Techaisle Blog

For decades, channel partners have aspired to achieving ‘trusted advisor’ relationships with their customers. The concept is so ingrained that it is nearly impossible to separate the notion of ‘trusted advisor’ from the broader sense of being a partner.

But if the market is moving from value addition by the channel to value creation for the end-customer, isn’t it essential to move beyond ‘trusted partner’ status to becoming, in a meaningful sense, a partner of the customer, invested in the customer’s business success?

Techaisle’s WW channel partners study of 2445 channel partners and corresponding US channel partners study of 814 partners shows that 61% (66% in the US) are transforming their organizations to focus on delivering business outcomes to their end-customers, up from 42% three years ago. However, the figure is still below customer expectations which stands at 78%. There are several points of disconnect between the customer and the channel. One of the most important disconnects stems from the notion of trusted advisor relationship versus meaningful customer partnership. Only 51% of partners are building meaningful partnerships (55% in the US) and the balance 49% still believe in being trusted advisors. There is nothing wrong with it except that customers, especially SMB and midmarket firms are looking for a “super consultant” – a firm that can offer advice that is more complete than what is being obtained from most partners and which can move beyond strategy to deliver operational support that is tied to business outcomes.

These firms exhibit a clear preference for advisors who can move seamlessly from advice to architecture to procurement to deployment and finally to management. Nearly three quarters of SMB buyers would like their channel partners to be able to provide technology advice that is directly connected to business issues, and nearly two-thirds want a partner who is “invested in customer success.”

The nature of the sales relationship will be a critical determinant of channel success. 52% of channel partners globally and 58% in the US are still running their businesses on sales quota requirements rather than a book of business. When all channel partners call themselves “advisors” there is no differentiation left across partners. Channel partners need to focus on being a meaningful customer partner delivering customer success. And this falls into the realm of being a super consultant.

Digital transformation success requires that channel partners respond to a diverse set of challenges: the channel organization needs to be able to balance extensive consulting and executive customer management with product transactions, ongoing management services and tangible contribution to customer business success. Those that are able to align their capabilities with digital transformation requirements will be positioned for long-term success in IT’s highest-growth market. Techaisle’s digital transformation (DX) framework highlights six ways that channel partners can profitably connect with customers in their initial stages of the DX journey. At the beginning of the DX journey, channel partners should plan to deliver billable services in foundational technology areas:

1. Deployment of discrete foundation technologies needed to enable pursuit of DX business objectives: The requirement for these technologies should be clearly associated with capabilities needed within the DX roadmap; the systems themselves should be prioritized in accordance with the benefits that they deliver.
2. Provision of management/support for technology tied to the DX roadmap: In this step it is essential for channel partners to increase customer communication so that they understand the value associated with ongoing support and integration that maintains the currency of the DX platform by managing its discrete IT components.
3. Development and delivery of incremental feature/function objectives: Some of the technologies deployed within the DX framework may provide all needed functionality ‘out of the box,’ while others may benefit from ongoing enhancements. In these latter cases, both channel partners and their customers will benefit from the addition of features that provide incremental benefit to users/organizations that have absorbed current capability and who are ready for, and have need for, additional functionality.

Interwork technologies

Once the foundational level is in place and immediate benefits of the technology have been identified and communicated as ‘success stories’ within the customer organization, the channel partner should help the customer move on to the next DX level: establishment of connected ‘Interwork’ systems. Here, channel partner opportunities expand to include higher-value activities:

Techaisle research, US SMB and Midmarket IoT adoption trends, analysis of 1,135 unique SMB survey responses, leveraging its network of over 1.5 million b2b respondents globally, shows that for US SMBs and midmarket firms that have production-level deployments IoT has helped improve controls within their businesses through better operations monitoring, increased business agility by improving processes, enabled them to develop new products and delivered reduced costs by increasing productivity and automation. 34% of SMBs began their IoT deployment with the hope of improving customer experience, 32% were expecting better cost efficiencies and 29% were targeting increased revenues. However, these SMBs experienced unexpected business outcomes with 43% reporting improved controls within business through better operations monitoring, 42% achieved increased business agility by improving processes and 41% were able to develop new products and services. These business outcomes’ percentages are almost identical demonstrating the fact that two out of five SMBs using IoT are deriving multiple positive business outcomes from their IoT deployments.

IoT is still an early stage technology. Survey data shows that IoT solutions are deployed in just 8% of small businesses and 28% of midmarket businesses. But these figures overstate the number of IoT production systems deployed by SMBs; many of the reported projects are exploratory. However, planned adoption trends show that the IoT usage and penetration may exceed 60% in midmarket and reach 35% within small businesses in the next 2 years. Generally, early IoT adopters are focused on one or more of security/surveillance, proactive alerts, reducing inventory levels and asset tracking.

Comparing 2018 survey with 2019, data shows that small businesses seem to have either tempered their ambitions to deploy IoT solutions or they tried and abandoned their efforts. Except for the 100-249 employee size firms, most mid-market firms, on the other hand, have increased their IoT adoption efforts. As a result, IoT adoption within the SMB market is still at an early stage, hindered by limited budget, costs and lack of skills. In fact, more than 50% of current IoT systems are at early stages of maturity: 19% incorporate minimal sensor deployment feeding isolated systems or feature devices that support remote monitoring / service / control. Only 10% of firms that have deployed IoT can be categorized as advanced users, having real-time information feeding enterprise-wide data intelligence solutions or connected devices creating competitive advantage.

It is important to note that while 23% of small businesses were conducting ad hoc pilots in 2018, only 13% are conducting such pilots in 2019. This however does not mean that all small businesses have migrated their ad hoc pilots to production – some have abandoned the project and some others have set loftier objectives. The biggest changes from 2018 to 2019 are in their objectives for creating new revenue opportunities, new levels of collaboration between suppliers, partners and customers as well as supporting predictive maintenance.

Managing governance, risk and compliance is an IT challenge for over 1/4th of midmarket firms and slightly more than 1/10th of small businesses in each geo – US, Europe, Asia/Pacific, Latin America. See chart below. In an SMB context, “governance” is at least somewhat analogous to “taste” in home décor, or “sustainability” in supply chain practices: easy to acknowledge as important, but difficult to define. What is easy to delineate is the notion that governance has important linkages to issues that are of vital importance to SMB management:

• risk mitigation,
• regulatory compliance, and
• protection of the corporate reputation.

Governance is a way of describing the objectives of senior executives, or of the company as a whole; it is the approach that determines how the SMB interacts with its customers, its suppliers, and its community. Oftentimes, the term ‘governance’ is coopted by IT professionals, who talk about issues like “IT governance,” “cloud governance,” or “data governance.” These are important concepts, but they really refer to policies and controls.

Policy is the ‘glue’ that connects governance and security: SMBs benefit from thinking about management issues first, and then developing positions that guide security decisions. This works as a starting point for an SMB security strategy. However, there are challenges that arise from specific IT usage patterns or events that impact an SMB’s risk profile.

Consider the issues cited in the chart below - examples of usage patterns that affect an organization’s security stance: use of cloud, and ‘shadow IT,’ or user-managed applications and/or storage that may not align with corporate security policies. It’s possible to simply state that any use of cloud or user-managed IT services needs to adhere to these policies, but the reality is that they may not: for example, a cloud supplier’s SLAs may not include corporately-approved escalation processes, and users may lack understanding of (or concern for) corporate IT guidance. This doesn’t mean that use of cloud and shadow IT should be banned – cloud is an important IT service delivery option, and to some extent, shadow IT reflects innovation within the business.