Partner Programs Changing to Match a Changing Channel

Managed services, cloud computing, online marketplaces and other industry trends have vendors redesigning partner programs in ways not everyone welcomes.

From the shift to managed services and consumption-priced solutions to M&A mania and the rise of cloud computing, much has changed for both vendors and their partners in recent years. Have partner programs changed too?

Yes, most partners agree, but not always in good ways.

“Partner programs are evolving, but in the vast majority of cases, not for the better,” said Ed Correia, who is CEO of Santa Clara, California-based MSP Sagacent Technologies. “They’ve been cutting support.”

And not just the technical kind.

Sagacent's Ed Correia

“If you’ve got an issue with your bill, you can’t get ahold of anyone to fix it,” sighed Correia, who’s seen a steady decline in partner program quality across his 24 years in business. “At this point in my history, it is hard to find those vendors who get it.”

A closer look at Correia’s experiences and those of others in the channel, however, reveals a more complicated picture. Multiple trends are simultaneously making partners more important to vendors than ever and changing vendor partner programs in new and sometimes unwelcome ways.

Mutual Success Mentality

Those trends begin with the rapid proliferation of sophisticated technologies like AI, analytics, and the internet of things.

“We’re at this interesting tipping point almost right now where there’s so much innovation and so much change going on,” said Steve White, program vice president of channels and alliances at research firm IDC.

Assembling solutions around those technologies requires a complex mix of skills and services that no vendor can provide on its own, a fact that has transformed the once familiar interactions between vendor and reseller.

“In the old days, it was a bit of a baton passing exercise,” White said. “I have something that I give to you, you go and do something with it, and I probably know little about that.”

Today, by contrast, vendors see working more collaboratively with partners as an essential ingredient to producing successful outcomes for end users.

“There’s very much a mutual success mentality, I think, with every vendor that we deal with now,” White observed.

On the flip side, more and more vendors are embracing “product-led growth,” a go-to-market strategy in which vendors sell cloud-based applications directly to end users and let partners deliver deployment, customization and continuing support. As effective as that approach has been for companies like Slack and its parent company Salesforce, it’s decidedly less popular with many partners. Correia, for one, has cut ties with three vendors that now sell direct this year alone.

Partners are going to market differently these days too, though. Some 335,000 of them worldwide have at least one managed contract now, according to research from Canalys. (Informa owns both Canalys and Channel Futures.) More than 86,500 of those companies, moreover, generate greater than 30% of their income as recurring rather than transactional revenue.

Barracuda's Jason Beal

“In the last decade, partners have moved from a ‘sell it and forget it’ resale model to managed services,” said Jason Beal, vice president of worldwide partner ecosystems at Barracuda Networks.

To complicate matters further, many partners make money both ways, and others as well.

“There’s no such thing as partner types anymore,” White said. “Partners are all doing multiple activities.”

Vendors are re-tooling their partner programs in response to such developments. The global partner program Barracuda unveiled just weeks ago, for example, rewards members not only for traditional product sales but managed service contracts and deals executed through online marketplaces from AWS, Microsoft and others too. It also includes the first MSP enablement track the company has ever offered, along with its first customer success certification.

“We’re helping them understand what customer success is, and then how to engage more with their customers throughout the life cycle,” Beal said.

Squeezing Costs

According to a lot of partners, however, many of the same vendors investing more in customer success are investing less in partner account managers and personal relationships. Correia cites a recent call to an unnamed vendor’s support line as an example.

“I was talking to a bot. It wasn’t even a person,” he said. “I needed a real answer. I couldn’t get it.”

Correia blames the influence of private equity investors, who’ve been pouring billions into many of the industry’s most successful vendors for years.

“They’re trying to squeeze their costs,” he said.

Not every investor-owned software maker has fallen into that trap, though. Correia, for instance, points to ConnectWise, which was acquired by private equity firm Thoma Bravo in 2019, as an increasingly rare exception to a larger rule.

“Their people are willing to participate in webinars and help me construct marketing programs,” he said, noting that the company provides co-op funds for those programs too.

“Boy, do we use those funds, and it grows our mutual business,” Correia stated. “It’s a true partnership.”

Michael Goldstein, president and CEO of LAN Infotech, a solution provider and MSP in Fort Lauderdale, Florida, has the same opinion of Microsoft cloud management vendor Nerdio.

“They’ll review our customer accounts with us and show us ways to actually save money,” he said. “They’re always making what we sell for Microsoft better," said Goldstein.

Microsoft itself, despite shaking up its massive partner program in ways many members have found disruptive, deserves more credit than it typically gets, according to Goldstein. The company is “a little hands-off,” he conceded, but showers partners with training, enablement, and other opportunities.

“There’s probably not a day in the past three weeks that I couldn’t have been on a [virtual] Microsoft event having something to do with Copilot or MSP programs or security,” he said.

The more time partners dedicate to offerings like that, Correia asserts, the more they’ll get from their Microsoft relationship, a fact that applies to other vendors as well.

“It’s not fair for us as MSPs to condemn vendors that are out there unless we’re willing to put skin in the game,” he said.