoT solutions by themselves, working together effectively has become a premium competency. Many of these solutions are custom-assembled for each customer, and the constellation of partners may be different for each opportunity. A new model of more agile, more integrated partnering is required. A partnering model dependent on trust which becomes easy to replicate—or terminate—once the work is completed..
In a very complex and changing landscape, we believe the vendors and partners who embrace the change, build partnerships for the long run, and make partnering a core tenet of their company strategy will achieve a competitive advantage that could last for years.
About the Authors:
Theresa Caragol is founder and principal consultant of Theresa Caragol Consulting, LLC, and Achieve Unite a strategic advisory firm that provides business acceleration services to global enterprises including partner and channel development, go-to-market planning, M&A channel integration and executive learning forums. She has more than 20 years’ experience in building and managing multi-million dollar indirect channel teams and strategic alliance business and programs from inception to sales success. Prior to founding TCC, Theresa held senior executive roles at Extreme Networks, Ciena and Nortel.
Norma Watenpaugh is the founding principal and CEO of Phoenix Consulting Group (www.phoenixcg.com), which provides partnering and collaboration consulting services with expertise in partnering strategy, multi-channel and alliance management, and ecosystem development. Prominent clients include Amazon.com, Adobe Systems, Cisco Systems, Dupont, Intel, PayPal, Microsoft, SAP, and Xerox. Norma is also a Board member of the Association of Strategic Alliance Professionals. She also leads the U.S. delegation to the ISO standards committee for Collaborative Business Relationship Management.
Posted Sunday, October 30, 2016 at 06:00 AM by Norma Watenpaugh
Measuring Channel Ecosystem Health? And Why do I Care? I recall the first time I spoke about a “partner ecosystem” in 1999 to my boss, a long time direct sales manager. He looked at me like I was a tree hugger. Today, we frequently talk about our partners collectively as...
Tags: Partner ecosystem; ecosystem health, partner scorecards, partner metrics
Posted Thursday, September 29, 2016 at 12:00 AM by Norma Watenpaugh
Understanding if you have the right number of channel partners can be a tricky question and one related to having the right partners. You may have thousands of partners but they may not be productive for you or they may not have the right skills. But assuming they...
Posted Monday, September 5, 2016 at 12:00 AM by Deborah Henken
You’ve recruited partners and now you need to get them ready to sell your products and solutions. Systematic and deliberate onboarding can have long term impact on partner loyalty and productivity. By one company's experience, 50% greater first year revenue was realized by those partners...
Tags: onboarding, partner experience, channel management,
Posted Friday, August 12, 2016 at 06:00 AM by Norma Watenpaugh
“Well, they get a good margin” was the response to the question “What is the partner value proposition?” at one large manufacturer. Margin as defined between the difference between buy price and sell price is probably not the right answer. “Do I offer my partner a...
Posted Thursday, August 4, 2016 at 06:00 AM by Deborah Henken
Do you Have the Right Channel for your Future?The Buyer's journey has changed in the past few years. Has your channel strategy kept up? Have your partners? How are you transforming your channel to address how buyers buy? How is your channel changing to keep up?Here are some facts about...
Tags: channel strategy, digital transformation, buyer's journey, transforming the channel, channel of the future
Posted Friday, July 22, 2016 at 06:00 AM by Norma Watenpaugh
What Savvy Channel Chiefs Already KnowHow does a channel chief address the seismic shifts happening in the world of digital transformation? How can you enable the channel to make the crossing to new opportunities promised by the digital transformation? Phoenix Consulting Group and Highland...
Posted Friday, May 13, 2016 at 03:00 PM by Norma Watenpaugh
TALKIN' SMAC AND DIGITAL TRANSFORMATION Author: Hobart Swan | Published by: CCI Global Channel Management, January 2016 Feature Let’s start off with a definition. The Altimeter Group defines digital transformation as “the realignment of, or new investment in, technology and...
