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4 Takeaways on State of IT Channel

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4 Takeaways on State of IT Channel

  1. 1. 4 Key Takeaways on IT Channel Today Carolyn April Sr. Director, Industry Analysis CompTIA Copyright (c) 2014 CompTIA Properties, LLC. All Rights Reserved. | CompTIA.org
  2. 2. The Big Picture in Channel Change
  3. 3. How Far Along the Path to Business Transformation? Self Assessment Business Transformation 17% 2012 2014 59% 55% 24% 24% 22% Low degree Moderate degree High degree Current State of Transformation by Size Small channel firm Medium channel firm Large channel firm CompTIA MPS Trustmark Value Proposition 1. Validation of MPS expertise to customers 2. Mechanism to evaluate internal MPS operations / follow best practices 3. Differentiator 15% 72% 13% 20% 49% 31% 15% 48% 37% Low degree Moderate degree High degree Source: CompTIA 4th Annual State of Channel: Base: n=350 IT channel firms
  4. 4. Primary Catalysts for Channel Business Transformation 27% 23% 23% 36% 35% 32% 41% Cloud computing pushing us in new directions Customer demand for different services and IT delivery models Desire to move to a recurring revenue model New financial models are more lucrative Vendors pushing us to change Margins on product sales declining Defensive move against obsolescence In 2010, just 37% of channel firms sold cloud solutions; today, nearly all do in some form. Source: CompTIA 4th Annual State of Channel: Base: n=350 IT channel firms
  5. 5. Top Challenges Experienced with Business Transformation Note: rank order listings are useful for summary purposes, but should NOT be interpreted quantitatively. For example, the first-ranked item is not necessarily 8 times more important than the eighth-ranked item. 1. Cash flow and other financing challenges 2. Customer education 3. Balancing existing business operational needs with new business 4. Hiring skilled staff to accommodate new lines of business 5. Need for new kinds of technical training 6. Need for sales and marketing training and repositioning 7. Need to learn new financial metrics and accounting schemes 8. Lack of business transformation roadmap Source: CompTIA 4th Annual State of Channel: Base: n=350 IT channel firms
  6. 6. Takeaway #1 Cloud is forcing fundamental change – but take stock before moving too fast. Copyright (c) 2014 CompTIA Properties, LLC. All Rights Reserved. | CompTIA.org
  7. 7. Cloud Computing and Channel Today
  8. 8. Year-over-Year Cloud Traction Positive for Channel Cloud vs. Established Products/Services Revenue Growth 26% 22% 50% 19% 21% 58% Established growing faster Growing at same rate Cloud growing faster Cloud vs. Established Products/Services Profit Margins 21% 30% 49% 11% 24% 64% Established higher Roughly the same Cloud higher Source: CompTIA’s 5th Annual Trends in Cloud Computing | Base: 400 channel firms with cloud offerings
  9. 9. Challenges Deemed “Very Significant” by Channel on Rise 45% 44% 44% 46% 57% 56% 52% 52% 50% 49% 43% 56% 54% 59% Determining appropriate business model Balancing needs of legacy business and cloud sales Initial costs (infrastructure etc.) Cash flow/financial considerations Deciding which vendors to work with Developing cloud expertise (technical and sales) Optimizing markering and sales messaging for cloud 2014 2013 Source: CompTIA’s 5th Annual Trends in Cloud Computing | Base: 400 channel firms with cloud offerings
  10. 10. Steps Taken to Mitigate Cloud Transition Challenges Note: rank order listings are useful for summary purposes, but should NOT be interpreted quantitatively. For example, the first-ranked item is not necessarily 7 times more important than the seventh-ranked item. 1. Invested in technical, sales and business training 2. Transitioned just a portion of business to cloud; scale later 3. Used third-party data center provided rather than build own NOC 4. Accessed vendor-provided training 5. Hired new sales reps to sell cloud services 6. Partnered with other solution providers to combine skill sets 7. Pursued additional credit/capital Roughly half of respondents turned to a third-party data center provider for cloud in 2014, up from 31% last year. Source: CompTIA’s 5th Annual Trends in Cloud Computing | Base: 400 channel firms with cloud offerings
  11. 11. Takeaway #2 Make sure to understand the implications of business model change. Copyright (c) 2014 CompTIA Properties, LLC. All Rights Reserved. | CompTIA.org
  12. 12. Sales & Marketing Changing Times
  13. 13. Sales & Marketing Skills Still Lag Technical Expertise Self-assessment of sales & marketing effectiveness of channel 29% 48% 21% 3% Highly effective Moderately effective Hit or miss Ineffective MSPs are far more critical of the channel’s sales and marketing acumen than solution providers. Just 6% of them deemed channel efforts ‘highly effective’ vs. 31% of solution providers who responded favorably. Twice as many MSPs characterized these operations as ‘hit or miss.’ Source: CompTIA 4th Annual State of Channel: Base: n=350 IT channel firms
