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Decentralization of IT Doesn't Mean Resellers Should Panic

The rise of the LOB buyer has some players in the channel in a tizzy, but VARs have a big advantage: They've been their clients' 'trusted adviser' for years, and they can ride their rock solid relationships straight to the bank.

The Golden Age of traditional resellers is well behind us, and the days when tech spend came from one centralized IT or procurement department are gone. Some resellers and service providers see the decentralization of tech as a challenge, and some as an opportunity. Wherever you land on it, one thing is certain: If you want to succeed, you have to change how you sell.

There are a slew of contributing factors we could name that led to the shift in buying behavior, but at a certain point, you don’t really need to understand why the paradigm shifted the way it did. In a nutshell, cloud came along and democratized businesses’ IT departments, leading to the high availability and low cost of applications and solutions specifically designed for lines of business (LOB).

The cloud eliminated many of the restrictions companies placed on LOB applications because they were no longer competing for limited on-prem server space. Freed from the constraints of IT departments’ budgets and procurement rules, LOB heads now have a lot more autonomy—and resellers have to learn to sell to someone other than IT.

Tina Lux-Boim, President & CEO of Managed Maintenance, says there’s a learning curve for traditional partners who built their practices in a hardware-based ecosystem that no longer exists. Today, multiple LOBs are competing for pieces of the corporate tech budget, and are responsible for managing their own warranties and maintenance agreements that may not align with the corporation’s fiscal year. That can lead to a much more complex sales funnel as resellers have to form multiple relationships within an organization, potentially segmenting their opportunity data by department in order to ensure it supports the sale.

The key to sustained success in the new channel, says Lux-Boim, is developing high-touch relationships with myriad buyers within a company while continuing to serve as a trusted technology adviser. But is that the daunting hurdle that so many experts and analysts are making it out to be?

The good news is that if there’s one thing traditional resellers are great at, it’s developing relationships. We’re beginning to see an increase in M&A activity in corners of the channel that have historically been largely untouched by corporate financial wheeling and dealing as born-in-the-cloud shops and legacy companies attempting to execute a hard pivot toward cloud look to buy the relationships they don’t want to spend resources developing themselves.

The challenge is that these new relationships are built on unfamiliar conversations with unfamiliar buyers who usually don’t have a deep understanding of IT environments.

“[It’s] a completely different beast than working with CIOs and IT teams,” says Lux-Boim. “This is where the value add of deep technical knowledge and the ability to design and configure technical solutions that address the departmental problem will again become valuable to the buyer and should be a key focus for the reseller.”

While the idea of having to learn how to speak the LOB language and how to navigate business-focused relationships instead of those built strictly upon technological solutions can be intimidating, Lux-Boim says it isn’t as difficult as it may seem. She has three main tips for resellers looking to enhance their relationships with departmental heads:

  1. Understand what’s important to those business units, and remember that working with two departments within one company can feel like working with two organizations altogether. Brace yourself for increased red tape and politicking.
  2. Be able to communicate how a solution will help LOB leaders reach their individual goals. Talk their talk. That means stepping outside of your area of expertise to understand how an LOB function operates. Read what your buyer reads, and go where your buyer goes.
  3. Remember you have the depth and breadth of experience to advise on technology solutions that no one else does. There’s a reason you’ve built a successful VAR business. Educate business leaders on the value of working with value added resellers. Whether that’s on security, compliance, integration, or a host of other solutions, there’s a huge opportunity for channel partners to step in and offer education and consulting.

There are definite perils that come along with decentralized tech that, with their deep level of expertise, partners can help mitigate. According to a survey by VMware, businesses are seeing an average increase of 5.7 percent on IT costs on as a result of decentralization as disparate departments inadvertently duplicate spend. Without an adviser that understands how tech solutions for various functional departments can work together, organizations wind up spending more money than they have to.

The survey also points to the security issues that come along with LOB buyers incorporating non-secure solutions into the company’s network, in many cases violating corporate or government data protection regulations. Many partners have a long history of vertical specialization and can help customers identify areas where they might get their hand slapped.

All this talk about the ‘new’ channel and how resellers will have to drastically alter their business models to succeed is probably overblown. Yes, if you’re still operating on a break-fix model, the move to recurring revenue might be painful. But at the end of the day, you’re still your clients’ trusted advisor.

 

 

 

TAGS: The VAR Guy
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