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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.

Channel and Vendors must shift from turnkey to ecosystem collaborative solutions by 2020

The core changes in the demands on different areas of the channel business are critical and challenging, but they can be seen as more effect than cause. In all aspects of channel business, long-held business tenets are being replaced by an emerging reality that has been ushered in by the move to cloud and amplified by many other trends – changes in buyers and buyer behavior, as well as management and process changes, and evolutions in service/technology delivery – that are reshaping how technology is acquired and used, and how suppliers need to act to meet buyer requirements.

NEXT channel

Techaisle has identified twelve areas where channel partners must abandon ingrained behaviors and move to new approaches that will enable NEXT (Networked, Engaged, Extended, Transformed) channel businesses.

Partner-to-partner relationships are important to cloud business success

There are seven imperatives that impact all areas of channel business operations, there are two imperatives that relate to internal management/process items, two that impact service/technology delivery, two that affect go-to-market and customer relationship management, and one – the shift from ‘turnkey solutions’ to ‘ecosystem collaborative solutions’ – that touches on all three areas. Let us discuss this last imperative.

Solution packaging isn’t a ‘religious issue’, it’s a ‘customer choice issue’ – and customers are clearly choosing to move from turnkey systems to hybrid environments that can be aligned with their evolving needs; this will also require an accelerated frequency of partner-to-partner collaboration (not opportunistically but strategically).

techaisle channel partner ecosystem collaboration new

The chart above illustrates an important feature of this migration: it increases both the scope of projects that the channel partner can engage in and the profitability of those engagements. As the chart demonstrates, 65% of channel firms that consider themselves to be “very successful” in selling cloud report that they frequently collaborate with other channel partners; firms that struggle with cloud success are much less likely to proactively work with peer channel firms.

Drilling into the data from 2014 to 2018, we find that the opportunistic collaboration has increased by 69%. There are many sporadic efforts but no single vendor is formalizing and enabling this P2P collaboration.

What is the new Turnkey solution:

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Customer-centricity challenging channel – customer-partners needed

For decades, channel partners have aspired to achieving ‘trusted advisor’ relationships with their customers. The concept is so ingrained that it is nearly impossible to separate the notion of ‘trusted advisor’ from the broader sense of being a partner.

But if the market is moving from value addition by the channel to value creation for the end-customer, isn’t it essential to move beyond ‘trusted partner’ status to becoming, in a meaningful sense, a partner of the customer, invested in the customer’s business success?

Techaisle’s WW channel partners study of 2445 channel partners and corresponding US channel partners study of 814 partners shows that 61% (66% in the US) are transforming their organizations to focus on delivering business outcomes to their end-customers, up from 42% three years ago. However, the figure is still below customer expectations which stands at 78%. There are several points of disconnect between the customer and the channel. One of the most important disconnects stems from the notion of trusted advisor relationship versus meaningful customer partnership. Only 51% of partners are building meaningful partnerships (55% in the US) and the balance 49% still believe in being trusted advisors. There is nothing wrong with it except that customers, especially SMB and midmarket firms are looking for a “super consultant” – a firm that can offer advice that is more complete than what is being obtained from most partners and which can move beyond strategy to deliver operational support that is tied to business outcomes.

These firms exhibit a clear preference for advisors who can move seamlessly from advice to architecture to procurement to deployment and finally to management. Nearly three quarters of SMB buyers would like their channel partners to be able to provide technology advice that is directly connected to business issues, and nearly two-thirds want a partner who is “invested in customer success.”

The nature of the sales relationship will be a critical determinant of channel success. 52% of channel partners globally and 58% in the US are still running their businesses on sales quota requirements rather than a book of business. When all channel partners call themselves “advisors” there is no differentiation left across partners. Channel partners need to focus on being a meaningful customer partner delivering customer success. And this falls into the realm of being a super consultant.

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Practical guidance for navigating digital transformation with customers

Digital transformation success requires that channel partners respond to a diverse set of challenges: the channel organization needs to be able to balance extensive consulting and executive customer management with product transactions, ongoing management services and tangible contribution to customer business success. Those that are able to align their capabilities with digital transformation requirements will be positioned for long-term success in IT’s highest-growth market. Techaisle’s digital transformation (DX) framework highlights six ways that channel partners can profitably connect with customers in their initial stages of the DX journey. At the beginning of the DX journey, channel partners should plan to deliver billable services in foundational technology areas:

  1. Deployment of discrete foundation technologies needed to enable pursuit of DX business objectives: The requirement for these technologies should be clearly associated with capabilities needed within the DX roadmap; the systems themselves should be prioritized in accordance with the benefits that they deliver.
  2. Provision of management/support for technology tied to the DX roadmap: In this step it is essential for channel partners to increase customer communication so that they understand the value associated with ongoing support and integration that maintains the currency of the DX platform by managing its discrete IT components.
  3. Development and delivery of incremental feature/function objectives: Some of the technologies deployed within the DX framework may provide all needed functionality ‘out of the box,’ while others may benefit from ongoing enhancements. In these latter cases, both channel partners and their customers will benefit from the addition of features that provide incremental benefit to users/organizations that have absorbed current capability and who are ready for, and have need for, additional functionality.

Interwork technologies

Once the foundational level is in place and immediate benefits of the technology have been identified and communicated as ‘success stories’ within the customer organization, the channel partner should help the customer move on to the next DX level: establishment of connected ‘Interwork’ systems. Here, channel partner opportunities expand to include higher-value activities:

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Capturing the Midmarket digital transformation business value map

IT trends belong to one of two main categories. Some, like Linux or cloud, refer to a product or product category that changes IT strategies by providing breakthrough capabilities. Others are statements of IT strategy, highlighting opportunities to directly connect IT capabilities to broader business objectives.

Digital transformation (DX) is an example of this second type of trend. DX, according to a report by global research leader Techaisle, is the integration of digitalized processes to achieve enterprise-wide automation spanning multiple functions; modernization of current processes and supporting infrastructure to achieve previously-unattainable or unimaginable business outcomes.

Digital transformation isn’t defined by a single initiative or end-point. DX describes an evolving set of capabilities that connect investments in core technologies to enhanced operational efficiency, employee empowerment, product innovation and customer intimacy – which in turn enable DX adopters to increase revenue, decrease costs, reach new markets, deliver better products and services, and ultimately, drive more profit and improve shareholder value.

Viewed from this outcome’s perspective, DX success is rooted in the ability to connect incremental investments in technology with milestone achievements, aligned within a roadmap that ties to the organizational vision of modern capabilities delivering new levels of business performance.

The channel will play a critical role in guiding midmarket firms through the DX transformation. This starts with helping IT and executives within client organizations to define their vision for the key competency areas: mapping the digital transformation pillars to business outcomes provides IT and non-IT management with a cohesive set of meaningful objectives for addressing business pain points.

techaisle midmarket business value map

Capturing the midmarket DX opportunity

What does the channel need to do to translate midmarket demand for DX and its attendant benefits into long-term customer relationships? To capitalize on the DX opportunity, channel partners need to develop deep understanding of how the DX platform is built – how this framework supports process evolution – and how to cleanly align the IT and process frameworks with a delivery plan that addresses midmarket executive care-abouts.

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