Technologies are converging, and so are the companies that provide those technologies.
One result of this trend is that various types of partners now sell overlapping technologies to an overlapping customer base. It's more common than ever for an MSP to team up with company that it might traditionally consider a rival.
Four experts will speak on the topic of "coopetition" at the upcoming Channel Partners Evolution. They are Telecomquotes.com CEO Michael Bremmer, Infinit Consulting CEO Darrin Swan and Tolar Systems Vice President Phillip Poarch.
Optimized Channel CEO Michelle Ruyle will moderate the conversation.
To preview the session, dubbed "1+1=3: How Coopetition Drives Bigger Sales for All," part of the revenue and supplier conference track, Thursday, Oct., 11, sponsored by Cyxtera, a few of the panelists fielded questions from us about the trend of "coopetition" in the channel.
We have edited the transcript for length and clarity.
Channel Futures: How are “swim lanes” changing for channel partners, and what obstacles does this trend present?
Phillip Poarch: Swim lanes are the “silos” that the MSP industry has divided itself into. Different types of MSP organizations have different specialties: VARs, cloud communications, cloud productivity, managed security, etc. When organizations are too focused on a specialty, it forces the customer to work with a variety of different organizations to meet all their IT and communication needs. It also limits what the MSP organization itself can actually do for a client, limits our revenue, adds cost to IT and prevents us from having a total picture of how to drive the most value for a client.
On the other hand, there can be some advantages too. Organizations that focus on their “unique ability” can become very good at that. Organizations that are very regionally focused like we are can develop really strong relationships with clients in our geography. But from the client’s perspective, it can be a bit unwieldy to call multiple vendors to solve different kinds of problems or to support their expansion and growth plans when really what they want from organizations like ours is to have all of their IT be reliable, secure and valuable to their business.
Our industry is starting to respond to these challenges by taking a more unified view of all the different aspects of connectivity and communication that our clients are asking from us. For instance, at Tolar Systems we have been very focused on managed services, but increasingly we’re finding that our clients are turning away from landline phones, toward VoIP services delivered via the cloud. These systems are managed and secured in a roughly similar way to the cloud productivity suites we were already supporting, so it just made sense to expand into that business model.
Michael Bremmer: "Swim lanes" have been destroyed by crashing margins in phone/internet and these will be further destroyed by 5G internet deployments.
This is the "adapt or die" moment for the channel, and it's now. The biggest challenge is understanding many former "partners" are now your direct competitors and accounts you may have worked on together are now fair game. It can make for interesting conversations with clients.
Michelle Ruyle: With the onset of cloud technology services, the swim lanes have become blurred. VARs, MSP and agents must redefine their go-to-market strateg[ies] and determine how they will support customers who are going through digital transformation. Adding staff with cloud expertise or finding the right partner who has the cloud-services expertise that can be leveraged are two of the biggest obstacles.
CF: Do you have an example of different partners teaming up?
MB: I've begun working with software specialists and other types of consultants who aren't interested in selling technology but see the value of it for their clients. This is definitely new territory, but candidly the best partners are ones who are laser-focused on their business model, not being "all things to all people."
MR: There are many companies – Peak10 + ViaWest (now Flexential) and Trace3/Data Strategy – [that] have come together financially to expand reach and services to customers. Companies like Sirius Computer Solutions has bought eight MSP/VARs in the last four years and is now a nationwide IT system integrator juggernaut with annual sales around $2.2 billion. There are companies, such as Michigan-based MSP US Signal and California-based 365 Data Centers, which announced a partnership that offers their respective customers more options for customized disaster recovery (DR) solutions. Lastly, master agents such as Intelisys and Avant have partnered with the VAR community, bringing them a cloud-services portfolio they can offer to their customers.
PB: We crossed the swim lanes when we found we started offering a VoIP solution to meet our clients’ communication needs. We offer that solution as part of our complete IT service package so that we are a one-stop-shop for clients. Instead of different organizations to handle networking, security or phone communications, we offer our clients a complete solution to all those needs. Another example is our relationship with SherWeb, a Microsoft Cloud Service Provider organization out of Canada. They sell services direct[ly] to customers but also work with MSPs like Tolar. They provide expertise, products and services like free email migrations to help our clients get on-boarded more quickly. We can focus on designing, building and managing the solutions our clients need to support their business[es] and they help us deliver them, so that we both benefit.
Throughout our industry there are examples of organizations working together in “coopetition” to benefit the client. Channel sales, up-selling, product bundling [and] integration arrangements are all based on this idea that by working with partners, we can provide more value to the client.
The classic example of coopetition would be the partnership between Microsoft and Intel. They might technically be competitors, but by combining forces they were able to build a better and more complete product. And closer to home for us, software application vendors like Microsoft and Intuit could service their customers across geographies directly, but at great cost and with lower customer satisfaction. They find it’s more efficient and beneficial to partner with organizations like Tolar that are able to provide a higher level of service and deeper relationships to clients. It lowers cost for them and creates opportunity for us.
CF: What do you hope your audience will take away from this panel?
PB: I hope the audience will be inspired to think broadly about where their business opportunities may lie. Think of things from the customer’s perspective — what do they want from us, and how can we provide that?
Coopetition isn’t just about delivering different services or bringing on new vendors; it can be about geographic expansion – we want to move into a new market, is there an organization there that can help us do that? There can be coopetition arrangements between MSPs, or between MSPs and break-fix organizations, or different types of MSPs — an organization that specializes in networking can partner with a specialist in unified communications to deliver a more complete solution.
These types of arrangements can increase opportunity for the partners involved and allow organizations like ours to deliver a higher quality of service to our clients. Ultimately our business is about providing the best service to a customer that we can, and helping them drive value from their IT assets. Coopetition allows us to be more creative about how we accomplish that.
MB: My hope, quite candidly, for the good of the channel, is that we actually start focusing on outcomes and paid consulting and stop focusing on monthly service price, because the more you talk about price, the lower it goes.
MR: When you leave this session, we hope that we have given you some thought-provoking ideas on how to build stronger ecosystems that will allow you to expand your business to meet clients' needs and grow your revenue.