State of the IT Channel
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The document outlines the evolution of the IT channel from 1997 to 2012, emphasizing the shift towards a more complex ecosystem involving various players such as VARs, MSPs, and cloud service providers. It highlights key challenges faced by channel partners, including the transition to cloud services and the need for effective vendor partnerships, alongside factors influencing these relationships. Moreover, it discusses the necessity for improved communication and simplification of processes in vendor-channel partner interactions.
![Order
Takers
Beware
“[T]he
partners
that
have
made
a
living
in
the
past
targe6ng
a
customer’s
procurement
office
are
slowly
going
away.
Their
value
to
that
par6cular
customer
in
being
able
to
be
a
single
source
for
all
different
types
of
technology
isn’t
what
it
used
to
be.”
–
Head
of
Global
Channels
–
Hardware
vendor
“[A]
commodi6zed
partner
that
is
targe6ng
the
baseline
fulfillment
price
is
not
interes6ng
to
me.
You
have
to
be
a
company
that
knows
how
to
sell
business
value.
If
you’re
selling
into
the
C
suite
you
need
to
have
value
props
that
are
financial
and
business
oriented
as
well
as
technical.”
–
VP
of
Worldwide
Partner
Development
–
Hardware
vendor](https://image.slidesharecdn.com/comptiachanneltrends-120329140301-phpapp02/85/State-of-the-IT-Channel-12-320.jpg)
![Assessing
a
Key
Element
of
the
Vendor-‐Channel
Partner
Rela>onship
Ra1ng
of
Vendor
-‐
Partner
Communica1ons
49%
Top
Informa1on
Gaps
with
Vendors
[from
Perspec>ve
of
Channel
Partners]
33%
u Training
material,
course
requirements,
etc.
u Product
spec
details
for
comparison
purposes
u Most
up-‐to-‐date
sales
promo>ons/incen>ves
15%
u Supply
chain
delays,
product
technical
problems
u Pricing
informa>on
for
products/bundles
4%
Not
Moder-‐ Very
Exactly
u New
product
roadmap
informa>on
close
to
ately
close
where
it
where
it
close
should
be
should
be](https://image.slidesharecdn.com/comptiachanneltrends-120329140301-phpapp02/85/State-of-the-IT-Channel-19-320.jpg)
State of the IT Channel
- 1. The State of the Channel Nancy Hammervik, SVP Industry Rela>ons Tim Herbert, VP Research March 2012
- 2. CompTIA, the Not-‐for-‐Profit IT Trade Associa>on Educa1on Advocacy Cer1fica1on Philanthropy
- 3. CompTIA Communi>es Connect the Industry
- 4. The Channel Model, Circa 1997 Product Distributor Reseller IT Dept. Vendor Key Concepts: Technology Silos, Transac6onal Business, Many Parallel Channels, IT Department Gatekeeper
- 5. The Channel Model, 2012 DIY Prod uct Distributor VARs, SPs, Customers Product or VAD MSPs, ?? t P roduc Key Concepts: More of Everything, Convergence, Recurring Rev, New Complexi6es, Further Commodi6za6on
- 6. Key Roles Within the Channel u Value Added Reseller (VAR) u Cloud Service Providers u Systems Integrators u Telephony Agents u Solu>on Provider u Master Agents u Managed Service Provider (MSP) u Tier 1 Vendor u Independent SoOware Vendor (ISV) u Tier 2 Vendor u Applica>on Developers u Value Add Distributor u Channel Partner
- 7. Sizing the IT Industry | Channel Impact Core IT – 2011 Revenue Telecom – 2011 Revenue Mix for U.S. Market Mix for U.S. Market Wireless IT Services Voice/Data 38% 54% 36% 26% Hardware 46% SoQware Fixed Voice/Data Source: IDC
- 8. Profiling the IT Channel The Channel is Dominated by Small Firms According to the U.S. Economic Census, there are ~115,000 U.S. IT employer firms (payroll) that could poten1ally be considered channel firms. . According to the CRN VAR500 98% list, the company ranking #500 generates less than $20 million in annual revenue. % of channel with fewer than 100 employees
- 9. Profiling the IT Channel Con>nued On average, channel partners belong to 8 vendor programs % repor1ng a NET GAIN 43% in vendor program 14% par1cipa1on in 2011 % of channel partners belonging to >15 vendor programs
