Techaisle Blog

How can cloud suppliers identify the partners most likely to be successful or very successful in selling cloud? Techaisle’s 7th year of channel tracking survey data indicates that a powerful indicator is found in the growth paths identified by channel firms.

Characteristics of very successful cloud channel partners (“what to look for”)

• Very successful cloud channel firms view advanced solutions as major opportunities and are focused on growing business in BI/analytics and IoT
• Very successful cloud firms recognize that hybrid IT is the key and are anticipating increased revenue from data and/or application integration than their less successful peers
• Nearly 90% of very successful cloud channel firms (as compared with just 23% of unsuccessful firms) offer IaaS to SMB customers
• Over 90% of very successful cloud partners offer SaaS today. Less than one-third of unsuccessful cloud partners offer SaaS, and 20% neither offer it nor are planning to do so
• Successful cloud partners view partner-to-partner (P2P) relationships as a strategic imperative, whereas unsuccessful partners connect with other channel firms on an opportunistic basis
• There is a clear, multi-year trend of very successful cloud channel partners differentiating themselves by selling self-branded (and supported) cloud offerings
• There is strong evidence in data to support the notion that very successful cloud partners are focused on assembling multi-sourced solutions to meet customer needs, 57% of very success cloud partners as compared to 31% of unsuccessful and 34% of successful partners
• Three-quarters of very successful and nearly 70% of successful cloud partners offer UCaaS, vs. just 20% of unsuccessful firms
• Successful channel firms are actively participating in cloud and IT orchestration and are investing in technology advisory & architects
• Digitalization & digital transformation are new focus areas of very successful channel partners

What to look out for – characteristics of unsuccessful cloud partners

Inability to balance product resale and services revenue, inability to adjust to a customer-centric approach and inability to align recurring and non-recurring revenues are severely holding back the MSPs. Since 2008 Techaisle has been conducting managed services studies, both demand side within SMB & Midmarket segments and supply-side within the VARs, MSPs, SIs, SPs, Consultants offering managed services. Each year Techaisle (latest report deliverables are here) has been quantifying what separates the successful and unsuccessful managed services channel partners. And there are several data-evinced barriers to entry and success factors. To understand barriers to entry, it is important to first define the characteristics that are important to success as an MSP. There are many but let us discuss three that always percolate to the top:

1. The ability to sell services independently from product sales (while maintaining the ability to sell products to customers as well).
2. The ability to package and efficiently deliver standardized services to multiple customers, growing by expanding portfolios of discrete services rather than by simply agreeing to address sprawling customer requirements on a ‘one-off’ basis.
3. The ability to align internal processes and costs/cash flow with a recurring revenue (rather than transactional) approach to the business.

Techaisle research substantiates the importance of each of these key characteristics.

How should suppliers looking to target SMBs with IoT solutions set their strategies? Techaisle believes that strategy starts with the buyer, which in this case, means understanding who the buyer is, what factors are motivating purchase decisions, and how much is available for spend on IoT. From a deployment perspective, IoT straddles an interesting line: it is technically complex, which would argue for deep IT involvement, but it – at least, in more sophisticated solutions – addresses business process issues that are most important to business managers, which would argue for deep line of business (LOB) involvement. What do we see with today’s SMB IoT adopters?

Data collected from the Techaisle SMB IoT Adoption survey indicates that in these early days, responsibility for IoT deployment in small businesses is divided relatively equally between IT and LOB management, while in midmarket organizations, IoT is most often the responsibility of IT group.

The Cloud channel partners are operating between the raindrops. Techaisle’s channel survey trend data clearly shows that the sources of competition and channel conflicts for cloud business is increasing thereby creating untenable conditions for many channel partners. From 2013 to 2017, the percent of channel partners experiencing competition from vendors has gone up by 15 percent whereas from distributors it has increased by 55 percent.

At a high level there are three types of channel conflict:

1. Competition between the vendor and its channel partners,
2. Competition between distributors and channel partners, and
3. Competition between similar types of channel partners (e.g., VAR/VAR).

Figure below shows the trend data from 2013 to 2017.