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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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Dell Technologies Partner Program – Evolution not Revolution – Consistency to Drive Continuous Improvement

Rola Dagher is the new global channel chief at Dell Technologies. Proverbially speaking, changing of the guard brings in its wake anticipation of partner program changes. Because of the success achieved, Dell Technologies does not feel compelled to make significant modifications to its partner program. On the contrary, continuous fine-tuning of the program has helped Dell drive channel partner growth. While the core tenets of Simple, Profitable, Predictable remain, Dell plans to target consistency and constant validation with some refinements. For example, Dell is simplifying the partner preferred program (now to be named Power Up), launching a new platform to track earnings, MDFs, MyRewards with lower latency and cloud-like functionality of partner portal increasing investment earn-outs with potential to cross-sell and upsell. Dell had launched MyRewards in 2017 to capture the mindshare of the channel sales reps. The system awarded $1 value in points for cash to redeem for products and travel. 2017 also saw Dell launch its digital marketing platform (which has grown enormously), introduce Activation Packs for smaller partners with pre-approved MDF dollars, and develop compensation to channel partners on contract value for the cloud (consumption models).

Dell and its partners have been pleased with the channel strategy, and, as a result, Dell does not plan to change course. While every other IT supplier is planning for channel transformation, Dell's channel leadership believes in "evolution, not revolution." The enterprise partner preferred and commercial preferred programs (for targeted account lists) have been successful, yet they were complex to follow and execute. Learning from the experience, Dell has simplified the program to make it even more impactful for Partner of Record (PoR) partners. An identified list of accounts where partners are already working with Dell competitors; Dell sellers commit themselves to joint account planning to shift the customer to Dell. Partner competitiveness, better sales engagement with clarity of seller-partner offering, and robust programs on competitive takeout and customer acquisition have helped Dell and its partners. All part of the evolution strategy.

Until last year, Dell had struggled to simplify deal registration, both due to the task and technology transition's inherent complexity. Dell is therefore launching a better partner experience portal. Regardless of the complexity, due to relentless execution and commitment, Dell's partners made giant strides. There is no question that Dell has a complete product portfolio in the IT industry. This position has significant potential benefits but can lose impact due to the need for partners to navigate an immensely complex set of offerings. Dell deserves plaudits to recognize this challenge and respond with partner programs that mute the various solutions' roar and enable partners to focus on working effectively – and profitably – with their customers.

Channel partners are the custodians of customer needs. Armed with knowledge, training, and experience, partners are and can be in a great position to guide, design, architect, deploy and manage technology solutions for end-customers to work through the crisis and the future. Despite the headwinds, channel partners are quickly adopting both tactical and strategic approaches to solving customer problems to deliver customer success. Partners are the beacons that customers are looking for – partners who listen, share pain points, advise, and are responsive. It may be the best of times to develop a transformative strategy that is customer-in rather than product-out.

To help frame understanding of go-to-market investments, Techaisle asked its panel of channel partners to identify which of a handful of statements they believed to be accurate for their business. Data shows that the channel is in a longer-term transition. There is a need for sales staff to react to increasing customer's technical knowledge by being more innovative is essential and vital for their businesses. There is also broad and growing agreement that line-of-business selling is rising as a proportion of all sales and that "the as-a-Service model has significantly changed what a partner looks for in sales and business development professionals." These findings indicate that channel sales staff can't rely primarily on fulfillment-centric deals. Instead, they need to demonstrate a real understanding of customer business issues and how technology can deliver meaningful business benefits.