- 10. The Converging IT -‐ Telecom Channel: The View from Agents/Master Agents Nature of Agent/Master Agent u 9 in 10 agents/master agents report Rela1onship with IT VARs having at least one IT VAR partner; 50% report having mul>ple partners; most 61% expect to increase partnerships over coming year u Slight majority of agents/master agents report genera>ng less than 25% of revenue from IT VAR partner work 31% u Two primary factors drive partnership ac>vity: 1). Desire to reach new customers for core services, and 2). 9% Address exper>se gaps in emerging Referral Tac1cal – Strategic – technology areas driven by key to opport-‐ business unis1c pordolio needs
- 11. Channel Transforma>on Framework 1 Technology Delivery Model On-‐Premise Hybrid Off-‐Premise 2 Customer Engagement Model Transac1onal Project Recurring 3 Technology Stack Layer Infrastructure Applica1on Process 4 Technology / Solu=on Por?olio Product Package Solu1on 5 Customer Segment / Specializa=on Size Ver1cal IT Style
- 12. Order Takers Beware “[T]he partners that have made a living in the past targe6ng a customer’s procurement office are slowly going away. Their value to that par6cular customer in being able to be a single source for all different types of technology isn’t what it used to be.” – Head of Global Channels – Hardware vendor “[A] commodi6zed partner that is targe6ng the baseline fulfillment price is not interes6ng to me. You have to be a company that knows how to sell business value. If you’re selling into the C suite you need to have value props that are financial and business oriented as well as technical.” – VP of Worldwide Partner Development – Hardware vendor
- 13. Factors Channel Partners Believe Are Having the Greatest Impact on Vendor Partnerships Transi>on to the cloud 59% Expanding op>ons available to customers 52% ShiO from transac>on-‐based to recurring 39% revenue models ("everything-‐as-‐a-‐service") Industry consolida>on 21% Specializa>on models 12%
- 14. Channel Partner Transi>on to the Cloud Many channel partners have mixed feelings about the cloud. 41% Both sell and use cloud solu>ons 15% Sell cloud services, but don't use 30% internally 22% 16% End user of cloud only 22% 13% Not involved in cloud 42% 2011 2010
- 15. Top Decision Factors for New Vendor Partner Programs Joined During 2011 1 The product(s) 2 Ease of doing business with 3 Quality leads/demand genera>on 4 Quality/availability/affordability of technical training 5 Pre-‐ and post-‐sales support
- 16. Vendor Percep>ons of Channel Partner Needs “Partners like to see simplifica6on of processes in the overall experience with a vendor. And that’s a difficult one, because the business is geVng more and more complex. But it’s an important one, because complexity in processes typically means wasted money.” – Strategist, Worldwide Partner Programs, Hardware vendor “So they’re saying, ‘Make it easy for us.’ Ease of doing business is a big one. Every vendor has their own thoughts and their own processes and their own ways of submiVng different pieces of data. From deal registra6ons all the way again to forecast and pipelines. So they’re asking for that in doing business: ‘Make my life easier.’” – VP of Channel Sales, SoQware vendor
- 17. Factors Influencing Decision to Leave Vendor • Margins Money • Discounts/rebates Issue • Cost of membership • Lack of deal registra>on • Product line not a good strategic fit Strategic • Conflict with vendor’s direct sales Issue • Volume requirements too high • Constantly changing requirements Execu>on • Difficult to do business with Issue • Insufficient or ineffec>ve support (marke>ng, training, pre/post sales) 60% or channel partners report evalua6ng their vendor partner program par6cipa6on quarterly or semi-‐annually.
