State of the IT Channel


Published on

CompTIA gives an overview of the state of the IT channel -- where are the opportunities and challenges.

Published in: Technology, Business
  • Be the first to comment

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

State of the IT Channel

  1. 1. The  State  of  the  Channel  Nancy  Hammervik,  SVP  Industry  Rela>ons  Tim  Herbert,  VP  Research   March  2012  
  2. 2. CompTIA,  the  Not-­‐for-­‐Profit  IT  Trade  Associa>on   Educa1on     Advocacy                             Cer1fica1on                         Philanthropy          
  3. 3. CompTIA  Communi>es  Connect  the  Industry  
  4. 4. The  Channel  Model,  Circa  1997   Product   Distributor   Reseller   IT  Dept.   Vendor   Key  Concepts:  Technology  Silos,  Transac6onal  Business,      Many  Parallel  Channels,      IT  Department  Gatekeeper  
  5. 5. The  Channel  Model,  2012   DIY   Prod uct   Distributor   VARs,  SPs,   Customers   Product   or  VAD   MSPs,  ??     t   P roduc Key  Concepts:    More  of  Everything,    Convergence,  Recurring  Rev,    New  Complexi6es,      Further  Commodi6za6on  
  6. 6. Key  Roles  Within  the  Channel   u Value  Added  Reseller  (VAR)   u Cloud  Service  Providers   u Systems  Integrators   u Telephony  Agents   u Solu>on  Provider   u Master  Agents   u Managed  Service  Provider  (MSP)   u Tier  1  Vendor   u Independent  SoOware  Vendor  (ISV)   u Tier  2  Vendor   u Applica>on  Developers   u Value  Add  Distributor   u Channel  Partner  
  7. 7. Sizing  the  IT  Industry  |  Channel  Impact   Core  IT  –  2011  Revenue   Telecom  –  2011  Revenue   Mix  for  U.S.  Market   Mix  for  U.S.  Market   Wireless   IT  Services   Voice/Data   38%   54%   36%   26%   Hardware   46%   SoQware   Fixed   Voice/Data  Source:  IDC  
  8. 8. Profiling  the  IT  Channel  The  Channel  is  Dominated  by  Small  Firms   According  to  the  U.S.  Economic   Census,  there  are  ~115,000  U.S.   IT  employer  firms  (payroll)  that   could  poten1ally  be  considered   channel  firms.  .     According  to  the  CRN  VAR500   98%   list,  the  company  ranking  #500   generates  less  than  $20  million  in   annual  revenue.   %  of  channel  with   fewer  than  100   employees  
  9. 9. Profiling  the  IT  Channel  Con>nued   On  average,  channel  partners  belong  to  8  vendor  programs     %  repor1ng   a  NET  GAIN   43%   in  vendor   program   14%   par1cipa1on     in  2011       %  of  channel   partners  belonging   to  >15  vendor   programs  
  10. 10. The  Converging  IT  -­‐  Telecom  Channel:  The  View  from  Agents/Master  Agents   Nature  of  Agent/Master  Agent  u  9  in  10  agents/master  agents  report   Rela1onship  with  IT  VARs     having  at  least  one  IT  VAR  partner;  50%   report  having  mul>ple  partners;  most   61%   expect  to  increase  partnerships  over   coming  year    u  Slight  majority  of  agents/master  agents   report  genera>ng  less  than  25%  of   revenue  from  IT  VAR  partner  work   31%  u  Two  primary  factors  drive  partnership   ac>vity:  1).  Desire  to  reach  new   customers  for  core  services,  and  2).   9%   Address  exper>se  gaps  in  emerging   Referral   Tac1cal  –   Strategic  –   technology  areas     driven  by   key  to   opport-­‐ business   unis1c   pordolio   needs  