Dell is working on its partner training and sellers to transition from product to solution selling, from pricing-led to outcome-driven strategy. It seems to be yielding results. For example, in Q3, over 60% of Dell's new customer activation was through the channel. An increase in incentives to 20% for flex-on-demand offerings (for both referral and resell) lead to US$1.3B in offers in as-a-service. Dell is working to enable partner participation with Project APEX and access to Dell's as-a-service portfolio. The first offering in its portfolio will be Dell Technologies Storage as a Service (STaaS), delivering a pay-per-use model and elastic capacity and deployed on-prem. It will launch in the US for Dell's direct business in the first half of the fiscal year. Dell will share an update later this fiscal on partner availability with Project APEX, including STaaS. The key enabler of Project APEX is the Dell Technologies Cloud Console. This single web interface enables both customers and partners to manage cloud workloads and services. The Cloud Console's initial rollout will allow customers to browse a marketplace of IaaS products, services, and solutions. For partners, Dell is working on a roadmap and timeline for the console to be API eligible, allowing partners to integrate with their marketplaces.

Techaisle data shows that transformation partners are targeting revenue growth over quarterly, short-term incentives. But incentives seem to work wonders for Dell. Channel partner interest in fees and activity-based incentives are driven primarily by firms with traditional channel business models. SIs and VARs, who form most Dell partners, consider this type of stimulus most important to their businesses. But firms developing IP prefer solution development funds (which has been introduced by VMware). Channel partners focused on commodity products may not capitalize on deal registration, and only large partners would have access to staff/embedded headcounts. Rebates may be popular, but they do not increase margin much and often depress street price instead. Fees and activity-based incentives support solutions that require very long sales cycles, which would not be as beneficial in a rapid-turnaround niche. Solution development funds can be instrumental in building an ecosystem around a platform product but may take a long time to generate tangible results. SPIFs are generally helpful to shaping sales behavior but can be expensive, require effective targeting and management, and only work where there is buy-in from the partner business's owner. Within the overall channel partner ecosystem, 50% prefer fees and activity-based incentives, and 43% want solution development fund. Staffing and embedded headcount are preferred by 37% of partners.

It is evolution and not revolution. Those expecting Dell to make market-shattering transformative changes will likely be disappointed. Dell is working towards simplifying operations, educating partners, and enabling better digital marketing. Yes, there is a lot more Dell needs to do. Recent work by Techaisle shows that the need for updated understandings of channel management imperatives has expanded beyond the tactical questions of sales or management metrics or marketing activities. The pandemic has been an accelerator. Digital transformation provides enormous opportunities for the channel. It offers a means of establishing a customer relationship that secures ongoing/escalating account revenue and influence, improving the business outlook of channel firms who can capitalize on customer need for digital transformation support. For now, Dell's channel partner program has both its feet firmly planted on solid ground. Dell does not want and does need to take flight. Instead, it plans to and should continue its fight to remain valuable and loyal to the channel partner community.

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Dell channel partner program – all grown up and making a difference

Dell has been aggressively peppering both the digital and print media with its enterprise storage campaign “running circles around everyone else”. It has reason to do so. Dell has come a long way from a dorm in Austin, TX to the corporate offices and consumer households globally. And Dell is doing all it can to take its channel partners, which are Dell’s extended sales and deployment team, along a fraught put potentially rewarding journey.

Dell’s channel momentum has not yet peaked. Q3 YoY channel order revenue grew by 21% as compared to 14% YoY reported in Q1. Distribution remains one of Dell’s fastest growing routes to market, having 19% Y/Y growth in Q3 (same as Q1) and through three quarters, accounting for roughly 40% of Dell’s overall channel mix. In early 2018 Dell had set a target of reaching US$50 billion in channel revenue and by end of 2018 it was at US$49B in orders (pending Q4 financial results). It has now set its sight at US$70B, timeframe as yet unknown.

Regardless of the success achieved, Dell continues to modify its partner program. Actually, it can be argued that continuous tinkering with the program has helped Dell to drive channel partner growth. While the core tenets of Simple, Profitable, Predictable remain, in February 2019 Dell has added three imperatives: 1/ making it easier for partners to do more business with Dell, 2/ fast-tracking partners’ ability to deliver transformational solutions, 3/ embracing and monetizing emerging technologies. Is Dell being very smart in using financial incentives’ levers to drive quarterly growth and revenue share and missing out on long-term transformation of its channel partners to efficiently participate in multi-cloud, connected business future? Is Dell focusing on the end zone without regard for down and distance? Let us analyze.