- 18. Puong the ‘Partner’ in Channel Partner “I’ve been in the IT channel for more than 25 years, and this year is the first 6me a vendor has bothered to ask me how my business is doing … and actually demonstrate that they want to help. I don’t know whether the vendor can do anything to directly affect my profits beyond changing the margins they share on product sales, but I’m definitely willing to listen. A`er all, if solu6on providers generate a majority of a vendor’s sales revenue, it stands to reason that if we’re not financially healthy, neither are they.” – IT Solu1on Provider “Evolu6on is not mandatory; but then again, neither is survival.” – IT Solu1on Provider
- 19. Assessing a Key Element of the Vendor-‐Channel Partner Rela>onship Ra1ng of Vendor -‐ Partner Communica1ons 49% Top Informa1on Gaps with Vendors [from Perspec>ve of Channel Partners] 33% u Training material, course requirements, etc. u Product spec details for comparison purposes u Most up-‐to-‐date sales promo>ons/incen>ves 15% u Supply chain delays, product technical problems u Pricing informa>on for products/bundles 4% Not Moder-‐ Very Exactly u New product roadmap informa>on close to ately close where it where it close should be should be
- 20. Small Inefficiencies Add Up and Take Toll on Margin Incidence of Leaving Vendor Program Money on the Table Frequently happens 16% Occasionally NET % of channel money slips 40% partners* saying through cracks 70% it has become more important Rarely, but has 28% to achieve happened highest 1er of vendor partner Never 13% program *NET of more important + significantly more important
- 21. Overcoming Training Challenges “To be honest with you, product training has been our focus. ... I think one of the problems with our training, to be candid, is it’s focused specifically on our product. And it doesn’t include how our products fit into solu6ons and solve customer problems.” – VP of North American Channels, Hardware vendor “I think that’s a problem everybody faces. Put it into the very simple, ‘OK, it’s Sales Training 101: How to Befer Approach a CIO.’ Who’s going to train you on that? Again, most of my training is focused on my products and how they fit alongside other solu6ons. I’m not running out there, training my partners on how to become a befer cloud infrastructure marketer or seller.” – Head of Global Channels, Hardware vendor
- 22. Channel Partner Challenges in the Healthcare Ver>cal Overall, solu>on providers report a very posi>ve experience doing business in the healthcare ver>cal, but do face some challenges. 48% Understanding regula>ons (e.g. HIPPA, HITECH) 42% Technical training (e.g. EMR/EHR) 37% Adjus>ng business prac>ces (e.g. work during non-‐pa>ent hours) 34% Sales training 34% Crea>ng new targeted marke>ng materials 32% Deciding which EMR/EHR vendors to align with 29% Mee>ng criteria to join vendor partner programs 23% Securing financing to fund entry into healthcare market
- 23. Agents/Master Agents Indicate Many Elements of VAR Partnerships to Become More of a Factor Next 12 Months Last 12 Months 81% Effec>ve communica>ons 71% 57% Leads provided by partner 47% Emerging technologies and business models 57% (e.g. cloud compu>ng) 39% 49% Partners' understanding of my biz model 42% 49% Compensa>on models/margins 26% 43% Formal business planning with partner 16% 28% Partner-‐provided technical training 9%
- 24. Agents/Master Agents Also Recognize Poten>al Obstacles to Overcome in Rela>onship with VARs Establishing/protec>ng account ownership 52% Establishing customer interface rules 49% Seong sales strategy (who will sell what) 42% Iden6fied as most difficult to execute on Establishing pre-‐ and post-‐sale support roles 41% Seong compensa>on terms 35% For revenue models, agents/master agents indicate the following are most important: u Having no caps on recurring revenue (72%) u Being paid for renewals (69%)