  11. 11. Channel  Transforma>on  Framework   1   Technology  Delivery  Model   On-­‐Premise   Hybrid   Off-­‐Premise   2   Customer  Engagement  Model   Transac1onal   Project   Recurring   3   Technology  Stack  Layer   Infrastructure   Applica1on   Process   4   Technology  /  Solu=on  Por?olio   Product   Package   Solu1on   5   Customer  Segment  /  Specializa=on   Size   Ver1cal   IT  Style  
  12. 12. Order  Takers  Beware   “[T]he  partners  that  have  made  a  living  in  the  past  targe6ng  a  customer’s   procurement  office  are  slowly  going  away.  Their  value  to  that  par6cular   customer  in  being  able  to  be  a  single  source  for  all  different  types  of  technology   isn’t  what  it  used  to  be.”     –  Head  of  Global  Channels  –  Hardware  vendor   “[A]  commodi6zed  partner  that  is  targe6ng  the  baseline  fulfillment  price  is   not  interes6ng  to  me.  You  have  to  be  a  company  that  knows  how  to  sell   business  value.  If  you’re  selling  into  the  C  suite  you  need  to  have  value  props   that  are  financial  and  business  oriented  as  well  as  technical.”       –  VP  of  Worldwide  Partner  Development  –  Hardware  vendor  
  13. 13. Factors  Channel  Partners  Believe  Are  Having  the  Greatest  Impact  on  Vendor  Partnerships   Transi>on  to  the  cloud   59%   Expanding  op>ons  available  to  customers     52%   ShiO  from  transac>on-­‐based  to  recurring   39%   revenue  models  ("everything-­‐as-­‐a-­‐service")   Industry  consolida>on   21%   Specializa>on  models   12%  
  14. 14. Channel  Partner  Transi>on  to  the  Cloud   Many  channel  partners  have  mixed  feelings  about  the  cloud.     41%   Both  sell  and  use  cloud  solu>ons   15%   Sell  cloud  services,  but  dont  use   30%   internally   22%   16%   End  user  of  cloud  only   22%   13%   Not  involved  in  cloud   42%   2011   2010  
  15. 15. Top  Decision  Factors  for  New  Vendor  Partner  Programs  Joined  During  2011   1   The  product(s)   2   Ease  of  doing  business  with   3   Quality  leads/demand  genera>on   4   Quality/availability/affordability  of  technical  training   5   Pre-­‐  and  post-­‐sales  support  
  16. 16. Vendor  Percep>ons  of  Channel  Partner  Needs   “Partners  like  to  see  simplifica6on  of  processes  in  the  overall  experience   with  a  vendor.  And  that’s  a  difficult  one,  because  the  business  is  geVng   more  and  more  complex.  But  it’s  an  important  one,  because  complexity  in   processes  typically  means  wasted  money.”       –  Strategist,  Worldwide  Partner  Programs,  Hardware  vendor   “So  they’re  saying,  ‘Make  it  easy  for  us.’  Ease  of  doing  business  is  a  big  one.   Every  vendor  has  their  own  thoughts  and  their  own  processes  and  their  own   ways  of  submiVng  different  pieces  of  data.  From  deal  registra6ons  all  the   way  again  to  forecast  and  pipelines.  So  they’re  asking  for  that  in  doing   business:  ‘Make  my  life  easier.’”       –  VP  of  Channel  Sales,  SoQware  vendor  
  17. 17. Factors  Influencing  Decision  to  Leave  Vendor     •  Margins   Money   •  Discounts/rebates   Issue   •  Cost  of  membership   •  Lack  of  deal  registra>on   •  Product  line  not  a  good  strategic  fit   Strategic   •  Conflict  with  vendor’s  direct  sales   Issue   •  Volume  requirements  too  high     •  Constantly  changing  requirements   Execu>on   •  Difficult  to  do  business  with   Issue   •  Insufficient  or  ineffec>ve  support   (marke>ng,  training,  pre/post  sales)   60%  or  channel  partners  report  evalua6ng  their  vendor   partner  program  par6cipa6on  quarterly  or  semi-­‐annually.    
