• HYBRID WORK IS HERE TO STAY?

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    FEATURED INFOGRAPHIC

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    NEXT CHANNEL - THE FUTURE OF PARTNER ECOSYSTEM

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  • SECURITY RESEARCH

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  • CLOUD RESEARCH

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  • 2020 CHANNEL PARTNER PREDICTIONS

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  • ANALYTICS & ARTIFICIAL INTELLIGENCE

    ANALYTICS & ARTIFICIAL INTELLIGENCE

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  • BUYERS JOURNEY

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  • SAAS RESEARCH

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Techaisle Blog

Insightful research, flexible data, and deep analysis by a global SMB IT Market Research and Industry Analyst organization dedicated to tracking the Future of SMBs and Channels.

The power of P2P partner ecosystem collaboration is a strategic imperative

Management of P2P ecosystems is not a core focus of many vendor channel organizations – but it will be increasingly crucial to success in providing channel coverage for complex technologies. One distinguishing characteristic of a traditional channel firm is its ability and willingness to test, learn about, deploy, integrate and support new solutions as customers need them. However, increasing solution complexity has made it more difficult for channel partners to master all of the different technologies required by their clients. This has, in turn, led the channel to look at partner-to-partner (P2P) alliances as an alternative to the building (through training/certification) or buying (through new staff hires or acquisitions) unique expertise whenever required. Vince DeRose, President, PEAK Resources, Inc., said it very well, "it is difficult to staff engineering/delivery talent for every solution we sell. Training and certification are generally required to have a meaningful and relevant relationship with a manufacturer/OEM." Techaisle research shows that costs are high for staffing skills with certifications. In an increasingly complex market (e.g., IoT, hybrid IT), partners need access to many products – certainly more than they can afford to be certified. Certifications may work for some products, but they constrain options for partners dealing with configurable solutions. P2P collaboration is the panacea for delivering complex customer solutions.

The enduring issue of Partner-to-Partner

PEAK Resources, a 30-year-old DMR, actively believes in and participates in P2P to augment skill gaps – technical and geographical. Initially, most of its IT skills focused around IBM offerings, but now there are many prominent vendors in the market with varying solutions and platforms to meet changing customer demands, such as Cisco, VMware, Dell, and more. In addition, projects are becoming much more complex, requiring many different and complex IT skill sets to solve for the customer. Vince DeRose continues, "a P2P platform, like P2P Global, Inc. is vendor agnostic. It works specifically great for emerging technologies and vendors who have immature partner programs. Vendors are making efforts to develop their P2P enablement programs. Still, most see their platforms filling a gap in their portfolio instead of partners' preference for fulfilling a skills gap. "

Techaisle saw this trend start to take root with security, where deep and diverse protections (and threats) opened the door to mainstream channel collaboration with MSSPs and other specialized security providers. However, the channel partners could not immediately replicate the security experience in other areas. Channel partners often act as gatekeepers, reducing client exposure to other solution sources and internalizing as much of the IT-related business requirements as possible.

Still, though, with the industry-wide trend away from rigid solution definition and towards fluid, flexible configurations that integrate multiple components, P2P collaboration (and from a vendor's perspective, ecosystem alliances) is moving from opportunistic to strategic. In addition, the COVID-19 pandemic catalyzed technology and IT companies to become more flexible and quickly roll out more efficient and seamless digital solutions for partnering and completing projects.

CohnReznick, a 100-year-old firm specializing in tax and audit work and deep expertise in ERP core consulting for midmarket firms, has strategically jumped into P2P ecosystem participation. But, again, the pandemic was the great accelerator. It joined P2P Global, and whose "platform shines as it is laser-focused on curation versus throwing up matches like a job board type solution," says Reed Dailey, Director, Strategy, Technology, and Transformation, CohnReznick.

Partnering To Be Efficient

Techaisle sees solution packaging as a customer choice issue – and customers are choosing to move from turnkey systems to hybrid environments that can align with their evolving needs. In many cases, this requires an accelerated frequency of partner-to-partner collaboration. Real-world demands for predictable, rapid responses to customer demands requires that channel businesses be proactive in building effective relationships with trusted allies.

Karl Kleinert, Director, Advisory Services, CohnReznick, adds, "typically, the vendor solutions are closed ecosystems to their network, but end-customers are not only buying or using solutions from one vendor. We are in a heterogeneous world. The vendor platforms break down pretty quickly in terms of their partner networks as soon as a partner has a project with even a minimal level of complexity that requires ancillary and adjacent technologies. We are very particular about the partnerships that we enter into and make sure we have a route to market model that fits us and that we have good rules of engagement and well-defined roles and responsibilities. Customers are demanding new technologies, which exposes new skill gaps within the partners. A vendor agnostic P2P collaboration platform gives us the kind of flexibility that is important for business success. A good example was a rollout of Infor's Birst data analytics solution supporting a global ERP deployment. CohnReznick owned the overall implementation, and we leveraged another partner for the data migration."

