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The 7 Biggest Sales And Market Trends In The IT Channel Today

Mark Haranas

From the hottest new services and sales trends in the channel to solution provider layoffs and new recruitment efforts, CRN breaks down the seven most important findings of The Channel Company’s 2021 COVID Recovery Survey of 200 solution providers.

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Huge Trends And Key Insights From 200 Top Solution Providers

The COVID-19 pandemic has shifted and affected the channel partner community in a game-changing way, channel marketing guru Jade Surrette said as she unveiled some of the most significant solution provider business and technology market trends in the industry.

From sales growth and adding net new services to hires and layoffs, Surrette broke down the biggest findings of The Channel Company’s 2021 COVID Recovery Survey of 200 solution providers.

“We actually saw a tremendous amount of growth in terms of channel sales all across the country,” said Surrette, chief marketing officer for CRN parent The Channel Company, in front of hundreds of solution providers at XChange+ 2021 this week in San Antonio. “It was really great to see that in a very challenging time, solution providers thrive.”

Dawn Sizer, CEO of 3rd Element Consulting, a fast-growing Mechanicsburg, Pa.-based MSP and consulting specialist, said sales skyrocketed a whopping 120 percent in 2020.

“So 120 percent growth for us in 2020 and we’re still on a growth trajectory in 2021,” said Sizer, adding that growth has come from various technologies segments and IT services.

CRN breaks down seven of the most important channel trends in the market today based off The Channel Company’s 2021 COVID Recovery Survey of hundreds of solution providers.

Over 80 Percent Of Channel Partners Expect Sales Growth In 2021

Over 80 percent of the 200 channel partner respondents said they expect sales growth in 2021. Just as important, nearly 40 percent of solution providers are predicting revenues to increase by between 10 percent to 29 percent this year.

“It was really positive to see that a majority of solution providers are actually expecting sales growth,” said Surrette. “We have a pretty sizable area of over half actually expect to see 10 percent or more, which was really encouraging to see in this type of landscape.”

The COVID-19 pandemic is driving sales growth for many channel partners as businesses turned to the cloud, doubled down on security services and needed new hardware and software deployments to need their new remote workforce needs.

“Realistically, [growth] is because of the pandemic. Because everybody went, ‘OK, so the state says we have to close down. What do we do? Do we go out of business? Do we send people home? How do we function?’ And they‘re all like, ‘Okay, so we need to have people work from home,’” said 3rd Element CEO Sizer. “I tell them that we’ve talked about this before and we’ve told you in order to allow people to work from home or be out of the office, these are the infrastructure pieces that we needed to have in place. [Before COVID] they were like, ‘No, that’s too expensive.’ That changed. So it was a lot of reactionary spending, which was a lot of it.”

Sizer said customers depend on channel partners more than ever before to keep business running smoothly and effectively which will continue to fuel revenue growth in 2021 and beyond.

Only 6 percent of the 200 solution provider respondents are expecting sales to decline in 2021.

The Top Technologies To Increase Over Next Six Months

“Cloud, remote management and collaboration, and security, remain at the top in terms of those growth areas that solution providers expect to see continuing to increase over the course of the next six months,” said Surrette.

Over the next six months, solution providers are expecting a surge in cloud demand with a whopping 58 percent of respondents saying public cloud, private cloud and/or hybrid will be the largest technology segment being demanded from customers.

CEO Sizer said getting her customers in the cloud was a main priority during COVID-19 and cloud continues to drive sales for 3rd Element Consulting in 2021. “Getting everybody prepped to actually get into the cloud and get that accomplished was nuts,” she added.

Remote management and collaboration, as well as security in general, tied for second place in terms of what type of technologies solution providers are expecting to see greater customer demand in. Approximately 47 percent of respondents expect high demand in these two segments over the next six months.

Rounding out the top five list are mobile devices and laptops at 38 percent, and networking at 34 percent. Other technology areas channel partners are expecting to see high demand in over the coming months are around managed services, storage, security, business continuity, endpoint security and servers.

Increase Growth Rate By Technology Area

The survey took a deeper dive into just how much solution providers are expecting customer demand to increase in key technology markets such as security, managed services and cloud.

“No surprise: security, managed services and unified communications continue to be in that top three area in terms of forecasting growth and increases over the next six months,” said Surrette.

Approximately 38 percent of solution providers expect an increase in security growth of over 10 percent in the next six months, with 46 percent expecting security growth of between six to 10 percent.

In managed services, 32 percent of channel partners are predicting an increase of more than 10 percent in the next six months with 47 percent predicting growth of between six to 10 percent. In cloud, 31 percent of solution providers expect an increase of over 10 percent, with 49 percent predicting growth somewhere between six to 10 percent.

“What was really interesting is some of these other areas in more of the velocity side of the house, hardware categories and things of that nature, they‘re still anticipating some growth — just not to the degree of really more in the services area,” said Surrette.

