Techaisle Blog

How can cloud suppliers identify the partners most likely to be successful or very successful in selling cloud? Techaisle’s 7th year of channel tracking survey data indicates that a powerful indicator is found in the growth paths identified by channel firms.

Characteristics of very successful cloud channel partners (“what to look for”)

• Very successful cloud channel firms view advanced solutions as major opportunities and are focused on growing business in BI/analytics and IoT
• Very successful cloud firms recognize that hybrid IT is the key and are anticipating increased revenue from data and/or application integration than their less successful peers
• Nearly 90% of very successful cloud channel firms (as compared with just 23% of unsuccessful firms) offer IaaS to SMB customers
• Over 90% of very successful cloud partners offer SaaS today. Less than one-third of unsuccessful cloud partners offer SaaS, and 20% neither offer it nor are planning to do so
• Successful cloud partners view partner-to-partner (P2P) relationships as a strategic imperative, whereas unsuccessful partners connect with other channel firms on an opportunistic basis
• There is a clear, multi-year trend of very successful cloud channel partners differentiating themselves by selling self-branded (and supported) cloud offerings
• There is strong evidence in data to support the notion that very successful cloud partners are focused on assembling multi-sourced solutions to meet customer needs, 57% of very success cloud partners as compared to 31% of unsuccessful and 34% of successful partners
• Three-quarters of very successful and nearly 70% of successful cloud partners offer UCaaS, vs. just 20% of unsuccessful firms
• Successful channel firms are actively participating in cloud and IT orchestration and are investing in technology advisory & architects
• Digitalization & digital transformation are new focus areas of very successful channel partners

What to look out for – characteristics of unsuccessful cloud partners

Techaisle's SMB & midmarket decision making & buyers journey report confirms that business decision makers (BDMs) – who tend to inhabit the ‘carpeted’ realms of their businesses – are more engaged by discussions about business benefits and objectives than by ‘feeds and speeds’. Cloud business application sales reps will need to develop ‘deep carpet’ language and skills. Techaisle survey data shows that:

• Determining the need for new cloud business applications is the prerogative of business management. The balance of authority within SMBs is nearly 7:1 in favor of business management except in the case of midmarket businesses where it is nearly 2:1
• Neither business nor IT have a clear authority within 29 percent of small businesses and 22 percent of midmarket businesses to purchase new business applications, yet, cloud applications do get adopted driven by need, experimentation, and rogue adoption
• At 32 percent, ad-hoc purchases are more popular within upper midmarket businesses than any other employee size business
• Business management also has authority over determining the needs for enhancements to cloud business applications. The balance of authority within small businesses is 5:1 in favor of business management and 1.2:1 for mid-market businesses
• Neither business nor IT have a clear authority within 17 percent of Small Businesses and 21 percent of midmarket businesses to enhance already deployed business applications, yet, these applications do go through significant modifications and upgrades to better serve the needs of business management
• SMB Business management controls the budget and purchase authority by 8:1 as compared to IT management. However, within the midmarket businesses, the control ratio drops to 2:1 indicating that it is easier to sell cloud technology to small businesses than midmarket businesses since the decision-making units are dissimilar
• In 15 percent of SMBs budget for new business application is usually created at the time of ad hoc decisions for purchase to meet business needs

We are in the midst of a transition from an IT industry shaped by small decision making units (DMUs) comprised of IT professionals to an industry that must respond to the varied needs of BDMs and ITDMs. This makes for a very complex selling environment; many IT suppliers would no doubt like to have ‘the genie hop back into the bottle,’ as many members of their sales and marketing teams lack the skills and understanding needed to sell to BDMs.

Techaisle research on SMB and Midmarket buyers journey and decision-making shows that ITDMs and BDMs have differences in ‘care-abouts, are focused on applying IT to different business objectives, have different perceptions of success measures, and use different information sources. The data is not only helpful in building relevant marketing messages, but also serves to underscore the complexity of working with a diverse DMU. This DMU becomes further complicated with the presence of IT conversant business specialists (embedded IT staff), increasingly residing within line of business units, reporting to business, and away from IT.

• Business management has seized a much greater role in technology acquisition, deployment & management than IT management – varying from 3.4X in “needs identification” to 2.0X in “solution evaluation & selection”
• Within small businesses, business management plays a more influential role than IT in five out of nine stages of technology solution adoption
• Within mid-market businesses, role of business management is predominant in the first three stages of decision making (needs identification to solution options), equal to IT in the next two (solution evaluation & selection) and substantially higher than IT in the last two stages (determining solution effectiveness and optimization)
• In nearly 1/4th of small businesses and slightly over 1/3rd of medium businesses, technology specialists (embedded IT staff) are employed within Business Units not reporting to IT management. In nearly 50 percent of midmarket firms that have IT specialists, they are the primary decision makers
• Determining the need for new cloud business applications is the prerogative of business management. The balance of authority within SMBs is nearly 7:1 in favor of business management except in the case of mid-market businesses where it is nearly 2:1
• Ad-hoc purchase and deployment of new cloud business applications is prevalent within 22 percent of mid-market businesses
• In 15 percent of SMBs budget for new business application is usually created at the time of ad hoc decisions for purchase to meet business needs

Techaisle's SMB & midmarket research not only confirms that BDMs are increasingly present in the IT solution adoption process but the research deep-dived to understand the extent to which BDMs actually lead their organizations in adopting solutions. To develop a deeper perspective on this issue, Techaisle asked both ITDM and BDM respondents to address questions that explored the acquisition process around software (both new applications and meaningful upgrades to existing applications), infrastructure hardware and IT services. The results provide direction for sales strategies aimed at these product segments within the US SMB market.

Software budget authority

“Determining the need for” a new business application or a meaningful enhancement to an existing application is not, of course, identical to signing off on the purchase of a new system. When we extended our coverage to ask about having “budgetary control and authority,” we discovered two interesting findings:

• The proportion of organizations where budgetary control and purchasing authority for new applications rests entirely with BDMs increases in all e-size segments, relative to the statistics for determining need in these segments. This means that BDM control over the final purchase decision is even higher than the “determining the need for” statistics suggest.
• The proportion of respondents reporting that responsibility resides entirely with either IT or business – but is not shared between them – increases in five out of seven e-size segments (missing only the 10-19 and 20-49 employees groups). This suggests that needs identification may be more collaborative than final purchase decisions.
• Both findings point to the same conclusion: that BDMs are extremely important to suppliers of software.