Where next for the channel?
As part of our 40th anniversary, we look ahead to get a sense of where the channel will go in the years and decades to come
If the past 40 years have proved anything, it is the channel’s ability to adapt and survive in changing circumstances. As MicroScope marks its milestone anniversary, inflation is back where it was when the magazine was first launched and the world is once again looking uncertain, with a war in Ukraine, high energy prices and a cost-of-living crisis.
Things could get tough, but history has shown that the channel knows how to ride the waves and get through challenging times, and with technology more important than ever, having moved out of the IT department and across the business in the past four decades, the need for IT expertise is greater than ever.
Across the industry, there are many reasons to look forward with some optimism, with the channel supporting customers as they continue to harness the power of technology. The future will involve more subscription, further transformation and specific moments like the digital switchover that will provide the channel with opportunities to grow.
Here is what some big names had to say about the channel’s prospects.
James Rigby, CEO at SCC
Over the past 10 years, there has been a seismic shift towards “as a service” and developing annuity revenue. The consumption model shows no signs of slowing down – but the Covid pandemic has taught us that product can never be written off.
Product sales are more important than ever, but they fit into a much broader picture. Many businesses are now accelerating digital transformation – another result of the pandemic – and it is incumbent on the IT channel to help shape IT models to support the modern workplace and the ever-increasing demands of digital computing.
James Rigby, SCC
We are still at the beginning of the hybrid working era and this will dictate many of the long-term trends and technology innovations over the next decade and beyond.
In parallel to this, security will become more and more important. With every digital innovation, businesses become more exposed and new risk factors are identified. With cyber crime already one of the biggest threats to businesses and criminals becoming even more advanced, we can expect an even bigger focus on security.
The importance of the IT channel cannot be overstated. Companies like SCC and our peers might not be household brand names and the average person on the street might not understand what we do, but what is easy to understand is that for every visit to your supermarket, online retailer, car dealership or betting company; for every visit to a healthcare provider, school, college or university; and for every home delivery you’ve ever received, an IT service provider has underpinned that interaction.
Frankly, without the channel, there would be no innovation. It’s a bold claim – but in 2022, technology drives every single business improvement – and that’s what we and the channel have delivered for 40 years and more.
James Munroe, channel director at Trend Micro
The channel will continue to evolve at pace, with new ways to consume and use technology taking precedent. Partners will continue to look to be trusted advisers, adopting skills to make sure they are still technically ahead of new trends and offer maximum value to their customers and partners.
One thing is for sure – the channel will never be dull and is more exciting than ever.
Ed Baker, vice-president of global channel sales at Trellix
I expect the channel to include more services and become even more security-focused. Partners have been innovating with services for many years, whether it be consulting or managed services, as they have permission from their clients through years of credibility, to be their trusted adviser.
With the continued acceleration of new consumption offerings, partners will gravitate further toward services offerings as their clients continue to increasingly concentrate on their core business. As such, partners will have the wonderful opportunity to step in and offer IT services that accelerate client growth.
Clients are also looking for a new answer when it comes to security. They are unable to manage the complexity but want to reduce risk and, ultimately, use security to their business advantage. The addressable market is enormous and the partners that win will take an approach to leverage security as a platform and focus on building their own services capabilities to give clients desirable outcomes.
Brent Owens, director of sales and partner enablement EMEA at Vertiv
The critical tactics of personal interaction and hands-on demonstrations of technology at trade shows, combined with a well-stocked distribution network, are changing as concepts such as e-procurement mean more customers are finding what they are looking for without engaging with a salesperson.
Because of developments like these, the channel will need to continue to evolve and look for new ways to build relationships and loyalty with their customers. The sharing of knowledge and customer experience will be critical to success.
Andrew Forsyth, sales and marketing director at Brother UK
Sustainability is the next major challenge. Vendor-reseller partnerships will have to be clear on what they can deliver from an environmental perspective to help retain and grow their customer base. And they will have to be able to show meaningful progress. Green credentials are being given increased weighting, by up to 40% in some cases, especially in public sector tender processes that we work with our partners on.
Andrew Forsyth, Brother UK
This will only be magnified by the accelerating demand for service models. The management of those devices will be heavily scrutinised, and we must ensure that devices and supplies can be recycled and reused when replacements are needed or when contracts come to an end.
Undoubtedly, cost and supply are vital issues to focus on in the short term. But vendors and the channel have a great opportunity to work together to develop more sustainable products, solutions and ways of working.
Christina Walker, global director of channel sales at Blancco
Given that artificial intelligence (AI) is currently all the rage in the channel, the main focus over the next few years will be implementing AI to hone the process of creating simplicity out of complexity in the most efficient way possible.
The channel has also shifted focus towards sustainable practices, and rightly so. The impetus to be more sustainable will strengthen over the next few years, with partners upping their efforts through investments in the world stage of sustainability and community care.