Informed by end-user and partner survey research, Techaisle sees substantial and increasing demand for solutions integrated around data rather than physical system components. The escalating requirement will require changes in channel go-to-market strategies. Channel businesses that are not actively developing P2P capabilities will be vulnerable to gaps in their ability to meet customer expectations, reducing their ability to maintain solid and profitable relationships with existing clients. Results from the 2021 research indicate that channel businesses that are effective in P2P are more likely to experience growth – and higher growth – than those that rarely collaborate with other channel members. Vendors with solid ecosystem management programs with a platform that helps facilitate P2P collaboration have an opportunity to help engaged partners to obtain above-average returns, strengthening the vendor and its partners alike.

The Benefits of a P2P Ecosystem

Connectria, a 20-year-old managed services and cloud migration services provider with 180 partners, is "getting its feet wet" in the P2P ecosystem collaboration space by recently joining P2P Global. Jeff Swartz, Director, Channel Sales, Connectria, said, "our objective is to glue our partners together so not only do they get the benefits of doing business with us, but they also get the benefits of doing business with all of our other partners." For ten plus years, Connectria has been in IBM Power hosting business but has been branching out into managed services for AWS, Azure, and Google Cloud. Connectria is successfully conveying the message to its customers that it is essentially bringing them more value. P2P Global allows it to expand on the relationship that it has with existing customers. "Particularly over the last year, customers want to see more value from the suppliers they are doing business with, not value addition but value creation. Value addition is akin to selling hardware which is a race to the bottom with very little money,", says Jeff Swartz.

One of the core tenets of channel-ready products is that they are 'designed for relevance, rather than elegance' – that they predictably address a defined issue, rather than being designed so that they can be applied to address a range of potential issues. Resellers then build these products into turnkey solutions that help a target audience to achieve a defined outcome. One result of this approach was that vendors connected to partners in a 'hub and spoke' model, where multiple partners relied on one vendor for a component of a turnkey solution, and the vendor relied on numerous partners to deploy their products within well-defined target markets.

Ecosystem Partnerships

John Guido, CEO, and Founder, P2P Global Inc., has a great perspective on the IT channel and provides valuable insight, saying, "We developed P2P Global to help facilitate P2P engagements for channel partners – to help them solve for skill gaps. In the end, while our platform is easy to use and very efficient, it is only a tool. If a solution provider believes they can deliver more customer value and competitive advantage by leveraging an ecosystem approach, then they will also need to create a company culture that embraces scaling partnerships. While we know our platform can help deliver ecosystem value, we also know continuing to scale membership will be critical to further our value proposition. I believe vendors and distributors will be key to scaling and enabling their channel partners to participate in platforms like ours."

In the "as-a-service" world, a solution is based not on a defined hardware/software configuration but the orchestration of multiple on-demand services integrated with existing legacy systems. In an important sense, this is a liberating factor for the channel partner. However, it also means that channel partners have to increase their collaboration with other channel members, not opportunistically but frequently, similar to what PEAK Resources (a DMR), Connectria (an MSP), and CohnReznick (a consulting firm) are doing.

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Mission, Migration, and Modernization – three pillars of AWS Partner Program

There is no doubt that Amazon AWS has been a cloud leader since 2006. Channel partners are an essential cog in the wheel of success. The AWS Partner Network (APN) is the umbrella under which its global community of partners builds solutions and services for their customers. Over the years, APN has evolved to include an MSP program, distribution program, marketplace channel program, and partner transformation program, amongst many others. Despite the evolution, AWS is not particularly well-known for its partner program, except if the partner is a significant consulting partner such as Accenture, Deloitte, Mphasis, and several others or a technology partner of size, stature, and brand recognition. However, the AWS Partner Network (APN) does include more than 100,000 Partners from more than 150 countries, with almost 70% headquartered outside of the US.

Over the last decade, there has been an industry-wide change in engagement models to support smaller channel partners. Except for top-tier partners, vendors have distanced themselves from direct oversight of channel marketing initiatives, relying on distributors to manage market development resources. The changes have made it more difficult for channel organizations to maintain predictable operational arcs. They have also made it more difficult for vendors to build and nurture high-performance partner networks. As a result, almost every week, we field two questions from the channel partner community. 1/ Does AWS have a partner program for the midsized to smaller partners? 2/ How does its program differ from Microsoft's (and increasingly from Google Cloud) channel partner initiatives?

