2017 Channel Predictions

The reality of what transpired in the channel in 2016 is over — and without a crystal ball, there’s no certainty as to what’s ahead in 2017 for partner firms.

What we do know is that digital transformation is in full swing, impacting vendors, business customers and partners — and no partner business sitting it out on the sidelines will be vital in the upcoming years.

Even without the crystal ball, industry experts tap into their intelligence and data to strategize for 2017 and beyond. Here’s a look at what they point to as imperatives for the upcoming year.

Follow senior editor @LynnHaber on Twitter.

Channels need to transform core functions throughout their businesses. Channel management has to be managed and measured differently; sales has to sell and compensate differently; marketing has to change and expand its purview; and, technical staff have to develop new and different skills.

Partner differentiation has been on the radar for a few years now, but in 2017, if you’re not training or retraining your staff to specialize – whether that means going deeper into a particular solution, vertical or professional consulting – partners will lose business to those who do.

No longer dominated by resellers of products, much of today’s channel is shifting to a services focus and specializing across vertical industries and/or solutions niches.

In the year ahead, CompTIA says more channel firms will develop their own intellectual property, too, whether that is a piece of custom code or a business process they replicate across end customers.

Channels must invest in cloud orchestration and data integration. Providing best-of-breed cloud computing solutions that serve the needs of SMBs is only part of the technical foundation needed for success in the cloud channel business. Successful channel partners have also invested in the ability to provide integration connecting cloud and on-premises application solutions. Some channel partners have built their own integration and migration tools that run on top of a stack of cloud offerings, while others utilize data-integration tools and technologies available from third parties.

As the number of cloud applications used by SMBs continues to increase, the need to connect data from different sources will become more acute; front-office applications will require a single view of the customer (leads, sales, and service) regardless of whether the data is sourced from cloud or on-premises systems, and this logic will also apply to accounting, billing and fulfillment, and other corporate functions, notes Anurag Agrawal, CEO and analyst at Techaisle.

On a similar note, 451 Research wrote that in 2017, the growth of hybrid cloud services would usher in the widespread use of brokerages to deliver the right combination of offerings to meet different needs. Brokers will need to provide access to a range of services – their own as well as third-party and partner offerings – or risk that customers will go elsewhere.

In 2017, service providers will need to focus on expanding into untapped markets and higher-value services, such as application management, managed security and business-process hosting that are “beyond infrastructure,” in order to survive, the research firm added.

Partners need to insert themselves earlier in the cloud buying cycle.

What this means, according to Heather Tenuto, vice president of global GTM strategy and programs at ShoreTel, is understanding the ideal profile of target customers based on the partner’s expertise, and marketing to those users who are early in the buying cycle. They need to be prepared to articulate the value of considering and procuring cloud service with a channel partners vs. a more direct model.

In addition, channel partners should look for vendors that understand and have operationalized around the benefits a channel partner brings in the creation of a happy and long-lasting cloud customer.

As technology products become more commoditized and the real value resides in the solution – or even the business outcome generated by the technology solution – we will see more conflict over the lucrative services that accompany technology sales.

Both the vendor’s professional services teams and the solutions providers are eager to sell and deliver these high-margin services, and what we will see is much more channel conflict around services models and policies, notes Diane Krakora, CEO of PartnerPath.

2017 is a year for channel partners to focus on understanding the buying pattern and differences between millennials and boomers.

Millennials currently constitute 25 percent of the buying power and are either in influencer roles or working their way into more powerful decision-making roles in IT. They are one-half the size of baby boomers, who constitute 50 percent of buying power. Partners must understand these differences and communicate and engage effectively using targeted modern marketing tactics to these to different groups, Luanne Tierney, modern marketing and channel technology sales executive at Fivesky, told us.

Tierney also noted that partners will need to get creative with their content to break through the “attention economy” and will turn to Snapchat and Instagram to engage with IT decision makers.

Expect to see more mergers and acquisitions, particularly among solution providers. Shifting to a subscription model is tough, and partners have been faced with it for several years now. Some solution providers won’t have the appetite or the endurance to see it through and will be gobbled up by other solution providers eager for talent and access to advanced technologies.

Primary carriers will be overthrown by rising competitors, most likely software and social businesses or cable companies. This turn of events, notes master agent TBI, will prove to the traditional telco market that the power of the circuit is an asset these businesses are unexpectedly looking to leverage. As a result, these companies will significantly strengthen their presences in the channel, reshaping the topography of the market.

With 2017 a transition year for the government – new president, new politics – there’s no saying what will transpire for businesses and partners until things settle down a bit.

One thing for sure, cybersecurity got ample attention in 2016 and by the end the year it no doubt held its own among the top priorities for technology spending.

IDC’s Worldwide Semiannual Security Spending Gide forecast that revenue for security-related hardware, software and services will grow from $73.7 billion in 2016 to $101.6 billion in 2020.

“Today’s security climate is such that enterprises fear becoming victims of the next major cyber attack or cyber extortion,” Sean Pike, program vice president, Security Products, IDC, commented. “As a result, security has become heavily scrutinized by boards of directors demanding that security budgets are used wisely and solutions operate at peak efficiency.”