In terms of servers, 14 percent of solution providers are projecting over 10 percent growth in the next six months, with 65 percent expecting between six to 10 percent growth. Nearly 70 percent of channel partners are predicting between six to 10 percent growth in storage.

Layoffs Offset By New Hires

Some solution providers said that layoffs were unavoidable. However, many new employees were also hired to support new in-demand offerings.

“We also saw kind of this mix between the acceleration of net new hires within organizations to really respond into the changing landscape that was happening and new services being added versus having to potentially lay people off,” said Surrette. “So we had just under 27 percent reported that they needed to layoff people just because of what was happening over the last year and a half.”

Many solution providers tell CRN that they are frantically trying to hire skilled talent in 2021, but are having some difficulties finding the correct candidates. “I‘ve heard from many of you over the last few days and in the last few months is, hiring talent is really tough right now,” said Surrette. “In a scenario where there were quite a few layoffs, you think the talent is there, but it’s been pretty tough to try to find really strong folks.”

For Sizer, 3rd Element Consulting is increasing their recruitment efforts.

“We’ve been in business for 16 years. This is the first time we’ve ever had to use a recruiter to get talent. And it was good talent. But my gosh, it’s expensive talent,” said Sizer.

“We saw a really weird shift of our clients getting more quality people,” she said. “So you‘d see people dropping off and being replaced — so it wasn’t a downsize. It was better people during the pandemic, which I thought was really interesting to watch.”

‘Everyone Is Trying To Get In Front Of A Decision Maker’

“Customers are absolutely inundated with messaging right now,” said Surrette. “So going from a face-to-face environment to 100 percent digital, and staying that way for an extended period of time — everyone is trying to get in front of a decision maker.”

Nearly all channel partners, 97 percent, report they receive multiple emails each month from suppliers they have an existing relationship with, while 85 percent get multiple emails on a monthly basis from suppliers they don’t have a relationship with.

“It happens to me. I get 1,000 emails a day from people trying to get my attention, and what is it that‘s actually going to cut through the noise? And that’s really where people need to take a step back and think that through,” said Surrette. “Because people realize, especially in the IT space, they’re getting hammered from everyone, everywhere, all the time.”

Approximately 85 percent of solution providers receive multiple phone calls each day from suppliers they have existing relationships with; while 83 percent get multiple calls each month from suppliers they don’t have an existing relationship with.

Other key findings include 62 percent of solution providers receive multiple social media messages each month from suppliers they have relationships with, while 63 percent get multiple social media messages every month from suppliers they don’t have existing relationships with.

“It‘s really critical that you show your value to your targets and to your clients, and create a level of stickiness to cut through that noise,” Surrette said.

COVID-19 Impact Shows That Solution Providers Follow The Money

Over half of solutions providers reported that they added more services in response to customers needs during the COVID-19 pandemic.

Surrette said in 2021 and beyond, channel partners will continue to add net new services. “We‘re continuing to see this acceleration of new opportunities, new services, and new ways to respond to end user demand and the things that they’re having to do to change their businesses,” she said.

Another key finding in the survey is that solution providers mostly maintained their customer base. As some customers were lost, many new clients were gained to the point where many partners maintained their customer base count.

“Just over 50 percent of solution providers actually reported that net new customers had been added. And that ultimately, there was a little less than 40 percent who actually said that they lost some customers,” said Surrette. “So it kind of created this net mutual kind of scenario, but by and large, many saw growth in terms of customer acquisition.”

Solution Provider Business Stronger Than Ever

Over the past 18 months, the channel partner community “has absolutely been resilient” with no slowdown in sight, said Surrette, based on The Channel Company’s survey results.

“We actually saw a tremendous amount of growth in terms of channel sales all across the country,” said Surrette. “Which was really great to see that in a very challenging time, solution providers thrive.”

Additionally, channel partners are meeting their customers needs head-on by shaking up their services business, hiring new talent and creates net new offerings.

“We also saw that the mix of technology and services that they‘re providing end users are actually shifting dramatically. Many new services were actually added in response to some of the changes that folks were seeing and the changing demands that end users had within their own businesses,” she said.

With no technology slowdown in sight for channel partners, 2022 is looking to be another great year for solution providers of all shapes and sizes.

“Over the next 12 months, we‘re seeing that it’s going to be really healthy just in terms of growth. And it’s going to come down to solution provides being able to continue to respond and scale,” said Surrette.

 

Mark Haranas

Mark Haranas is an assistant news editor and longtime journalist now covering cloud, multicloud, software, SaaS and channel partners at CRN. He speaks with world-renown CEOs and IT experts as well as covering breaking news and live events while also managing several CRN reporters. He can be reached at mharanas@thechannelcompany.com.

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