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November 16, 2023
The once niche industry known as the agent channel is seeing major validation from the larger IT world, according to Avant CEO Ian Kieninger.
Agents, referred to by Avant as trusted advisors and by others as technology advisors (TAs), historically comprised a small subset of the channel partner community. Born out of the carrier world years ago, the advisor channel has been selling managed services and earning evergreen commissions for decades.
From the perspective of Kieninger and his peers in the community technology services distributor (TSD) community who support technology advisors, the word is catching on.
"... Recurring revenue in an agency model format is of high value. Whether you're a publicly traded VAR or a two-person trusted advisor, our industry, our portfolio, our business model is hot and the smart money is investing, and that is great for everyone," Kieninger told Channel Futures.
Kieninger made the comment in an interview with Channel Futures at the Avant Special Forces Summit last month. The conversation touched on the growth of the agent model. Part of that growth includes the entrance of large recognized VARs into the space. Some of these national partners, including Kieninger's old employer, CDW, have engaged with Avant for years as a way to tap into as-a-service technology sales. However, Kieninger said the advisor model is growing more strategic with these companies and other partner firms that come from outside the traditional agent channel.
Avant's Ian Kieninger
We've edited the transcript of the Q&A below for length and clarity.
Channel Futures: Ecosystem is a very popular phrase in channel right now, but I'd love to hear the Avant perspective on it. In your keynoteatSpecialForces, you encouraged advisors to sell multiple lines of technology, not just settling for being the telco person or even the security person. How does that desire to do more fit with the ecosystem message? What does that mean for a TA?
Ian Kieninger: You’ve met a lot of our TAs here. Do you feel like any of these people want to be a cog in any wheel? No. They’re driven to win. Many of them started their own companies because they wanted to call the shots, do it differently, and show up stronger. You have to start with that natural drive, that determination.
Our TAs can deliver value in a lot of different ways, and Avant’s role is to accelerate that value by supporting the front end, simplifying the back end, and creating scale in a business that’s hard to scale on your own.
You can be really good and see some success, but to be elite and have proven success over and over, you have to be able to do it at scale. That’s where the Avant ecosystem comes into play, so that you never lose a deal you want. TAs can scale through people, but they will grow more profitably through tech, support and other resources that might be an area they don’t know enough about or aren’t ready to invest in.
I’ll share an example. At times, we will meet a TA that says, "I have engineers; I don’t need your engineers." OK, I can get that. However, I believe an engineer needs to be focused on four things. 1) Time spent in front of end customers; 2) Understanding the different technology categories and the impact on business outcomes; 3) the bits and bytes of how it all works; and 4) the differences between all of the various vendor options. Avant engineers can support our TAs in all four areas, so in the case when a TA has their own engineer, the Avant differentiator is a collaboration between the TA’s engineer who is primarily focused on the first two areas and Avant’s engineer who does the heaving lifting of three and four. The best relationships are when our engineers are close with the TA, even friendship level. In many cases, there is a private chat and back channel of information constantly flowing between the two. This is how we create leverage together.
CF: A TA was telling me he commonly partnered with MSPs for referrals in the past. Now he's a lot more wary of trusting those MSPs anymore. And other folks are saying they're just watching their back more because lots of people feel that they can get into as-a-service type offerings. What do you see there?
IK: Competition and collaboration are everywhere. The first priority for a company should be to define their business model as either a TA or MSP, and then be true to that strategy. We have seen MSPs looking to supplement their business with agent services, so in that sense they are competing with TAs. However, the vast majority of MSPs also focus on small businesses. TAs, on the other hand, can more easily move up market, which is much more lucrative. We see TAs penetrating more and more in the $1 billion-and-above customer segment, with our top partners doing well over 50% of their business from these end-user companies. A two-person TA company can sell into a $1 billion company with Avant's support, but a typical MSP will find it very hard to service such a large company with their core business model which is very people-heavy, unless they stop being an MSP for this segment and really become a true TA. So, while both may be strategizing an agent model, I see them ultimately focusing on very different target customers.
The TAs of the future need to look at what more they can do to add value. They need new types of information to create new buying experiences. The customer now says, "I know where I can buy this; I can buy it pretty easily. I can research the difference between this and that." But when a TA comes in and shows them the new Pathfinder provider analytics tool or dynamic matrices with a decision-making process that validates their recommendation, they are going to listen and engage and even be willing to pay consulting fees for that insight. That's why I'm passionate about data-driven technology and using this to our advantage to continue being disruptive and keep being unique and progressive, for buyers who are saying, "I don't need anything. I can do this all on my own."
CF: It's interesting where the new TAs are coming from. Historically people were starting agencies after being laid off by a carrier or seeing the opportunity to call their own shots. Now, they're starting a TA after being at a UCaaS [or CCaaS] provider. That's the new talent pool. I wonder if we’ll see a new round as a result of the layoffs, especially in security, and then a bunch of born-in-security TAs that follow into the community.
IK: It is interesting when you think that a little over 20 years ago Cable & Wireless laid off their entire sales force. They literally locked the doors one day. People went to get their stuff off their desk and they couldn't get in. That spawned some of the best TAs we have ever seen in this space, and they're still here. Then that compounded.