  14. 14. Impact of the Adoption of New Business Models, Such as Managed Services and Cloud Services, on Sales Structure 12% 6% 27% 28% 20% Increasing the complexity dramatically Increasing the complexity somewhat Simplifying the complexity somewhat Simplifying the complexity dramatically No impact Source: CompTIA 4th Annual State of Channel: Base: n=350 IT channel firms
  15. 15. Main Sales Activities Taken by Channel Firms Note: rank order listings are useful for summary purposes, but should NOT be interpreted quantitatively. For example, the first-ranked item is not necessarily 8 times more important than the ninth-ranked item. 1. Routine visits/interactions with existing customers to upsell 2. Marketing/business development to identify/attract leads 3. Sales proposals presented to customers 4. Outside sales rep face-to-face visits with potential new customers 5. Use of social media to attract new customers 6. Contractual terms discussed for services, including SLAs 7. Inside sales cold-calling of qualified leads 8. Purchasing outside database/customer list Source: CompTIA 4th Annual State of Channel: Base: n=350 IT channel firms
  16. 16. Rating Various Activities as Part of Sales Model Transition 15% 12% 18% 17% 12% 10% 18% 10% 49% 45% 50% 44% 47% 46% 49% 35% 38% 38% 48% 41% 42% 41% 36% 41% Retraining existing sales reps to engage in services-based selling vs. product/project sales Hiring new sales staff to accommodate new lines of business Realigning sales compensation models for reps Adjusting to different sales cycle durations Learning to sell to non-IT and line-of-business end customer buyers Effectively rebranding/messaging as a services provider Performing demand generation/lead generation for new customers Creating incentives to drive sales to new business areas Major factor Minor factor Not a factor Source: CompTIA 4th Annual State of Channel: Base: n=350 IT channel firms
  17. 17. Actions Taken to Sell to Non-IT LOB Executive 25% 23% 19% 40% 36% 34% 32% Source: CompTIA 4th Annual State of Channel: Base: n=350 IT channel firms Sales training to enable reps to sell to non-IT executives Use of social media to target non-IT executives Redesign marketing collateral with more of an end-user focus Focus less on HW/SW specs and more on total solutions Hire new sales reps with experience in vertical industries Maintain dual approach for business and IT execs to meet both needs Incentives for staff to further engage with business execs 49% of solution providers plan this step vs. 28% of MSPs
  18. 18. Takeaway #3 Learning to sell consultatively with a business solution or gain in mind is paramount. Copyright (c) 2014 CompTIA Properties, LLC. All Rights Reserved. | CompTIA.org
  19. 19. Marketing: The Channel’s New Frontier
  20. 20. Staffing Activity for Channel Firm Sales & Marketing 24% 25% 22% 26% 34% 39% 28% 51% 44% 36% 48% 23% Added new marketing reps Eliminated sales reps based on business model change Hired reps outside the IT industry Added new sales reps Major activity Minor activity No activity Source: CompTIA 4th Annual State of Channel: Base: n=350 IT channel firms
  21. 21. Social Media Usage and Marketing Plans for Future Planned Changes in Marketing Strategy 42% Use of social media 34% Increased use of white labeling 32% Webinars, blogs, etc. 23% Hire of marketing professionals 20% No longer leading with vendor brand or vendor certification skills to attract customers 19% None of the above Source: CompTIA 4th Annual State of Channel: Base: n=96 IT channel firms which are using social media Plans to Increase/Decrease Social Media Usage 35% 38% 2% 25% Increase its usage significantly Increase usage somewhat Maintain same usage NET Decrease
  22. 22. Takeaway #4 Cloud and other industry changes make YOUR brand the premium to lead with. Copyright (c) 2014 CompTIA Properties, LLC. All Rights Reserved. | CompTIA.org
  23. 23. In Conclusion: Steps to Think About Point #1: Re-train and/or hire sales reps to sell consultatively and to focus on services and business outcomes for the customer. Point #2: Learn to sell to the non-IT line of business buyer, who increasingly has a seat at the table in making technology purchases. Point #3: Retool internal sales processes, sales team structures and compensation plans/incentives to fit a recurring revenue model. Point #4: Up you game around marketing and self-branding, including the use of social media to acquire new business. Point #5: Don’t ignore the cloud, but be smart and know your business operations today to plan for tomorrow Source: CompTIA
  24. 24. About CompTIA Market Research CompTIA is a member of the Marketing Research Association and abides by its guidelines for survey best practices and research ethics. CompTIA is responsible for all content contained in this report. CompTIA research is one way in which the association re-invests resources in the IT channel. As the voice of the IT industry, CompTIA has hundreds of tools, market intelligence reports and business training programs to help IT channel organizations grow through education, certification, advocacy and philanthropy. The full version of this report and other CompTIA research reports are available at no cost to CompTIA members to help them develop and hone their business plans. Visit www.comptia.org or contact research@comptia.org for more information. Source: CompTIA Market Research

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