  18. 18. Puong  the  ‘Partner’  in  Channel  Partner   “I’ve  been  in  the  IT  channel  for  more  than  25  years,  and  this  year  is  the   first  6me  a  vendor  has  bothered  to  ask  me  how  my  business  is  doing  …   and  actually  demonstrate  that  they  want  to  help.       I  don’t  know  whether  the  vendor  can  do  anything  to  directly  affect  my   profits  beyond  changing  the  margins  they  share  on  product  sales,  but   I’m  definitely  willing  to  listen.  A`er  all,  if  solu6on  providers  generate  a   majority  of  a  vendor’s  sales  revenue,  it  stands  to  reason  that  if  we’re   not  financially  healthy,  neither  are  they.”     –  IT  Solu1on  Provider   “Evolu6on  is  not  mandatory;  but  then  again,  neither  is  survival.”     –  IT  Solu1on  Provider  
  19. 19. Assessing  a  Key  Element  of  the  Vendor-­‐Channel  Partner  Rela>onship   Ra1ng  of  Vendor  -­‐  Partner  Communica1ons   49%   Top  Informa1on  Gaps  with  Vendors   [from  Perspec>ve  of  Channel  Partners]   33%   u  Training  material,  course  requirements,  etc.       u  Product  spec  details  for  comparison  purposes   u  Most  up-­‐to-­‐date  sales  promo>ons/incen>ves   15%   u  Supply  chain  delays,  product  technical  problems   u  Pricing  informa>on  for  products/bundles   4%   Not   Moder-­‐ Very   Exactly   u  New  product  roadmap  informa>on   close  to   ately   close     where  it   where  it   close     should  be   should   be  
  20. 20. Small  Inefficiencies  Add  Up  and  Take  Toll  on  Margin   Incidence  of  Leaving  Vendor   Program  Money  on  the  Table   Frequently   happens   16%   Occasionally   NET  %  of  channel   money  slips   40%   partners*  saying  through  cracks   70%   it  has  become   more  important  Rarely,  but  has   28%   to  achieve   happened   highest  1er  of   vendor  partner   Never   13%   program       *NET  of  more  important  +   significantly  more  important  
  21. 21. Overcoming  Training  Challenges   “To  be  honest  with  you,  product  training  has  been  our  focus.  ...  I  think  one  of   the  problems  with  our  training,  to  be  candid,  is  it’s  focused  specifically  on  our   product.  And  it  doesn’t  include  how  our  products  fit  into  solu6ons  and  solve   customer  problems.”       –  VP  of  North  American  Channels,  Hardware  vendor   “I  think  that’s  a  problem  everybody  faces.  Put  it  into  the  very  simple,  ‘OK,  it’s   Sales  Training  101:  How  to  Befer  Approach  a  CIO.’  Who’s  going  to  train  you  on   that?  Again,  most  of  my  training  is  focused  on  my  products  and  how  they  fit   alongside  other  solu6ons.  I’m  not  running  out  there,  training  my  partners  on   how  to  become  a  befer  cloud  infrastructure  marketer  or  seller.”       –  Head  of  Global  Channels,  Hardware  vendor  
  22. 22. Channel  Partner  Challenges  in  the  Healthcare  Ver>cal   Overall,  solu>on  providers  report  a  very  posi>ve  experience  doing   business  in  the  healthcare  ver>cal,  but  do  face  some  challenges.   48%  Understanding  regula>ons  (e.g.  HIPPA,  HITECH)   42%  Technical  training  (e.g.  EMR/EHR)   37%  Adjus>ng  business  prac>ces  (e.g.  work  during  non-­‐pa>ent  hours)   34%  Sales  training   34%  Crea>ng  new  targeted  marke>ng  materials   32%  Deciding  which  EMR/EHR  vendors  to  align  with   29%  Mee>ng  criteria  to  join  vendor  partner  programs   23%  Securing  financing  to  fund  entry  into  healthcare  market  
  23. 23. Agents/Master  Agents  Indicate  Many  Elements  of  VAR  Partnerships  to  Become  More  of  a  Factor     Next  12  Months   Last  12  Months   81%   Effec>ve  communica>ons   71%   57%   Leads  provided  by  partner   47%   Emerging  technologies  and  business  models   57%   (e.g.  cloud  compu>ng)   39%   49%   Partners  understanding  of  my  biz  model   42%   49%   Compensa>on  models/margins   26%   43%   Formal  business  planning  with  partner   16%   28%   Partner-­‐provided  technical  training   9%  
  24. 24. Agents/Master  Agents  Also  Recognize  Poten>al  Obstacles  to  Overcome  in  Rela>onship  with  VARs   Establishing/protec>ng  account  ownership   52%   Establishing  customer  interface  rules   49%   Seong  sales  strategy  (who  will  sell  what)   42%   Iden6fied  as  most  difficult  to  execute  on   Establishing  pre-­‐  and  post-­‐sale  support  roles   41%   Seong  compensa>on  terms   35%   For  revenue  models,  agents/master  agents  indicate  the  following  are  most  important:   u  Having  no  caps  on  recurring  revenue  (72%)   u  Being  paid  for  renewals  (69%)    