- 25. Challenges in Transi>oning to Managed Services Execu1on Importance* Difficulty** Achieving opera>onal efficiency 70% 81% Selec>ng right managed services mgt. soOware 67% 69% Customer acquisi>on 63% 81% Required level of human investment 60% 75% Required level capital investment 56% 70% Availability of trained consulta>ve sales and tech staff 56% 66% Time to reach profitability 54% 80% Determining correct monthly pricing model 54% 62% Migra>ng sales staff to new model 49% 65% *Items rated as ‘Very Important’ **Items rated ‘Extremely’ or ‘Somewhat’ difficult to achieve
- 26. Channel Partner Classifica>on Methods Annual revenue 60% Vendor product lines sold / Coverage 46% By number of employees 37% Channel Partner Opinions of Vendor Classifica1ons Ver>cal industry specialty 32% 49% -‐ Posi1ve strategy that allows Partner type (VAR, MSP, ISV etc.) 31% customiza1on of benefits Vendor wallet share 30% 43% -‐ Makes no real difference in terms of program deliverables
- 27. Ini>a>ng a New Channel Rela>onship • Account set-‐up • Partner portal On-‐boarding • Contract • Deal reg • Channel account manager assignment • Reaffirming strategic alignment • Training Enablement • Marke>ng • Repor>ng, metrics, check-‐ins
- 28. Other Factors Used in Channel Partner Evalua>on and Classifica>on “Partners should recognize that each interac6on with vendors may affect their overall grade. As such, partners should strive to iden6fy and understand every touch point they establish on a regular or an ad hoc basis with their vendors and establish clear guidelines as to how resources such as training, support, sales, and/ or marke6ng assistance should be requested, used, and made most effec6ve. – VP of North American Channels, Hardware vendor Other Metrics Used to Evaluate Channel Partners u Consistency u Loyalty u Engagement u Strategic alignment u Quan>ty/quality of interac>ons with vendor support teams u Cer>fica>ons achieved u Customer sa>sfac>on scores
- 29. Scoring Channel Partner Opera>onal Efficiency Part I Process Business Process Competency Repeatability Leverage Score DEMAND-‐SIDE FUNCTIONS Market Research / Alignment Porwolio Management / Development Marke>ng / Demand Genera>on Sales Process Customer Engagement Account Management DEMAND-‐SIDE FUNCTIONS – TOTAL SCORE N
- 30. Scoring Channel Partner Opera>onal Efficiency Part II Process Business Process Competency Repeatability Leverage Score DELIVERY-‐SIDE FUNCTIONS Product Configura>on / Delivery Billable Service Opera>ons Technical Support / Help Desk Delivery Process Design / Improvement Inventory Management / U>liza>on Resource Development / Training DELIVERY-‐SIDE FUNCTIONS – TOTAL SCORE N
- 31. Scoring Channel Partner Opera>onal Efficiency Part III Process Business Process Competency Repeatability Leverage Score SUPPLY-‐SIDE FUNCTIONS Product Evalua>on / Proof-‐of-‐ Concept Vendor Rela>onship Management Channel Program Par>cipa>on Human Resources Management Financial Management Facili>es / Tools / Support SUPPLY-‐SIDE FUNCTIONS – TOTAL SCORE N
- 32. Thank You Nancy Hammervik Tim Herbert SVP, Industry Rela>ons VP, Research nhammervik@comp>a.org therbert@comp>a.org
- 33. CompTIA Resources Relevant Research and Market Intelligence u State of IT Channel Programs u 2nd Annual Trends in Cloud Compu>ng u Understanding and Aligning with the Transforma>on of Partner Business Models White Paper u Margin Reten>on Through Opera>onal Efficiency White Paper u 3rd Annual Healthcare IT Insights and Opportuni>es u Trends in Managed Services u 2nd Annual Partnering Trends Between Telecom and IT Channels www.comp1a.org -‐ login into Members area and go to the Research tab