Looking ahead to 2018 and beyond, it’s actually a really exciting time for the channel. The rapid pace of technology advancements means massive disruption for partners in how they will continue to position, sell and support technology for their customers. Change is happening, and it’s affecting customer expectations, business models, sales processes, certification models, you name it! This is going to be a very good thing for our industry because it’s going to shift the focus to customer success and customer lifetime value.
As we move into the new year, technology continues to innovate at such a fast pace that customers can’t keep up. They must consume the technology in a new way. They can’t wait for the 3-6 month procurement cycles and 6-12 month implementations anymore. They need to realize the benefit of the technology faster and with less disruption to their operations. For vendors and their partners in 2018, their number one challenge is going to be, “How am I going to adjust to offer solutions the way the customer wants to consume it while making sure the customer doesn’t just buy it—but is productive with it?”
Here are some predictions for how the channel will change in 2018 and beyond, putting vendors and their customers in the best positions possible to succeed.
Partners can be the “flex” in a vendors’ go to market strategy, providing the customer with multiple options to consume technology when the vendor can’t
Partner and vendors must respond to how customers want to consume technology. Partners need to offer subscriptions, managed services and XaaS (Fill in the blank-as-a-Service) and make it available in multiple modalities like mobile. And they need to do it fast. Vendors need to help the partners build out this capability when they themselves can’t. A year ago, less than 2% of partners offered solutions that could be transacted in a pay-as-you-go or pay-as-you-use consumption model. Close to 20% are now offering services that are on demand, pay-as-you-consume or based on business outcomes.
Now customers are saying, “I only want to buy what I use today,” which changes the conversation for a partner. Or they are saying, “I’m not that interested in how it works or even which vendor it is, I need it to deliver the value I need.” Now many customers only want to buy what they use and pay based on consumption and not to mention that many vendors are converting box features to software format. This is a different financial system where revenue is recognized over time, vs paid all up front. Overall, partners are in a great position to move fast and respond to the customer this year.
Partners will more increasingly need to decide what technical skills and capabilities they need for their business success
If you are providing outcome based solutions via a managed service to a customer with 25 locations across North America, why do you need 3 certified engineers in Ohio where your corporate office is? Now that technology is being deployed and managed virtually, via remote data centers, to hundreds and potentially millions of devices (think IoT) the location of technical resources is less important. When customers begin to value the outcome of the technology vs how the technology is built and operated, the number of vendor product based certified individuals becomes less relevant. When partners convert Network Operation Centers to be service delivery platforms, shouldn’t it be their responsibility to determine how many and what technical capabilities their employees should have to run their XaaS network?
In 2018, partners will have to start taking responsibility for ensuring they have the right skill sets deployed in the best way for customer success whether they are offering multivendor solutions or managing their own cloud based multi-vendor environments. Don’t get me wrong, it is still the vendor’s responsibility to provide the knowledge for an individual to learn the skills they need to sell, plan, deploy and manage the technology they are offering, but it’s the partners job to know how many and what their human capital needs are to ensure customer success.
Vendors dictating technical competency requirements to partners may have worked 20 years ago. Having vendor-trained people does not exclusively equate to a healthy business today—having resources focused on making sure partners get their training and then having partners focus on ensuring that their people get product training that has nothing to do with what the partner is selling, especially if they are selling outcomes, appears to me to be a productivity drain. I still believe that competencies and training are important to success and I believe that vendors need to look at this in a different way to move forward.
Partners will be the key to customer success and have the best opportunity to monetize the shift to Customer Lifetime Value
Partners have a responsibility and in some cases, a financial burden, to ensure that the solution delivers the outcomes the customer is looking for. Traditionally conversations have been around how the purchased solution will be built, implemented and operated. Rarely was there a conversation about what value does this deliver to the business, can it be measured and how will it help the customer differentiate. Now more than ever, it’s about the customer and as a partner, it will be your relationship to manage and burden to meet customer expectations.
The good news is that it will work to the benefit of those partners that now begin to look at the customer lifetime value. Customer lifetime value is an important concept in that it encourages partners to shift their focus from quarterly profits to the long-term health of their customer relationships. Sound familiar? This is consistent with how customers want to consume technology today. Smart vendors will leverage the partner’s proximity and trusted advisor status to secure vendor of choice. Partners should leverage vendor initiatives that not only helps them land the business but enables the partner to participate in revenue growth to expand, adopt and renew initiatives.
Overall as we look to the coming year, the channel will certainly need to adjust rapidly to customer and technology-led disruptions and vendors will need to work with partners to offer them ways to monetize and scale their solutions. Again, 2018 is going to be an exciting year!
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