Disruption is possibly the most frequent term used to describe the changing landscape of the channel.
A plethora of political, financial and cultural forces are resulting in a pace of change never experienced before in the technology industry. The speed at which we now consume technology in our 'always-on' world is driving change; technology firms need to be delivering on-demand business models to remain relevant.
However, these 'challenges' represent the ideal opportunity to look at how channel businesses can achieve sustained growth by assessing how they deliver services to their end-user customers.
With the 24/7 nature of the IT channel, this is centred not only on the move from a CAPEX to OPEX business model, but on an increasingly on-demand offering, allowing flexibility to scale up or down, per their customers' requirements. For example, an increasing number of customers want to run full or hybrid cloud systems; as a result, it has never been more important to offer a fully-managed cloud migration solution.
Trying to shape a company into one that operates entirely self-sufficiently from other channel companies rarely works. Developing a skill-set or channel provision that would be more efficient and easier to manage through outsourcing is a no-brainer, especially as the end-customers' appetite for a widening remit of services increases exponentially. As a result, these collaborative outcome-based solutions need to access a broader range of specialist skills rather than using a generalist approach to serving the customer.
Achieving this level of service for customers can rarely be delivered by one single channel partner, acting as a one-stop-shop. Collaboration between two or more channel partners can significantly bolster each party's offering by utilising the services they offer, helping to stimulate growth through new business and increased customer loyalty.
Recent research has revealed that over a quarter of the revenue in a channel business is generated through the utilisation of skills from other companies, as the primary channel organisation adds more strings to its bow, delivering a greater percentage of margin across its solutions to the customer.
The exact needs of the customer must be adhered to, as out-of-the-box solutions are no longer viable; if they require a service that its current channel partner(s) cannot directly offer, they must work to deliver this though inter-channel collaboration. This is where the traditional vendor is struggling to remain relevant as customers want innovative, tailored solutions that meet their ultimate business objectives, while offering near-instant flexibility that meets the changing technological landscape.
This is supported through channel research revealing that the main areas which require investment are technology and solutions, and business intelligence and analytics. For example, with the complexity of IT systems only increasing, the requirement for delivery of more spare parts, coupled with the expensive requirement of storing and delivering these components, has placed an emphasis on outsourcing to external providers. This frees up resources for businesses to innovate and focus on their core competencies.
This is a perfect example of how innovative services and solutions can be fostered through collaboration with potential partners, allowing channel organisations to remain relevant for customers. On average, each business spends £66,000 on innovation; this can be split into internal investment and outsourcing to channel partners.
This should be the main priority for channel businesses going forward, delivering outcome-based solutions for customers, rather than off-the-shelf solutions that are not relevant to their business needs. For some organisations, this may involve a complete internal transformation, reflective of the cultural shift that many businesses have undertaken, to meet the needs of their customers and channel partners.
However, this doesn't only allude to internal transformation; a channel business' desire to expand its service offering has seen a strong increase in the number of acquisitions and takeovers, collaborating with partner companies before purchasing and re-branding their services under one name.
Demonstrating that they have an international services provision is also crucial in mitigating any uncertainties surrounding Brexit. While this is largely dependent on how their end-customers leave current markets and enter new ones, channel businesses should be looking to expand their portfolio across Europe and the Rest of the World, enabling them to trade in new markets. Even though Brexit will most certainly have an impact, how it will affect skills and resources in the channel will take far longer to become known as the country makes the transition.
Inter-channel collaboration will no doubt play an integral role in how organisations globalise, remain relevant to customers and transform their business models in the coming months and years. As a result, they should be actively seeking to consolidate relationships with existing partners, while looking for new companies to work with, to further foster innovation through collaboration, ensuring strategic goals are not only met, but exceeded.
Richard Eglon, Marketing Director of Agilitas
