Channel Convergence Will Never Happen — and That’s a Good Thing
This month I attended my first Channel Partners Conference and Expo held in Las Vegas. Hundreds of suppliers and thousands of partners, mostly telecom agents, gathered to talk about top trends in the communications industry. Common themes at the show included the exploding opportunities for partners in cybersecurity, internet of things and 5G, and the need for agents to gain the skills required to sell these hot technologies and more advanced data services such as SD-WAN and unified communications-as-a-service (UCaaS) now offered by communications suppliers.
But there was another theme I heard multiple times, presented with strong points of view as to whether or not it was really happening.
I’m talking about channel convergence. More specifically, the convergence of the telecom agents and managed service providers. Apparently, this is a trend that has been discussed for many years at the conference. Depending on whom I spoke with, the trend was either accelerating or barely happening. Thinking about this topic further after I got home, I concluded that this convergence will never really happen. And that’s actually a good thing for suppliers, partners and the end customers.
Resistance to change. Telecom agents, like insurance and financial agents, are paid a residual commission on the services they sell to their customers. They typically are paid the commission for the life of that customer, creating an amazing recurring revenue stream without ever having to worry about billing, first-line support or owning the assets. All that is handled by the supplier. Asking a telecom agent to act more like an MSP is like asking an insurance agent to start offering services that would require the investment in service technicians and assets and to take on the credit risk of the customer. That’s a hard sell for agents. They have no desire to change their business model. To them, it ain’t broke, so don’t try to fix it.
MSPs, on the other hand, bill and are paid directly by the customer each month for services they provide. MSPs want to own the customer relationship and see billing on their paper as proof of ownership and control of the account. Their MSP model requires investment in assets and technical skills to provide an excellent customer experience to maintain their monthly recurring revenue. Their service is often based on technologies from multiple suppliers, packaged together and billed to the customer as one monthly fee. It seems like a logical step for MSPs to add telco services to their portfolio. What an easy way to add an additional revenue stream, right? Yet most MSPs are reluctant to do this, many saying they’d lose control of the customer under the telco’s agent model.
Dilemma for agents and MSPs. As with most business software and services, the buyer of telecom services is also changing due to the impact of the cloud on buyer behavior. IT leaders used to make all the buying decisions, but that has been shifting rapidly. Business leaders can easily go online and sign up for an online conferencing solution with a credit card. Agents who have a Rolodex of IT customers need to start building relationships with the business leaders who are now buying the new cloud-hosted communication services. And they need to up their game to keep up with …