The internet has been a channel game-changer

As MicroScope enters its 30th year of publication, industry figures share their thoughts on what they consider to be the most significant developments in the channel over the past three decades. Amro Gebreel reports

What have been the most important channel developments in the last 30 years? There are a wide range of opinions, but there is some consensus that it has a lot to do with services emerging as the way to pitch, rather than product, along with a maturity in the  relationships between vendors and resellers.

At various points over the past three decades there have even been suggestions that the channel was dying. Not a chance. As comments gathered from the great and good across the industry show, the need for a channel is as relevant as it was 30 years ago, if not more so.

Kevin Bland, Citrix channel director, UK, Ireland and South Africa

The past 30 years have seen a dramatic yet gradual move for the channel from hardware-based value selling to services-based value selling. A reseller used to make considerable margins from selling a single desktop computer, as it represented a significant investment in both mind shift and money. However, the modern-day reseller has to create value from combining many technologies into a solution wrapped up in services.

It is in services that money is made today, as most components are commoditised within one or two years of initial customer adoption.

The cloud will represent the most significant mind shift as companies start to offer solutions where the hardware and software components are hidden from view and comprehensive service level agreements (SLAs) with consequences are a higher priority to customers than what sits behind the scenes. Vendors will need to keep a focus on who their customer actually is.

Glyn Heath, CEO, Centiq

The most important channel development has been how the symbiotic relationship between vendors and their partners has evolved and adapted to the introduction of new technologies, the downward pressure on margins and the pace of change within the IT industry over the past three decades.

In the early years of channel development, genuine, mutually beneficial relationships were rare and vendor-channel conflicts often the norm. Engagement models have been refined in response to more sophisticated users, challenging economic demands (the recession of the early 1990s, the Millennium Bug, the internet bubble in the early noughties, and the economic meltdown of  008/09) and the increasing pace of introduction of new technologies.

The channel is now more clearly defined between traditional product resellers and those that add real business value. Consequently, the width of the channel has shrunk, in place of greater depth where reseller strategies are developed as part of a long-lasting partnership.

John Antunes, director, SME and channels, SAP UKI

Cloud and software as a service (SaaS) have revolutionised the way software is deployed and consumed. The whole model of on-premise big software implementations and customers having to wait months to gain benefit from their software has changed, and the channel has had to change with it, as customers demand quicker time to value and faster deployment times.

In addition, where partners would once have sold a whole range of products, this is becoming increasingly challenging as the solutions on offer continue to grow. As a result, we are seeing partners becoming specialists, offering specific products in line with their skills.

Richard Blanford, managing director, Fordway Solutions

Most vendors now run a pretty clean channel programme, whereas many did not in the past. Another key development has been distributor consolidation – there are far fewer places to buy from now

Richard Flanders, marketing director, MTI

Thirty years ago, businesses and enterprises purchased IT from a vendor as a tangible product. But the rise of the world wide web led to a shift towards IT as a service. The rapid development of Internet-related technologies caused the breadth of choice to expand, meaning consultancy and flexibility began to play an increasingly important part of the purchase path.

The support offered with IT services and products has also progressed. With SaaS, quality ongoing support and service can be a key deciding factor in the purchasing decision, as the role of the CIO is n no longer confined to traditional IT infrastructure. As keepers of the keys on technology, which is now perceived as critical to business success, CIOs are increasingly being involved in key business decisions and strategy. Their time is precious.

David Ellis, director of new technology and services, ComputerLinks

One of the main developments in the channel has been the way channel partners have exploited opportunities around the advent of the internet, in particular being able to sell solutions via email and the web.

Communication between continents has never been easier, and the channel is now able to operate in a true global economy. Despite there being some predictions that the Internet would cause the demise of resellers and distributors, the channel continues to be as strong as ever.

With technology increasing in complexity, supply chains are often far more intricate than in years gone by. Channel companies have been forced to forge relationships and alliances to deliver complete solutions to end customers. This has sometimes involved cooperating with companies that may have traditionally been competitors.

Stuart Fenton, president EMEA, Insight

Over the past 20 years the most significant game-changer has to be the internet, and specifically how it has affected the way we interact with our clients, from transaction to communication.

Today, it seems normal that clients purchase over the web. However, the sophistication of supply chain integration has been phenomenal and innovations are visible every few months. Indeed, duringthe past two years alone, the online revolution has continued at a pace, with cloud computing and new and existing services being delivered over the web. Could we have dreamed this 20 or 30 years ago?

Ian Kilpatrick, chairman, Wick Hill Group

We have seen a lot of changes in Wick Hill’s 35 years of trading. Perhaps the most important is the slow and still incomplete recognition by vendors that the channel is important and that hybrid sales structures are less effective in the medium term than maintaining a clean channel policy. It has taken over 30 years to get to this stage, but it is core to the effective operation of a growth channel model. Even Dell, founded in 1984, is now seeing the light, which is a huge symbolic change.

