At a recent channel event in Chicago, the feedback that I received confirmed what we have seen trending in the channel for the past couple of years. The title from the popular play by Arthur Miller’s “Death Of A Salesman” sort of resonated during some of these conversations with VARs and MSPs . Unlike Willy Loman, we should realize that our old ways of thinking needs to adapt before it is too late.
So where is the channel going? I am very interested in what is really happening with the current solution providers and what they are thinking. Where are they going? Should the next generation follow in their footsteps or create a new path? What is the future of the channel? What are the near-retirement-age channel partners thinking and how can they still benefit vendors? What are vendors really doing to build their channel? Are we seeing the slow death of the channel? What is the future? When is the tipping point?
Well, the channel will probably not actually die, but the way it does business is definitely going away. Regardless of what all of the “experts” say or do to lead the channel, it seems impossible to change its future direction. The reason is simple: end-users are now in the driver’s seat and they want to consume technology differently. The new generation is fuelling the way the channel will deliver IT and therefore must adapt their business model to execute. It is something that both channel partners and vendors need to accept and get right if they want to remain relevant in the future.
While there are at least a dozen different types of companies, who sell IT solutions, most fall under three basic types. We have been working with thousands over the years to help them build a bigger, better and stronger business with our resource VAR Office Suite, so we got some deeper insights into their business practices. Understanding the business philosophy of each is an important key for being successful in the future.
TYPE A:
The most successful VARs and MSPs have already figured out much of what they need to do to be part of the next generation channel. These early-adopters have paved the way for the next generation channel. Today, the only help that they really need is to fine-tune some of their business processes and sharpen the skills of their team. Once we help them to figure out what they are missing or need to tweak, it is simply a matter of when to implement. These are amongst our very best clients as they tell us exactly what they need! We like to think of them as professional athletes who are looking for a solid Coach to help them to keep improving every day and stay on top of their game. Even the best athletes in the World need a Coach!
TYPE B:
This type of VAR or Hybrid MSP is looking to transition their business so they need the most support. Unfortunately they are not 100% certain of the future so they meet every step with a healthy dose of skepticism. On one hand they want to change, but on the other, they are reluctant to invest the resources necessary to take the plunge. For this group, we work on one tool at a time. We focus on what we know will make the fastest and biggest difference in their company. We also encourage them to join a small group of their peers (who are roughly in their same situation) to work together to improve their businesses. This collaborative approach works best because they support each other to build confidence and reassurance from the group. With the help of our business coaches, they can make the transition faster and easier to build a bigger, better and stronger business. This group is the most rewarding because we get to share in their excitement from the improvements that we help them to make.
TYPE C:
These VARs are simply stuck on the treadmill either by choice or by design. They are so busy working in their business that they actually do not have enough time to figure out their future. They do not seem to be too happy and very difficult to read. They are so busy chasing sales and fixing their clients’ problems that by the end of the day, they are simply exhausted. We feel for this group because we could help them, but the reality of them taking the necessary steps to fix their business, is slim. Sometimes we do get some to see the light as to how they can fix their business and build a better future. Unfortunately because many will slip back into old habits, some of these will not make the transition into the next generation channel.
Most VARs know that they need help and could actually do what it takes to fix their business, but they simply do not want to grow. Some are lifestyle resellers who make enough money to be self-employed and enjoy life. Some have significant multi-million dollar businesses with lots of staff. What’s their excuse? This may seem odd, but some actually do have a valid reason! Typically they have been in business for over 20 years and still making solid profits. Many are almost ready to retire. They are looking for an exit strategy, not to grow their business!
We enjoy working with this group because we are helping them to develop and execute their retirement exit strategy. Unfortunately the evaluation of their business is not what they had expected when they try to sell. Seems like without a recurring revenue stream, business valuation is very low. However, there are some great alternatives to downright selling the business and we have been exploring some of the better ways in which they can retire while getting the most return from their decades of investment.
There is forth type of channel partner emerging. Channel Partners are becoming Vendors! We are closely tracking this group and will be showcasing many in the future. We are already helping some to build a partner network! We like to think of these channel partners not as a separate type, but rather a core business strategy of the smartest VARs, MSPs and ITSPs. Many are building their own Intellectual Property (IP). It can be as simple as mixing a variety of third-party solutions to come up with their unique version of a whole solution. They may be adding more development into applications and services around the solution to make it even more powerful and proprietary. They may be developing their own exclusive IT solution application (we are starting to see a lot of this in the IoT space). These “VARs” are literally becoming “Vendors”. Once they have a solid proof-of-concept with sustainable traction from paying customers, they are emboldened to find other partners to resell their solution.
We have been monitoring many of these channel trends for several years and have since built a comprehensive resource to help channel partners to find what they need, when then need, to build a more effective business to exploit these future trends. Regardless of type, this resource can help them to transition their business model and build a recurring and predictable revenue stream.
Vendor channel programs must also evolve to meet the emerging needs of the next generation channel partners, or they too may be marginalized. The channel is a two-sided blade: some channel partners will die, if they choose not to evolve and the same faith waits for vendors who do not adapt. For too long, vendors have been shovelling sales pitches to the channel to sell – sell – sell. Many closed their eyes to the real needs of their channel partners to transition their business to meet the new ways. Today, that future is now!
Both vendors and channel partners need to stop and think about what they are doing and realign their actions towards the future before they pass the point of no return. While the noise level in the channel is very loud with a high dose of uncertainty, there is a not-so-quiet revolution happening right under our noses. You just have to listen. Failure to do so may mean the death of their role in channel.