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Digital transformation and employee empowerment in modern midmarket

A Techaisle survey of nearly 900 midmarket firms in the US found that 42% believe that digital transformation is a key to employee empowerment. In an era where employees are expected to move fluidly across a wide range of tasks – and where staffers and contractors expect to be able to work at any time, from any location, with access to any data source they might require – employee empowerment is a key factor in driving corporate responsiveness, staff recruitment and retention and bottom-line success. No wonder improving workforce productivity is #1 in the list of midmarket business priorities.

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Digital transformation offers a path to translating the promise of core technologies, such as mobility and cloud, into new empowerment and process options, via the creation of a connected workplace where applications and collaboration systems seamlessly connect to the anytime/anywhere/anyplace/any data demands of the modern workforce. And this digital transformation evolution leads in turn to realization of the other top issues shown above: reduced cost, increased profitability and growth, and better processes and customer outcomes.

The constraints
It is important that the channel step up to helping clients to build digital transformation strategies – because midmarket firms are struggling with a wide range of challenges that impede the evolution to an empowered workforce. From a workforce perspective, digital transformation demands change within both IT and the workforce as a whole. The key digital transformation challenges identified by midmarket firms – are lack of skills, a risk-averse culture and lack of adequate technology to support digitization initiatives.

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The third of these issues, adequate technology, is often a digital transformation stumbling block for midmarket IT organizations. The digital transformation vision for employee empowerment includes self-service access to needed applications and data; the reality of many IT shops includes an inability to integrate data across different systems and to deliver it securely on an any place/any device/any application basis, and a mobility strategy that falls short of corporate requirements for security and data protection, auditability and disaster recovery.

The second issue, a risk-averse culture, extends beyond IT to executives who have not yet grasped the potential benefits associated with digital transformation – or, in the context of a fast-moving economy, the need for change. In some cases, this may simply reflect a desire to continue with ‘business as usual,’ while in others, it may stem from an inability to see how their firms can bridge the gap from their current reality to a brighter digital transformation future.

The top issue, lack of skills, is one that needs to be addressed by the channel. It will be years – possibly, decades – before digital transformation skills are so common that every midmarket firm has depth in both IT and in the workforce at large. Until that time, the channel needs to provide leadership to its midmarket clients: it needs to deliver the IT skills and guidance needed to evolve core technology to the point where it supports digital-transformation-ready connected solutions, and it needs to provide the advice that business leaders need, in order to understand and capitalize on the many business benefits that are gained from employee empowerment.

Bridging the gap
Laozi once said that “the journey of a thousand miles begins with one step”. With respect, though, he was not correct: a long and complex journey begins with a vision, and a plan, and proceeds to the steps along the path. What does this mean to growth-focused channel members looking to help clients to ‘bridge the gap’ to employee empowerment?

  • From a business perspective, ‘bridging the gap’ means helping executive clients to see the productivity, profitability, agility and innovation potential of an empowered workforce – and perhaps, illustrating as well the possible threat associated with being late to the digital transformation party
  • From a technology perspective, ‘bridging the gap’ means delivering a roadmap that shows how current infrastructure can follow a logical path to support for social, self-service and connected, ubiquitous data while enhancing security, backup, audit and DR
  • From a skills perspective, midmarket firms need access to professionals who can define the path from basic IT potential to real business benefit – and will find that guidance in the channel, from firms that have themselves made the leap into the digital transformation (DX) future.

Employee empowerment begins with a vision – and a plan. Midmarket clients urgently need advisors who can deliver both – and the business benefits that are unlocked by DX-empowered employees.

Senior executives in midmarket organizations care about digital transformation – and as a result, channel members can leverage their understanding of key Digital transformation objectives and roadmaps into long-term, sustainable relationships with senior decision makers.

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