The Future Of The IT Channel

This month, I’m going to depart from the solution provider point of view. I want to share a contemporary topic of discussion among vendors, specifically channel leaders and strategy executives. For the past two years, the same discussion has surfaced: Namely, which partner types, as defined by business model, will survive in the long run?

Think about the challenge these vendor executives face. With a finite budget every year, each places bets (invests dollars in partner programs or account management) to achieve resale or “influence” revenue impact. With the resale and “influence” channel in a state of transition and disruption, determining where to place bets is critical to achieve vendor ROI. The IT ecosystem disruption we reference? It results from the changing IT customer buying behaviors as CIOs and IT managers respond to budget pressure and technology advances, making mobility, remote management of IT assets and cloud computing top of mind in pursuit of a lower TCO.

Our conversation with the strategy executives, representing the IPED point of view, is one of transformation. Those who transform in this disrupted ecosystem will survive.

Let’s start with one of the most controversial partner types/business models -- your distributors. I have sat in rooms (yes, more than one) where the vendor opinion regarding the future role of distribution runs the gamut from less than critical to very critical. Why the former? It’s the belief that with public cloud, the traditional pick, pack, ship and line of credit are no longer critical functions supporting this newer way of IT services delivery. I see this most often with traditional IT vendors and new entrants like telco and cable companies. However, if the vendor is an Infrastructure-as-a-Service provider, e.g. Rackspace, then the opposite is true. Distribution becomes key for them to recruit solution providers and MSPs who can resell or white-label their capabilities. Ingram Micro’s Seismic for MSP and Cloud Conduit programs are great examples of how distribution can transform and will play a critical role. When you factor in private cloud growth, which often looks like a standard resale transaction into the customer data center, and the fact that customer data center IT spend is thought to be more than 45 percent to 50 percent of customer IT spend in 2012, distributors aren’t going anywhere.

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ISVs are another group that will not only survive, but thrive. Beyond the obvious --, NetSuite, SugarCRM and other Sofware-as-a-Service-only players -- traditional ISVs have transitioned aggressively to hosting versions of their applications over the past five years. Also, in a recent study of new ISVs every single one was developing SaaS and a handful also developed the application for on-premise licensing. This group has been quick to transition and spawn a market for other complementary ISVs.

The IPED opinion around the future of corporate or volume resellers, VARs or solution providers, MSPs or hosters and white-box resellers can’t fit into this month’s column. So tune in next month for more of the discussion.

BACKTALK: Contact SVP, IPED MarketBridge Alliance Rauline Ochs via e-mail at [email protected].