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

1. The
State
of
the
Channel
Nancy
Hammervik,
SVP
Industry
Rela>ons
Tim
Herbert,
VP
Research
March
2012

2. CompTIA,
the
Not-­‐for-­‐Profit
IT
Trade
Associa>on
Educa1on
Advocacy
Cer1fica1on
Philanthropy

3. CompTIA
Communi>es
Connect
the
Industry

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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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
don't
use
30%
internally
22%
16%
End
user
of
cloud
only
22%
13%
Not
involved
in
cloud
42%
2011
2010

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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. Thank
You
Nancy
Hammervik
Tim
Herbert
SVP,
Industry
Rela>ons
VP,
Research
nhammervik@comp>a.org
therbert@comp>a.org

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
www.comp1a.org
-­‐
login
into
Members
area
and
go
to
the
Research
tab