Nick Bannister, vice-president sales for enterprise computing solutions in UK and Ireland at Arrow
The continued evolvement of managed services, as well as game-changing technologies such as AI, machine learning and deep learning, will play a significant role in shaping the channel.
As the threat landscape continues to advance in scale and intensity, security will continue to be a critical component of channel activity.
Oylum Tagmac, senior director of international partner management at Commvault
Agility, flexibility, simplicity, innovation – these four concepts will be vital for channel partners to embrace if they are to continue to succeed. Offerings that are leading the way in digital transformation, yet are simple to implement and easy to use, will be top of the priority list for partners, as customers are looking for a smooth transition to the new hybrid working world we find ourselves in.
Oylum Tagmac, Commvault
In addition to supporting customers in their cloud migration journeys, another key element of the channel of the future must be an increased focus on keeping data safe. As cyber attacks continue to skyrocket, and businesses in all industries increasingly access and share data remotely, ensuring that customers are fully equipped with the latest cyber security and data protection solutions will very likely be a number one priority across the channel.
James Hudson-Dale, senior partner business development manager at IDnow
Change in the future will be as swift as it has been to get us to where we are now. In the next 10 years, it is estimated that there will be more than a million software-as-a-service (SaaS) businesses. Original equipment manufacturers (OEMs) are moving more and more towards subscription models, with service fees included as part of their recurring charges.
Partners are adapting, by offering ancillary components and wrap-around services and support. According to Accenture, 76% of CEOs believe the current business model will change drastically over the next five years, with partnerships and ecosystems likely to be the best way forward.
Following on, over the next decade, most decision-makers will by then be of the “millennial generation”, whose behaviours and psychology are different from that of the “baby boomer” generation that preceded them. This means older employees in the sector will have to adapt their more time-honoured methods, which younger generations have already started to move away from.
The post-pandemic drive towards remote working has impacted customer engagement, which will make personalisation a differentiator. A perfect technology stack will be at the top of everyone’s agenda, so partners will be key in supporting businesses navigate their individual evolving landscapes.
Lastly, low-code or no-code will become USPs for those partners who can orchestrate multiple providers for their customers though a single application programming interface (API).
Geoff Greenlaw, vice-president, EMEA and LatAm channel, at Pure Storage
Subscription is the way the world is going, and it needs to be services-led, as does the channel in its approach. Engagement needs to evolve away from primarily dealing with the IT department.
For example, compliance is becoming an ever-present issue on multiple fronts in the technology sector. This creates a need for the channel to engage with legal departments to ensure they are effectively communicating compliance messages to legal teams and the customer community. Channel partners need to learn to communicate in a different way than they are used to – it’s almost a new language. It is important that the channel embraces this difference, but it requires a change in mindset.
The other major directional change for the channel that will continue well into the future relates to sustainability. Until relatively recently, sustainability efforts and IT strategies were not talked about by customers or the channel community. That has changed, to a point where there aren’t many organisations across the tech sector that don’t have environmental footprint and energy reduction high on their agenda.
Customers want to incorporate greener solutions into their day-to-day operations and they are increasingly adding these issues to requests for proposals (RFPs). Channel partners that aren’t able to recognise the shift in priorities for organisations, and help enable change, are going to be significantly behind the curve. Sustainability is a shared responsibility for everyone, including the channel.
Simon Ratcliffe, principal consultant at Ensono
The demise of the channel has been a much-repeated sentiment for many years, but it is both resilient and adaptable. Ultimately, IT professionals realise that there is much in their technology space that does not differentiate their business, but is necessary. The channel will always be a better home for this, as services are flexible. Many of these technologies shift from “important” to “commodity” and there is a race to the bottom on pricing, but these are also then replaced with more technologies dropping from the “differentiating” space into the commodity space.
Within all this constant change, the channel needs to adapt. There will always be commodity providers and there will always be solution providers, and both need great intelligence to foresee the market and technologies moving between the tiers.
Hayley Mooney, general manager at Crayon UK
It’s an interesting time for the channel. The supply chain is under increasing demand to show value, and the hyperscalers are simplifying procurement cycles against the traditional model. Their global marketplaces work with independent software vendors to make buying software easy and affordable, potentially removing opportunity from the channel.
As a channel partner, distributors, managed service providers and value-added resellers are all under pressure to up their value game, and create meaningful and impactful services that deliver business outcomes that make a difference to the customer.
The skills required are more advanced than ever, and they will continue to evolve as technology does. Staying ahead of the skills gap is an area where the channel can continue to create value, but this is costly and requires innovative leaders and their teams to build and articulate the solutions successfully. Ongoing focus on diversity and hybrid working will set the channel apart from other industries, if executed effectively.
Kirk Horton, vice-president, channels and partners, at Netacea
One of the latest trends and changes in the channel has been the influx of private equity investment and capital. The channel wasn’t an area that these investors looked at previously. However, the evolution of companies in the channel has made them more profitable.
