For 12 years, Jim Sweeney, cloud architect at ChannelXperts, was the CTO of a government MSP he describes as “the Wal-Mart of IT.” He used to joke with his salespeople at GTSI that they only knew three questions: how many processors do you need, how much RAM do you need and how many discs do you need?
What he should have been selling, he says in retrospect, was Amazon Web Services and Microsoft 365. But like many traditional resellers, he and his team had a difficult time jumping to a revenue model where they didn’t know how much they’d get paid until they tallied everything up at the end of the month.
GTSI navigated the digital transformation just fine. The company was acquired in 2012 by Unicom Systems, and Jim turned his focus to figuring out how to make money in the channel when customers begin demanding service instead of servers.
“Cloud changed everything,” Sweeney says. “It’s too easy for users to bypass resellers and go to AWS to spin up a virtual machine. Customers don’t want people to sell them that stuff, but instead be their expert on how to make all these tools work together.”
This new customer demand prompted a fundamental and very tricky shift in the channel. Resellers today have to become experts on multiple topics, have technical capabilities that allow their customers to order many different products and have the ability to deliver those products instantly—all the while wrapping everything in a service package and changing their entire business model to accommodate as-a-service revenue streams.
In order to do this, Sweeney figured, resellers had to change their mindset. The channel had grown comfortable in the legacy way of building revenue from hardware margins. Even as those margins began to shrink, VARs could still make that mindset work. Like an old pair of slippers whose soles are wearing thinner day-by-day, many resellers didn’t realize their foot was meeting the pavement until it was almost too late.
Some agile VARs made the transition to MSP quickly and smoothly. Others struggled to make the pivot to recurring revenue and service packages, but never really found their footing. And still others are being left by the wayside
“The channel will be totally different in five years. Resellers will find their differentiation on the basis of their tech. They’ll need to invest, not in infrastructure, but in a way to let customers order and deliver and do the billing.”
In this ‘new channel,’ the partner dynamic will be different, too, he says. Independent software vendors (ISVs) will need to change how they run their own channels, and how they communicate with resellers and MSPs.
Traditionally, Channel Xperts set up and ran channel programs for American ISVs both in the U.S. and in Europe. Along the way, it realized it had essentially developed a partner relationship management (PRM) tool that was flexible enough to accommodate customers with a wide range of differing requirements. His ISV customers all wanted to sell six months of services, but it would take the MSP forever to spin them up.
Today, ChannelXperts sells that PRM tool as Channelplace, and it’s replicated the code base to serve as the foundation for a complementary tool for MSPs. mspEngine is a white labeled SaaS platform that lets MSPs fully customize their service offerings in a portal that their customers can then order through. An engine on the backend automatically (to the extent where manual intervention isn’t required) provisions and delivers the services to the customer and starts the billing process.
Sweeney says what sets ChannelXperts apart is that backend engine that makes the whole process work rather than just automating delivery. The company almost acts as a value-added distributor for ISVs, but doesn’t broker the relationship between vendor and partner. It’s a model that’s directly reflective of the emerging channel.
Brad Tovey, Sr. Director of Global Channel Programs and Operations at Ivanti Software and a Channelplace user, says getting the new concept from idea to execution wasn’t without its stumbling blocks. But Sweeney and his team patiently ironed out the kinks more than a year ago, and today Tovey calls the customer experience “super-responsive.”
“We can roll out an upgrade in four weeks. They added functionality to make it a full-featured partner system: MDF, business planning, content resources. Plus they hooked it into Salesforce so partners can have deal registrations exported from the portal into Salesforce.”
Sweeney says figuring out the dynamics of the evolving channel is a two-headed problem, both at the ISV and the MSP levels.
Ben agrees. “More and more companies are partnering today, and they need a platform to service those partnerships. I mean, Salesforce is good, but it’s expensive and complicated.”
The biggest value-add, says Ben, is the single pane of glass view that he can customize for his shop. “It looks and feels like our web. With single sign on our partners can access training and certifications, a customized resources section for marketing materials and sales presentations, deal registration—any interaction can be done in one place, and we can build a path for each partner type.”
Service providers, most of which are familiar with some version of a PRM with their large vendor partners like Dell or Cisco, have the convenience of a single portal where they can access resources for multiple ISVs, and access services that have been custom-defined for their businesses.
“It makes it easier for our MSP customers to service their customers,” says Ben. “They don’t have to lean on us to close business and support clients.”