Posted Friday, April 22, 2016 at 05:00 PM by Norma Watenpaugh
Is IOT Ready for the Channel?We’ve been hearing IOT is coming; IOT is coming for some time. The fact of the matter is IOT is here. GE announced that they saw $6B inrevenue in industrial IOT this past year, 2015. Others Amazon, Google, IBM, even the US government have also announced...
Posted Monday, May 25, 2015 at 01:00 PM by Norma Watenpaugh
Partnering Strategies to Accelerate Growth in the Internet of ThingsFor some time we’ve been hearing that Internet of Things is coming. Well it’s here!There are many examples that we probably don’t think much about. Beyond our personal devices: smart phones, watches...
Tags: By one estimate IOT will represent $14T of new value creation by 2020 with 50-75 billion devices connected.
Posted Wednesday, May 28, 2014 at 05:00 PM by Norma Watenpaugh
Business model transformation is one of the most disruptive changes a business can face and it isn’t pretty. As often is the case in disruption, those companies with the most invested in the old model have the most to lose since making the shift will cannibalize their existing business...
Tags: Cloud computing, business model transformation, disruptive change, SaaS
Posted Tuesday, May 6, 2014 at 02:00 PM by Norma Watenpaugh
Because more and more, channels are becoming the preferred route to market for alliances.As a recent CRN article on the VCE alliance illustrates, when alliance managers choose channels they need to understand how they work, what motivates channel partners, what are the economics, and how to deal with...
Tags: channels, SaaS, Strategic Alliances, Routes to Market, Go to Market
Posted Tuesday, May 6, 2014 at 02:00 AM by Norma Watenpaugh
Collaboration between technology providers and their channel partners has never been more important. Creating a sustainable partnership begins with the customer value proposition. Without customer value, there is no reason to partner! This requires you to get inside the head of the ultimate...
Tags: Business Impact, Solution Value, Relationship, Partner Value
Posted Friday, February 14, 2014 at 11:00 AM by Norma Watenpaugh
Channels are under pressure as never before. They have been subject to compressing product margins over the years; first on hardware, then software and now - pressure from a business model perspective in adjusting from transactional payment to recurring revenue driven by the SaaS (software...
Posted Thursday, February 21, 2013 at 08:00 AM by Norma Watenpaugh
Providing training to your partners is a major component of partner enablement. However one size does not fit all. Training must be relevant to your partners’ needs, delivered when they need it and in a format they find consumable. The challenge becomes exponential when you consider...
Posted Tuesday, October 2, 2012 at 10:00 AM by Norma Watenpaugh
Most channel programs see the 80/20 rule in effect around partner engagement. Meaning, only 20% of your partners are actively selling and promoting your products and services. So how do you increase active selling? Recruit more partners? Or find a way to capture more interest with the partners...
Posted Friday, August 17, 2012 at 10:00 AM by Norma Watenpaugh
We often focus on how to measure the performance of individual partners, but it is equally important to understand how your partner community is performing. Insight into what drives performance across your community informs you on how to better manage your partner program to enable more success.There...
Posted Monday, May 7, 2012 at 07:40 PM by Norma Watenpaugh
Following our last Deal Registration blog post, many readers have been wanting to know more about how to incent partners to register a deal and examples of how "best in class" incentive programs work. Simply put, the purpose of incentives is to influence the behavior you want from your partners through...
Tags: channel management, lead management, channel revenue, partner relationship management, PRM, channel incentives, channel rewards, partner incentives
Posted Tuesday, April 3, 2012 at 09:00 AM by Norma Watenpaugh
Deal registration is a common element of most channel programs. However, without a solid PRM system behind it, the process can be cumbersome and ultimately fail. The purpose of deal registration is to reduce channel conflict by protecting partner deals. It prevents partners from stealing deals and competing...
Posted Monday, February 27, 2012 at 05:00 PM by Norma Watenpaugh
We are pleased to announce our partnership with Requisite Software, an industry-leading Channel Management, B2B eCommerce and Master Data Management solutions. Together we plan to provide a series of postings highlighting issues and soutions for the partner management community. This is the...