Investors have recognised the potential value and placed large investments in these organisations, with the view of a high-profit margin when exiting within a short time period. This has given the larger channel organisations a war chest to acquire those that were previously competitors, as well as smaller organisations. This is creating a consolidation trend among the largest providers and a mindset of “acquire or be acquired”.
Carl Berry, UK and Ireland channel director at F5
Covid-19 has clearly catalysed and accelerated digital transformation, including a shift to subscription-based models, but there is still work to be done across the channel. Remote and hybrid working aren’t going away, which is putting pressure on businesses to really secure their applications and services, wherever they reside.
Carl Berry, F5
Broadly speaking, the channel will continue to be central to the cyber security challenges that businesses and individuals face. A decade ago, we were looking at cyber security as a whole. Today, segmentation within the channel has fuelled the growth of specialisms for specific focus areas.
Looking ahead, within the everything-as-a-service model – which is a predominant outlook – channel partners will be required to demonstrate value to a wider audience than ever before. The decision-making process is no longer purely technical. Delivering integrated IT solutions, with custom software on top of technology vendors’ offerings, will ensure that you stand out from the competition. Therefore, the channel is ideally placed to drive education and knowledge support from a managed service perspective in specific areas.
Celine Cazali, chief partner officer at SAP UK and Ireland
In the future, I expect consolidation to continue as larger partners look to invest in the next generation of service providers. This means there will be fewer specific partners and more of a spread of expertise across the ecosystem, with a healthy mix of large generalists that have acquired smaller boutiques. At the centre of this development is transforming the outcomes for customers and delivering innovation at a greater scale.
At the same time, as the shift to cloud continues, there will be a growth in mid-tier partners. Choice is important to customer success and offering global system service providers won’t always suit their needs. Mid-sized partners that are native to the cloud offer great expertise and innovation that provide real value to our customers.
In future, it will be important that we are onboarding the next generation of partners and fostering relationships that are mutually beneficial, which will be vital to driving positive outcomes for customers.
Gavin Jones, head of channel at BT Wholesale
The digital switchover will define the channel over the next few years. It’s the biggest upgrade in national infrastructure for well over three decades and is a fantastic opportunity for the channel to support the transformation to digital connectivity and IP-based solutions. It is important that partners take their customers on this journey with them, and act now to ensure that they lead from the front.
What has always been clear is that a channel is a place of innovation, and we expect the needs of customers to evolve continually in years to come and the channel to adapt quickly and effectively with new solutions. There is an acceleration of digital transformation within organisations and diversifying solution offerings, being more flexible and boosting skills in new areas is how we can continue to increase customer value.
Whether that is creating a new proposition to cater to evolving workplace models and hybrid working, ensuring that staff understand the evolving cyber security landscape, or adapting connectivity offerings to meet fluctuating demands, the channel is an exciting place to be.
Jonathan Bartholomew, vice-president of sales Northern Europe at Sophos
Partners today realise that within an increasingly competitive market, they need to be more strategic. In recent times, this paved the way for them to evolve their own services offerings, as we have seen with the emergence of the managed service provider (MSP) over the past decade or so. We anticipate that partners will continue to advance their expertise and services to demonstrate consistent and long-term value to their customer base.
This same approach must then be replicated by vendors, given the increasingly vital role that partners play within the sales ecosystem. Users want guidance on which way they should go, and it is channel partners that can offer this independent viewpoint. With the balance reset, vendors must ensure they are delivering a true two-way partnership from which partners are able to derive value beyond pure solutions, in the form of both services and support.
Fred Voccola, CEO at Kaseya
The amount of innovation we have seen over the past 40 years will pale in comparison to what we will witness in the next 40 years. Because technology is getting more sophisticated and powerful, there is even greater need for the channel, which serves as the enablement arm for businesses to successfully utilise technology to achieve their business goals.
Technology has been driving business growth for decades now, accelerating the amount of innovation and unlocking business value by facilitating new processes, which has had a positive impact on companies and their customers. The channel is going to facilitate and ensure that incredible technologies are implemented, deployed and utilised rapidly, successfully and securely.
Kristian Kerr, vice-president, EMEA partner organisation at NetApp
Looking ahead, I think the channel will be centred on these three key areas: partners focusing on becoming end-to-end providers, more partner-to-partner collaboration, and a change in sourcing models.
Largely driven by the huge adoption of cloud, partners will need to expand their portfolios to become end-to-end solution providers. This revolution in the cloud computing and mobility sectors means we will be welcoming many newcomers to the market – so partners will have to stay competitive in their offerings.
Also, due to the ongoing skills shortage and increasing customer demand, partners will have to focus on partner-to-partner collaboration to tackle this. Finally, due to the cloud usage boom, which has forced a shift towards digital sourcing platforms and as-a-service offerings, the channel is likely to build out a more subscription-based and pay-as-you-use sourcing model.
One thing is for sure – the channel will prioritise transformation to deliver on customers’ needs.