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A big market and sky-high margins await channel partners that can help customers undergo a digital transformation, as well as digitally transform themselves.
May 11, 2018
It’s study time for Microsoft channel partners wanting a piece of the digital-transformation future. This month, Microsoft and IDC released the first in a series of five e-books outlining how partners can sell digital-transformation services.
For channel partners with the wherewithal to get into this game, opportunities and riches await. By the end of 2019, IDC expects companies worldwide will spend $1.7 trillion on tech and digital initiatives, and channel partners will play a dominant role in helping businesses transform. For every dollar of Microsoft revenue, Microsoft says, channel partners generate an additional $9.64.
“Digital transformation is at the heart of our amazing partner multiples,” says Melissa Mulholland, partner cloud profitability lead at Microsoft, and co-author of the e-books.
Before channel partners can partake, there’s a lot of work to do. It starts with a channel partner digitally transforming itself, which is what the first e-book, Digital Transformation Market Opportunities, is all about. This includes building up intellectual-property assets and preparing to monetize them.
“Transformation is really difficult,” Mulholland says. “If partners want to be profitable and successful in the next few years, they need to transform themselves.”
Four more e-books will be rolled out in the next couple of months, covering four distinct areas of digital transformation:
Engaging Customers: how to deliver data-driven customer insights
Empowering Employees: how to recruit and build skills
Optimizing Operations: how to become more adaptive and agile
Transforming Products: how to capitalize on own products and IP
The e-books feature 16 channel partners that have seized the digital-transformation opportunity, such as New Signature, BitTitan, Red Pixie (recently acquired by HPE), Dimension Data and Tenth Magnitude.
Channel partners selling digital-transformation services, from hyper-agile development to managed services that get customers to the cloud, can expect big paydays. On average, 64 percent of Microsoft channel-partner revenue is generated from non-resale activities, Mulholland says, and those with recurring revenue can double the valuation of recurring business.
Down the road, channel partners can play a role in the adoption of game-changing, digitally transformative technologies such as artificial intelligence (AI). IDC expects the compound annual growth rate for U.S. spending on AI to be near 50 percent from now until 2021.
“A lot of partners have the opportunity to build IP with AI solutions and wrap managed solutions around it,” Mulholland says. “But that’s still early days.”
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