  25. 25. Challenges  in  Transi>oning  to  Managed  Services   Execu1on   Importance*   Difficulty**   Achieving  opera>onal  efficiency   70%   81%   Selec>ng  right  managed  services  mgt.  soOware   67%   69%   Customer  acquisi>on   63%   81%   Required  level  of  human  investment   60%   75%   Required  level  capital  investment   56%   70%   Availability  of  trained  consulta>ve  sales  and  tech  staff   56%   66%   Time  to  reach  profitability   54%   80%   Determining  correct  monthly  pricing  model   54%   62%   Migra>ng  sales  staff  to  new  model   49%   65%  *Items  rated  as  ‘Very  Important’  **Items  rated  ‘Extremely’  or  ‘Somewhat’  difficult  to  achieve  
  26. 26. Channel  Partner  Classifica>on  Methods   Annual  revenue   60%  Vendor  product  lines  sold  /  Coverage   46%   By  number  of  employees   37%   Channel  Partner   Opinions  of  Vendor   Classifica1ons   Ver>cal  industry  specialty   32%     49%  -­‐  Posi1ve  strategy   that  allows   Partner  type  (VAR,  MSP,  ISV  etc.)   31%   customiza1on  of   benefits     Vendor  wallet  share   30%   43%  -­‐  Makes  no  real   difference  in  terms  of   program  deliverables    
  27. 27. Ini>a>ng  a  New  Channel  Rela>onship   •  Account  set-­‐up   •  Partner  portal   On-­‐boarding   •  Contract   •  Deal  reg   •  Channel  account  manager  assignment   •  Reaffirming  strategic  alignment   •  Training   Enablement   •  Marke>ng   •  Repor>ng,  metrics,  check-­‐ins  
  28. 28. Other  Factors  Used  in  Channel  Partner  Evalua>on  and  Classifica>on   “Partners  should  recognize  that  each  interac6on  with  vendors  may  affect  their   overall  grade.  As  such,  partners  should  strive  to  iden6fy  and  understand  every   touch  point  they  establish  on  a  regular  or  an  ad  hoc  basis  with  their  vendors  and   establish  clear  guidelines  as  to  how  resources  such  as  training,  support,  sales,  and/ or  marke6ng  assistance  should  be  requested,  used,  and  made  most  effec6ve.     –  VP  of  North  American  Channels,  Hardware  vendor   Other  Metrics  Used  to  Evaluate  Channel  Partners   u Consistency   u Loyalty   u Engagement   u Strategic  alignment   u Quan>ty/quality  of  interac>ons  with  vendor  support  teams   u Cer>fica>ons  achieved   u Customer  sa>sfac>on  scores  
  29. 29. Scoring  Channel  Partner  Opera>onal  Efficiency   Part  I   Process   Business  Process   Competency   Repeatability   Leverage   Score   DEMAND-­‐SIDE  FUNCTIONS     Market  Research  /  Alignment   Porwolio  Management  /   Development   Marke>ng  /  Demand  Genera>on   Sales  Process   Customer  Engagement   Account  Management   DEMAND-­‐SIDE  FUNCTIONS  –  TOTAL  SCORE     N  
  30. 30. Scoring  Channel  Partner  Opera>onal  Efficiency   Part  II   Process   Business  Process   Competency   Repeatability   Leverage   Score   DELIVERY-­‐SIDE  FUNCTIONS     Product  Configura>on  /  Delivery   Billable  Service  Opera>ons   Technical  Support  /  Help  Desk   Delivery  Process  Design  /   Improvement   Inventory  Management  /   U>liza>on   Resource  Development  /   Training   DELIVERY-­‐SIDE  FUNCTIONS  –  TOTAL  SCORE     N  
  31. 31. Scoring  Channel  Partner  Opera>onal  Efficiency   Part  III   Process   Business  Process   Competency   Repeatability   Leverage   Score   SUPPLY-­‐SIDE  FUNCTIONS     Product  Evalua>on  /  Proof-­‐of-­‐ Concept   Vendor  Rela>onship   Management   Channel  Program  Par>cipa>on   Human  Resources  Management   Financial  Management   Facili>es  /  Tools  /  Support   SUPPLY-­‐SIDE  FUNCTIONS  –  TOTAL  SCORE     N  
  32. 32. Thank  You  Nancy  Hammervik   Tim  Herbert  SVP,  Industry  Rela>ons   VP,  Research  nhammervik@comp>   therbert@comp>        
  33. 33. CompTIA  Resources   Relevant  Research  and  Market  Intelligence   u  State  of  IT  Channel  Programs   u  2nd  Annual  Trends  in  Cloud  Compu>ng   u  Understanding  and  Aligning  with  the  Transforma>on  of  Partner  Business  Models  White  Paper   u  Margin  Reten>on  Through  Opera>onal  Efficiency  White  Paper   u  3rd  Annual  Healthcare  IT  Insights  and  Opportuni>es   u  Trends  in  Managed  Services   u  2nd  Annual  Partnering  Trends  Between  Telecom  and  IT  Channels  -­‐  login  into  Members  area  and  go  to  the  Research  tab