The questions and reality are on parallel tracks. The overwhelming majority of AWS partners are smaller businesses. AWS has intentionally designed the entry point of its programs to be inclusive of small businesses. For example, consulting or SI partners only need four trained employees, two certified employees, and three engagements with customers. ISVs only need to complete a Foundational Technical Review.

Sandy Carter, Vice President of worldwide public sector partners and programs at Amazon Web Services (AWS), is transforming the program to be inclusive and diversified, at least for the partners focused on the worldwide public sector – government, healthcare, education, not-for-profit, space, federal financials, and energy. Mission, modernization, and migration are the three pillars of partner enablement and empowerment. Mission is not about simply migrating something over or performing an IT function; it is about delivering a business value for the organization, agency, state, or country. There are many examples, such as digitizing a hospital, leveraging supply chain technology to get food to the right place, or leveraging AWS technology to deliver vaccines. Modernization for AWS is about using artificial intelligence, machine learning, and IoT. Finally, migration is more wide-ranging than the other two, with three converging tracks – application migration, mainframe migration, and data-led migration.

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VMware Partner Connect program is on its way to being future-ready

Channel empowerment, customer outcomes, solution labs, orchestration, partner ecosystem, and frictionless access for business scale are a few of the twelve essential components for a future-ready partner program. VMware is systematically addressing each one of these. In February 2019, I spoke at an IBM event during IBM’s Partnerworld conference and presented the above components. Unfortunately, IBM has chosen to be extremely slow to go down the path of the imperative future direction. In direct contrast, VMware is using the right words and is traversing a measured way to put words into action.

Cloud has fundamentally reshaped the consumption of IT resources. By providing buyers with variable-cost access to software, software development environments, core processing, storage resources, and even specialized skills, the cloud’s Anything-as-a-Service model prompts a massive shift in IT spending from traditional products and to on-demand alternatives. As a result, the transition from conventional products to aaS is fundamentally disruptive to the IT channel.

Business infrastructure is no longer procured solely through asset purchases – there is an accelerating trend towards aaS procurement. The direction means an increasing proportion of single large transaction sales spreads across a multi-year period for a channel partner, which stresses sales management, compensation structures, financial management, and cash flow. It also places strain on the professional services group by changing/expanding the requirement for technical skills. Buyers increasingly need support for hybrid IT environments spanning conventional and cloud infrastructure. To remain viable, channel partners and vendor suppliers need to align scarce resources with shifting customer demand. Channel executives need to guide their businesses through the transition to hybrid/cloud, maintaining account relationships as customer expectations evolve from ‘what can you deliver?’ to ‘how can you support my business in a shared-risk environment?’ VMware has begun the shift to being a guide and partner enabler for an empowered future.

First announced in 2018, VMware re-introduced its Partner Connect program in 2020 with a shift to SaaS. One year later, I find that it is in touch with reality, successfully transforming for the future. VMware plans to achieve 40% revenue from SaaS and subscriptions by 2025 compared to 18% in 2020. It knows that efficient SaaS transformation begins with a practical engagement with the partner ecosystem and is doing so by transitioning from product sale focus to creating customer value and aligning with delivering customer business outcomes.

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SMB and Midmarket Hybrid work is here to stay – not so fast, says the data

The industry is abuzz with hybrid work discussions, home office, safe return to the office, shared space, meeting room, and hot desk. Although most agree that hybrid work is here to stay, many cannot ascertain the trend's longevity because forecasts tend to be very wrong in volatile times: the companies that issue them revise them frequently. Forecasts extrapolate from current conditions – an approach that works well when current conditions vary from previous periods only incrementally, which doesn't work when the present is changing in ways that don't follow clear, recent patterns. To understand the hybrid work trend, Techaisle surveyed 2096 US SMBs and midmarket firms with employee sizes from 1 to 5000. The results are fascinating.

58% of employees within the US SMB and midmarket firms expect to work from home at least till the end of 2021, in sharp contrast to pre-pandemic in 2019 when 29% of small business (1-99) employees, 9% of employees within midmarket firms (100-999), and 7% within upper-midmarket firms (1000-4999), who worked from home. However, the work from home trend may not play out in the longer term. Encouraged by the increasing rate of vaccinations and economic recovery, 61% to 67% of firms plan to bring back all employees to the office by early 2022. Only 22% are planning for a phased or staggered approach to re-opening offices as soon as it is safe to do so. Higher employee size businesses are likely to be more aggressive in their re-opening plans than the smaller businesses. 11% of firms will most likely permanently adopt an approach allowing some of their employees to work from home indefinitely.

Overall, 97% of mainstream businesses (1 to 5000 employees) feel unprepared to having a long-term remote and hybrid workforce work environment. Between 17% and 44% of small businesses to upper midmarket firms' IT staff is challenged in identifying and deploying hybrid workplace solutions.

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