The Dickensian State of Today’s Channel
New research from IDC suggests these are the best of times and worst of times for relations between vendors and partners.
With apologies to Dickens, these appear to be the best of times and worst of times for vendors and their partners.
I base that on two of many interesting data points in the recently published 2023 edition of IDC’s North America Partner Landscape study. When asked to identify their top opportunities, 28.4% of the 503 partners surveyed named “vendor relations.” When asked to rank their biggest challenges, meanwhile, 28.5% named … “vendor relations.”
Both responses placed second on their respective lists, ahead of economic uncertainty, the skills shortage, and AI (which finished dead last on the opportunities list, by the way, a fact that should come as no surprise to regular Channelholic readers).
How could two seemingly contradictory takes on vendors be simultaneously true? Well, for starters, partners have arguably never had a wider range of solutions to offer from a larger number of software and hardware makers with big marketing budgets, well-oiled sales machines, and (in the case of Amazon and Microsoft, anyway) thriving online marketplaces.
That, my friends, is an opportunity.
But also a challenge. The same digital-first mentality driving double-digit growth in cloud computing and other hot markets is keeping IT providers extremely busy. “The world’s gone crazy in the last few years,” observed Steve White (pictured), program vice president of channels and alliances at IDC and a co-author of the landscape study, during a conversation with Channelholic this week. “There are more and more and more things to do.”
And fewer people to do them—the U.S. tech unemployment rate sank to 1.7% last month, less than half the 3.7% overall unemployment rate, according to CompTIA.
Simply keeping up with an endless stream of vendor programs and promotions under such conditions is tough. Mastering an ever-expanding range of increasingly complex products and technologies is tougher still.
“There’s so much innovation and so much change going on,” White observes. “Cisco three years ago [compared] to Cisco now is a very different company.”
Which is why vendor relations are both extremely valuable and extremely difficult for partners all at once. “They know that there’s opportunity there,” says White, “but, boy, is it hard work sometimes.”
It’s no cakewalk for vendors either. Even staunch advocates of product-led growth are recognizing that collaborative relationships with partners offering multiple forms of specialized expertise are all but indispensable.
“There’s very much a mutual success mentality, I think, with every vendor that we deal with now,” White says. The bigger their portfolios grow though, the harder achieving mutual success becomes, he adds, citing Cisco again as an example.
“Their intent is fantastic,” White says. “They care about partners. They care about partner profitability. They care about ease of doing business. They’re nonstop talking about it. But the reality is they’ve just got a lot of stuff.”
The partners they’re presenting it all to are trickier to classify these days too. When presented with a list of options including VAR, managed service provider, cloud service provider, and systems integrator, among others, respondents to IDC’s survey slotted themselves into an average of 3.2 categories.
“There’s no such thing as partner types anymore,” White observes. “Partners are all doing multiple activities.”
All of which makes helping partners tackle the challenges of vendor relations while seizing the opportunities no small task for the vendors themselves. “They’re all saying, ‘we want to make life easier. We want to make it simpler. We want to take out the complexity,’” White observes. “The reality is that’s easy to say, hard to do.”
There are a few ways they can start, though. One is rolling separate channel programs for separate partner types into one big offering, like Barracuda Networks just did. Another, White notes, is to centralize all their tools and resources in centralized, personalized portals, as VMware, Cisco, and Ingram Micro all have in the recent past.
Partners have a part to play too, though, like logging into those portals now and again, attending webinars, and acquiring new certifications. Also easier said than done when time and talent are both in short supply, White acknowledges, but the only way to tip the challenge-versus-opportunity scales on vendor relations.
“You’ve got to work at those relationships,” White says. “It doesn’t just happen.”
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Three more nuggets from IDC
There are a lot more insights on offer in that partner landscape study I just referenced, way more than I have room to explore here. Before we move on, though, here are three I found especially interesting:
1. On average, partners are earning 27.6% of their revenue reselling products or services and 32.2% delivering services directly. That latter figure has been rising in recent years, according to White, but so has the top-line share accounted for by partner IP, in the form either of packaged software products (20.5% of revenue at present) or custom software development (19.6%). True, 21% of participants in IDC’s poll were ISVs, it’s worth noting, but the other 79% weren’t.
Prediction: as GenAI gets better and better at gen-ing code, we’ll see more and more partners with limited development skills introduce IP of their own, driving those already substantial software revenue numbers even higher.
2. Reselling third-party services (like, say, MDR) was cited by 82% of partners as one of their most profitable offerings, ahead of SaaS (79%), IaaS (77%), and PaaS (76%).
3. Some 71% of partners call reselling laptops, printers, and other devices one of their most profitable activities too. Go figure.
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Blackpoint Cyber thinks it has just what the doctor ordered
Anyone in search of a good recent example of that “mutual success mentality” White reports seeing among vendors need look no further than Blackpoint Cyber. Tapping into a $190 million investment from Bain Capital earlier this year, the MDR specialist has hired former MSP Mike Estep (pictured) to be its first vice president of communities.
Though his duties include overseeing Blackpoint University, the vendor’s recently introduced training and enablement site, Estep’s primary mission isn’t teaching partners to sell and support Blackpoint products. It’s helping them acquire the skills they need to run a profitable business amid complex threats, mounting regulatory demands, and rising customer expectations.
“Our industry is going through the most significant transition in maturity, I believe, in its history,” says Estep, who likens the process to what healthcare went through over a century ago when one-time snake oil salesmen became trained, certified doctors.
“I believe that’s what’s coming to the IT space. We’re going to have to become professional at what we do,” Estep says, in words that echo the goals of the National Society of IT Service Providers. “If we handle it properly, we will become a very successful industry that can help businesses survive, and more importantly have financial success at the same time.”
To that end, the programs Estep begins rolling out next year will go beyond sales, marketing, and threat ops into areas like earning customer trust.
“My relationship with a cardiologist or a lawyer or an accountant doesn’t start with, ‘how much?’” Estep observes. “It starts with, ‘what do you think I should do?’ We want to help people understand that and help them learn how to build that type of relationship with their client base.”
Helping partners with financial management and leadership skills like nurturing a strong company culture will be priorities too. “Build a family culture and the business will succeed long term,” Estep says.
That’s one of many lessons he learned on the job during 33 years at Atlanta-based IT services company BECA Inc., where he served as president and CEO among other roles. More recently, Estep was a co-founder of Blue Alliance, an “operator-led investment group” of MSPs whose owners currently support over 37,000 users in 43 states.
Estep’s hiring is the latest milestone in a busy year for Blackpoint, which in recent months has added protection for Google Workspace and Azure AD to its Cloud Response solution, introduced a cloud MDR solution for SSO, and inked a distribution agreement (the company’s first) with Pax8.
Due in the first quarter of the new year, an updated Blackpoint University with courses led by top-tier MSPs, business experts, and security analysts will be the first part of Estep’s strategy to reach partners. Podcasts, peer groups, and other new resources will follow.
“I’m hoping that before we get to mid-2024 most of the community platform is completely launched,” Estep says.
Also worth noting
Veeam has added an as-a-service option to its backup for Microsoft 365 service.
TD SYNNEX has a new partner enablement program for Microsoft 365 Copilot.
ESET partners now have access to end-to-end marketing campaigns.
Solutions from ThreatDown (the former Malwarebytes for Business) are now listed in the Sherweb marketplace.
Scamio, a delightfully-named freebie chatbot from Bitdefender, helps users spot online fraud.
Stellar Cyber has added generative AI functionality to its XDR platform, to help security analysts quiz the system’s knowledge base using natural language.
Zyxel has introduced its first Wi-Fi 7 access point for MSPs and SMBs.