And you're right: A lot of the new blood, if you will, are not former telecom reps anymore. They're either different businesses creating practices, like the VARs, MSPs and big consultants. Or, for example, they are the former 8x8/RingCentral rep, the data center reps or the managed hosting reps. Those guys have great relationships, and they're good at selling one technology, and then we help enable them to sell other services. And your prediction is grounded. At some point, the security space is going to be overcrowded. Thousands of security vendors will cease to exist. I don't think they're all going to go bankrupt. Many will probably get bought and consumed, and there'll be lots of people let go and then more TAs will jump into the channel.
CF: I also felt that the national strategic partners were more visible at this show. The CDWs, the SHIs, the Trace3s. I'm wondering if they're a little more visible in this ecosystem – if they're a little more open to disclosing that they're in this ecosystem?
IK: You're right. You see more presence from the larger firms. Why? Because recurring revenue in an agency model format is of high value. Whether you're a publicly traded VAR or a two-person trusted advisor, our industry, our portfolio, our business model is hot and the smart money is investing, and that is great for everyone.
The bigger firms who are top-line driven are now saying, "Avant can create a lot of value for us, and help increase our EBITDA." These larger companies are saying, "OK, this isn't some side hack channel thing. This is real. And I can believe it. I can count on Avant being here now and, in the future, and being successful in delivering value." Private equity is investing in their success. They're in it, so this market is leveling up.
The best of the best are going to keep getting better, and they're going to push forward, and take a lot of share. There is a lot of revenue potential in play. We see very little conflict, which is also fascinating. Our community doesn't fight over these deals very often, because there's just a lot of market share.
CF: Is there just a level of respect for one another, or is it just such a big market?
IK: It's a big market and we are just scratching the surface. For example, of all the customers that have sold through Avant's platform, 84% have only been sold one service.
CF: I was pretty surprised by that 84% stat.
IK: It's a surprising stat. That's going to change.
CF: Is there a goal of, "We want to get to X% by a certain time?"
IK: Right now, it's just: get better, go faster and win more business together. Of all the new players participating in this moment going forward, how many of them are going to go sell multiple solutions? I think it's such a big number. In the early days all they had to sell was connectivity, right? Now we are seeing some trusted advisors who don't sell connectivity at all; they're more focused on other technologies such as CCaaS, CX and security.
CF: A partner was telling me that security has come to function as his foot in the door. The lion's share of his commissions in 2024 are going to come from contact center, but those client conversations often will start with cybersecurity or AI.
IK: As an example, an Avant TA, Eric Ludwig from Rise Technology Advisors, is doing these really informative webinars on AI to draw people into the conversation and is pivoting them in the context of other products that are going to carry enough volume and weight to make money. The hype-curve strategy has always been to start conversations in one area. There's some money to be made, but focus on the projects at the top. That's where the volume is. That's where the demand is. The client has more clarity on what they want to buy with less effort. Clients are so unclear on even how to buy security. They need a lot of handholding on complex contact center. So those things are rich; they just take more cycles. You need a balance of some volume deals that are a lot easier to sell, while you start to create value for these interesting, front-end conversations. What you're saying is 100% right. That curve will keep moving and there will be something else, so the key is to model your business strategy off that and get the timing down.
CF: There's the conversation about how telco people would benefit from evolving to CCaaS and security. But how do you look at that the other way? So if someone with a background at a SASE provider or MSSP starts an agency, are you going to encourage them to sell UCaaS and circuits?
IK: The absolute goal, ultimately, is to get someone who's trying to get into this space to produce enough revenue to first survive, then make money and invest. So, if you come into the channel with a strong security background but think, "I don't have a clue how to sell wide area network or whatever this UCaaS thing is.," then we say, "We do, and we can help you make that pivot. Avant has great engineers to guide and teach you. We have all this education and training. Let us be your coach, your running partner."
CF: It's been interesting to interview multiple people from the same TA firm this week. In one case, there was a salesperson, an operations person and the owner. I was told that the education sessions expanded a bit to be tailored to those different personas. These haven't historically been really big TA firms. It would have just been the one or two owners who were cook and bottle washer. They were doing everything. Now there's many more people involved, how should TSDs serve partners with diverse roles?
IK: Well, you said it. In the past, one person did it all. Most trusted advisors never ended up being bigger than five, six, seven people. And now you're seeing them really accelerate and grow. There are some great business owners like Matthew Toth from C3 Technology Advisors, who's investing and growing, as well as Opex Technologies. Even smaller firms like Eric Ludwig and Ed Wu from Rise are investing in their team, and at some point, they're going to have a back office and engineers. Avant must continue to expand to provide education tracks and experiences that are custom tailored to different roles for the TA. This wasn't as big of a need in the past and we recognize that. We're seeing a lot of TAs really mature and get better. And we want a multifaceted relationship with them. There is more value for them, more value for us; And then they get better leverage out of us -the more leverage they get out of us, the more they grow. It's a win-win scenario. It's very intentional that we're doing that. And it's amazing what we learned.
Senior News Editor, Channel Futures
James Anderson is a news editor for Channel Futures. He interned with Informa while working toward his degree in journalism from Arizona State University, then joined the company after graduating. He writes about SD-WAN, telecom and cablecos, technology services distributors and carriers. He has served as a moderator for multiple panels at Channel Partners events.
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