I was shocked by the Fortune 500 ranking in CRN recently showing Comcast listed as a larger IT Company than IBM!
When I worked at IBM, I could never imagine a “cable company” would surpass us on any list--let alone the Fortune list of IT companies. But, then again, I also thought Apple would not survive as an independent company after Steve Jobs first left. But the fact that Comcast, along with Microsoft, Google, Verizon, Amazon, AT&T and Apple, are ranked as the top six IT companies shows that perhaps I’m not the best prognosticator. But, more importantly, it demonstrates the profound changes in the channel and in the IT industry.
The very fabric of our industry is changing every day. And, ready or not, the future is now. Let’s take a look at some of the drivers:
- In a recent blog, Larry Walsh from 2112 Group opined that “five years from now marketplaces will dominate the channel, consolidating points of purchase and limiting opportunities for legacy partners. And professional services specialists will be influencers, directing customers on what to purchase and from whom.”
- Jay McBain of Forrester talked recently about the future of channels, the “shadow channel” and the role of influencers versus traditional VAR partners.
- Microsoft is replacing 3,000 people with new employees with deep industry vertical expertise to be more in touch with their customers and their unique solutions, especially in financial services, manufacturing, retail, education, health care and government.
What does all this mean for the future of channels and the role of partners? One of the things we are doing at Comcast Business is rolling out a new SD-WAN service. SD-WAN will fundamentally change the way networks are being operated and supported by partners. As we move to more disparate networks, and as the price of bandwidth continues to decrease, the requirement for providing more value-add to clients buying these services from their partners will only keep increasing. It will be more about using the unique software and portal for the SD-WAN service to improve a customer’s competitive advantage for its downstream customers and employees. The channel partners that can operate these SD-WAN networks on behalf of their customers while providing high value-added services will be the winners. While this may seem obvious, it is no longer a “nice to have”--it will be a pre-requisite for survival.
A Customer Example
Think of the old days when you brought your car in for tire service. If you were lucky, there were some wrinkled, out-of-date magazines to keep you occupied. If you were really lucky, the old T1-based MPLS technology the tire center had allowed you to slowly access web information or send files. A much better experience for the customer--and one that builds loyalty--is providing a customized WiFi network with fast speeds. All of a sudden, you don’t mind waiting for your car as much as before.
Now, imagine if that tire center had a Gigabit of Internet, where a customer could easily conduct business, even video calls, while waiting! A whole new experience. The partner who can monitor that location via an SD-WAN (and 500 others via their own NOC) will be able shut down bandwidth-hungry apps like Pandora from being used by waiting customers so that all the other waiting customers can get a better experience.
That will be huge, but this is just one microcosm example. Can a partner set up the support model to do this for their customers and make them more competitive? Can this new valued-added model be created across many industries by partners? We certainly believe so.
The future will be more about massive industry and services specialization like this along with value-added services on top of the core network and software applications that the customer is using. Partners today who sell for Salesforce or AWS don’t really make money on the sale of those platform offerings in and of themselves. But they do drive significant revenue from the value-added services supporting those platforms, and that margin is enormous. Partners will need to help their customers compete faster and with more resiliency than ever before in order to maintain their “digital edge”.
Partners in the channel can no longer rely solely on service provider commissions to secure their margins, as they may have in the past. They must also add on their own services on top of services like SD-WAN in order to provide that additional value for their clients--and additional revenue streams for themselves. Value will come in the form of differentiation and securing a competitive advantage for their clients.
We are very optimistic about the advent of this new world. With all the new changes like SD-WAN and the VNF services like UTM (Unified Threat Management) that can be added to existing networks, there is an entire new frontier to explore for service offerings and for additional margins. Those who embrace this will flourish, and those who don’t may self-select their status in the Darwinian food chain.
But for those of us who are channel industry veterans, excitement abounds as an entire new crop of partners may come into play. They will work with our current partners or become partners themselves: accountants, commercial realtors, digital marketing agencies, tractor dealers, movers, satellite installers and many more partner types could end up being some of the new channels of the future. The more they know about specific industry verticals, the more valuable they become.
It will be very exciting to watch, and Comcast Business will be providing numerous opportunities for all these “species” of partners, as well as our current partners, to participate in the new digital ecosystem and continue to add value. The future is now, and it is time to double down on the strategies that will allow the channel to flourish again for the next 30 years. At that point it will be the year 2047, and it will be incredible to what companies end up on the Fortune 500 IT rankings. I expect to see some surprising names on that list.
Craig Schlagbaum is Vice President of Indirect Channels at Comcast Business.
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