As technology companies continue to adapt to the new normal, our overall 2021 prediction has proven correct. Channels have become more strategic for many IT and solution vendors.
As we look forward to 2022 a number of important discussions are emerging:
- How to overcome the challenges of the pandemic
- How state of the art channel organizations are growing their businesses
- How to expand into new global markets cost effectively
- How to expand into new global markets cost effectively
How to overcome the challenges of the pandemic
The pandemic has caused many challenges… A number of which are impacting hugely on global channel businesses. The first, of course, has been the impact on revenue. This particularly relates to new business. Our recent conversations suggest that a high proportion of vendors and partners have seen a drop of between 10 and 30%. Equally, partners who are still reliant on perpetual on-premise deals and conventional IT services are suffering cash flow impacts, with estimates of up to 25% of reseller partners in real financial difficulty. Whilst the impact of this should mitigate during 2022, we expect to see a surge in new business activity and an increased demand for partner recruitment to back fill the gaps.
How to manage your partner recruitment
How state of the art channel organizations are growing their businesses
We predict a number of interesting trends in 2022 for channel organizations.
The first is that partners will become significantly more strategic. This will be driven by both the economic factors discussed above and also through a continued desire to reduce the cost of sale and coverage risk.
For Cloud and SaaS based solution vendors we see an increasing trend in the use of ‘partner channels’. This is up from over 58% reported by Softletter* earlier this year. We are also seeing the increasing use of sales Agent type models. Although touted as a new channel, Agent models are simply a revamp of manufacturing rep type approaches of the 1980s. However, they can be effective and certainly reduce risk, as well as improving cash flow for channel vendors.
A further trend will see the increasing use of partner ecosystems, in what were traditionally ‘direct business’ large and global accounts, for some of the biggest IT players. This is part of a continuing trend but needs to be managed carefully to ensure there is both channel harmony, with clear “rules of engagement” within the ecosystem, and that Partners also have adequate enablement and support.
How to expand into new global markets cost effectively
Channels will also undoubtedly be used to expand into new global geographies and markets.
Within the Cloud and SaaS bandwagon we can predict the themes at the front of many new business campaigns early in 2022. These will include green technologies, block chain, CX and security and in the US the massive Infrastructure investment just announced.
Sceptical partners will be looking for more than thought leadership. And, as we’ve heard at the recent Glasgow climate conference “blah blah blah”, some real new market opportunity analysis and “smart” enablement assets will be required to differentiate and support their partners. Travel considerations relating to economic, environmental and the pandemic are additionally likely to hamper business travel which will continue to encourage the use of local partners for extended geographic coverage.
How to expand into new global markets cost effectively
Final predictions relate to identifying high growth general partners as, in many supply chains, there is a shortage of ‘good born in the cloud partners’. This should be the first and most cost-effective way of both increasing coverage and new business.
Many vendors are investing in programs to help transform their existing partners, both digitally and subscription-based business models, which can be cost effective. However, too many rely on historic KPIs such as revenue and marketing spend to drive new business pipeline. We have been working on a number of projects that look specifically at future predictive performance indicators. These indicators give a much higher reliability for partners so they can more accurately decide which programs to invest budget and resources in. A good analogy is the recent focus on Customer Experience CX. Little of this methodology has been applied, in a structed way, to Partner Experience PX who are often the largest “customer” for vendors. To find out more click here.
Interestingly, some of this methodology, Delta Channels developed with IBM a couple of decades ago. It’s only now, with the advent of the pandemic, that we are seeing increasing adoption of it.
Finally, the oft repeated “that if the pandemic does not change the way you do business nothing will” will never be more appropriate than for the opportunity with channels to bounce back in a new and different way in 2022.
We look forward to discussing these topics with you and seeing how these predictions unfold during the course of next year. To find out more click here.
