The Channel Company CEO Bob Skelley's Five Keys To Success In Hybrid Solution Provider Era

The Shift To Business Outcomes

Exclusive research from The Channel Company shows partners are adopting multiple business models, technologies and delivery methodologies, morphing to become hybrid solution providers in order to meet the demands of their customers, said CEO Bob Skelley

"Customers no longer want to talk about products and technology, they want to talk about solving a business need and the business outcomes they are trying to drive," said Skelley. "Hybrid solution providers have a different level of expertise about their customers’ business."

These changing customer drivers are pushing the channel to adapt and evolve into hybrid solution providers, he said.

As hybrid solution providers, modern channel partners defy boxlike definitions: They're not just MSPs, or solely focused on a single advanced technology. They have multiple recurring revenue streams and speak to a wider range of customer decision-makers including line of business, chief security officer and even marketing, said Skelley.

The new hybrid solution provider model comes with the expansion of Everything-as-a-Service models, the consumerization of IT and a demand by SMB customers for enterprise-grade services and support.

"All of these things are driving the channel partner community to adapt, change and evolve," said Skelley.

1. Hybrid Solution Providers Focus On Multiple Business Solutions

The Channel Company research from the 2018 Institute of Partner Education and Development’s annual census shows that hybrid solution providers focus on at least two customer segments (line of business, chief security officer, marketing, networking/communications, security, IT purchasing); have more than one business model (systems integrator, cloud services provider, managed services provider, VAR, etc); multiple primary advanced technology practices (cloud, operational technology, networking, security, application development, data center and edge computing) and several recurring revenue services (Everything-as-a-Service, cloud, outsourced, managed services, off-premises and on-premises).

"These are the dimensions that define the hybrid solution provider, which now makes up 61 percent of the channel," said Skelley. "These hybrid solution providers are customer-driven. They are expanding their role as trusted advisers based on customer demand."

Eighty-six percent of hybrid solution providers have a focus on multiple business solutions and customers including line of business, chief security officer, marketing, networking/communications, security, IT and even purchasing, said Skelley. "The hybrid solution provider aligns their business based on the needs of the customer," he said.

2. Increased Partnerships With New Vendors And Partners

The increasing demands from customers are driving hybrid solution providers to seek out new vendor partnerships in areas like security or next-generation software-defined infrastructure, said Skelley.

In addition, there is an increasing amount of partner-to-partner collaboration. Security is a prime example where partners are seeking out solution provider colleagues to fill out their portfolio, said Skelley.

"Security is very complex and it is difficult to hire the talent to be a valued security professional, so partners are turning to other partners they have a relationship with to fill that need," he said. "There is a partner-to-partner, channel-to-channel ecosystem growing much faster than it has in years past."

The increased partnering comes as trusted adviser hybrid solution providers are moving into completely new technology practices such as video surveillance, Internet of Things and edge computing, said Skelley.

Seventy-five percent of hybrid solution providers have a focus on two or more advanced technology practices, said Skelley. "Hybrid solution providers are being pulled into new technologies and markets, and it is all customer-driven," he said.

3. End Users Are Becoming More Reliant On Hybrid Solution Providers

The business outcomes being demanded by end users are forcing customers to become more reliant on hybrid solution providers, said Skelley.

"The business outcomes customers are looking for require multiple technologies and manufacturers," he said. "Oftentimes, customers cannot get to the business outcome they want with a single point solution. It is an integrated solution that bridges many different technologies and many different technology manufacturers."

Partners that want to succeed in the hybrid solution provider era must expand their strategic engagement with their customers and elevate their brand equity, said Skelley. That is likely to mean a sharp increase in "powered by" marketing initiatives from vendors to drive hybrid solution provider loyalty, he said.

“Hybrid solution providers need to make sure their brand is at the forefront of the solution," said Skelley. "It is no longer about an individual technology manufacturer’s brand. It is about a collection of different technologies with the brand equity of the partner becoming more important."

4. The Hybrid Solution Provider Impact On Technology Vendors

Vendors in the hybrid solution provider era must adjust their go-to-market model to support the hybrid solution provider business model.

"Vendors are going to have to adapt their programs and support to optimize for the hybrid solution provider model versus just focusing on partner specializations," said Skelley. "They can no longer build a program that is optimized for an infrastructure VAR and another one for a cloud VAR. They have to build programs that support the hybrid solution provider. They are going to have to support their partner ecosystem differently."

Partners are not going to want to choose one specific market or technology practice, said Skelley. "Vendors need to think of the hybrid solution provider as a customer that they have to earn business with as opposed to a sales outlet," he said. "We believe that vendor dependency on the hybrid solution provider is going to increase. Solutions are going to be tied to business outcomes and customer value rather than solving an IT need."

5. The Payoff From The Hybrid Solution Provider Model

The big payoff for hybrid solution providers is "stickier" and "longer-lasting" relationships with customers.

"The financial benefit for the hybrid solution provider is deeper, long-term customer relationships that are stickier with new business opportunities based on customer needs and business outcomes," said Skelley. "What this means is partners have to get really deep with their customer with specific industry expertise."

Ultimately, the hybrid solution provider business model means both partners and vendors must adapt to the new industry dynamics.

Quoting Charles Darwin, Skelley said: "It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change."