The continuing diversity in channels, both reseller and distribution, creates a rich mix of choice for customers. Despite repeated waves of consolidation, in both the UK and the German-speaking countries, the decreasing cost of entry, particularly for resellers, means that this diversity of choice will continue.

Andy Baldin, vice-president EMEA, LANDesk

Products to services: Over the years we have seen a shift in the channel from products to services, which has translated into an increase in value-added services offered by channel resellers. The focus now is on value, customer service and partnership.

Less is more: We have seen the rise of smaller, highly skilled, focused partners that adhere to a ‘less is more’ approach, gaining greater ability in fewer solutions.

Partnership: The channel has embraced vendor loyalty and there is a real sense of partnership, whereby channel resellers see vendors as trusted partners and customers see channel resellers as trusted advisers. It is about delivering the right solutions, rather than just moving products.

Nessa Lynchehaun, UKI channel director, Mimecast

The most significant development has been the transition from box-shifting to more value-based selling, with the journey from traditional hardware and software sales to the cloud. Customers want to move away from a fragmented environment, expecting partners to provide advice and solutions that demonstrate value which can be maintained moving forward, as opposed to a series of products that separately address different pain points.

These days, the channel needs vendors which are 100% committed to the channel model. The recipe for success and longevity in the channel is to listen to the customer and focus on delivering a valuable customer-centric experience.

Janet Gibbons, director of partner strategy and programmes, Microsoft 

The move to services: Perhaps the biggest change has been the swap from sales of physical devices and software to an entirely more ethereal transaction. You might have sold bundled software back in 1982, but today, we are more likely to be purchasing software and processing power by the hour, day, week or month. Arguably, big companies were doing this with bureaus 30 years ago, but the difference now is that anyone with a credit card can do this, whether they have one or thousands of employees. This opens up lots of new opportunities for the channel, as partners of all sizes and shapes are exploiting this development to drive annuity income streams.

Consolidation (and rebirth): The number of companies in the channel that have been bought or gone under is huge. The very nature of the world of technology means it is fast paced, and in the channel this means businesses come and go quickly too. The stalwarts remain, but the distribution sector has seen mass consolidation, as has the smaller end of the reseller market. Equally though, the number of new entrants to the market is robust and we are seeing the emergence of new types of partners, such as born-in-the-cloud and apps developers, and the formation of new partnerships. 

Longevity of the channel itself: Despite the huge changes in technology, and the vendors which produce it, the people in the channel remain the same. The channel might well have been selling DOS, dBase 2, Osborne 1 and Lotus 123 back in 1982, but its business model was very similar to what we see today. Deals are done on a handshake, and usually once in the channel, you stay in the channel. There are faces that have been in the industry for 30+ years and weathered any changes in technology, business model or socio-economic factors. Not only has the channel itself survived, but the people in it have too.

Karl Barton, vice-president of sales EMEA, Exinda

Without the channel, the IT industry would not be where it is today. The IT innovators had the ideas and developed them for consumption; the channel gave them the route to a global market. The most important development for me therefore is the channel’s continued ability to find these routes to market, no matter the challenges placed on them, and add value throughout the process.

Matthew Searle, director, Canon Partner Channel

The imaging channel has been changing constantly, but never before has the shift to services been more of a driving force behind changes in the channel than today. Partners must decide if they willmove from a traditional hardware-centric sales approach to a more services-led business model that looks at optimising business processes. This shift to services represents the natural next sales step, as the market continues its evolution.

The market landscape has seen a number of technology-driven changes over the last few decades and there is an increasing need to offer value-added services to find and maintain loyal customers – increasingly, this includes cloud services. From a partner perspective, this represents an opportunity to open up new sales channels. Only by accepting this change can companies increase their sales and enhance their ability to cross-sell services. 

Barrie Desmond, group director, marketing and global accounts, Exclusive Networks Group

Networking has been the most important development, because that is when we moved to a connected business environment, and that in turn created the explosion in IT and the growth in the value-add channel to support innovative products which need a route to market. Prior to this we had a direct-to-end-user model. Foolishly, in recent years some larger players, such as Dell, have tried to cut out the channel and go direct. But they failed and now even they have a two-tier model. They learned the hard way that you cannot undervalue the channel.

Only a fool would underestimate the channel’s strength and value in delivering solutions and pushing innovation. There have been other threats to the channel, such as the internet threatening to bypass the channel. But again, all we ultimately saw was an increased validity in the channel as the only viable way to introduce new, disruptive, innovative products to the market. 

There have been many important developments, but even when those developments appeared initially to be a threat, the channel has time and time again proved its resilience and reasserted itself as the primary route to market. That the UK has in excess of 20,000 resellers underlines just how important the channel is. Long live the channel!

Read more on Channel Partner Programmes