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Why Stephen Jay Gould is the New Face of the Channel
Unless, that is, it’s consultant Janet Schjins, who thinks the SMB channel is on the brink of its biggest evolutionary leap in 30 years.
Devoted readers may recall that I quoted Janet Schijns, CEO of channel consultancy JS Group, in last week’s Channelholic. As it happens, I spoke with her one business day after that piece ran about a big bunch of people her company just hired. Believe it or not, the conversation got me thinking about Stephen Jay Gould.
Gould, who died 11 years ago, was a paleontologist best known for a theory of evolution called “punctuated equilibrium” which says that species tend to change little over long periods and then a lot all at once. According to Schijns (pictured), the channel is currently barreling into one of those relatively rare and really, really big transformations.
For some 30 years now, she explains, channel partners have been shifting “from box builders to software pushers, and from software pushers to services pushers.” Those were gradual changes, though, that took decades to unfold.
“They were just an evolution of the species,” Schijns says. “I don’t believe we’re in an evolution of the species anymore. I believe we’re taking an actual leap into a brand-new kind of channel.”
To understand why and what that brand-new channel will look like, she continues, you must first understand a series of dynamics shaking everything in IT out of equilibrium, starting with how SMBs buy technology. Unlike older times, that process rarely begins with a phone call or sit-down with an IT provider anymore. To the contrary, by the time most businesses make contact with a channel partner about something they need these days, they’ve already researched it thoroughly via websites, social media, and other online sources.
“Five years ago, 51% of the time that a buyer spent learning about your solution was with a salesperson,” Schijns says. “Now it’s only 17%.”
And when they’re ready to purchase, buyers are increasingly likely to transact on an online marketplace often run by a big-time cloud vendor like AWS and Microsoft. Indeed, some $17 trillion will flow through B2B marketplaces by 2030, according to McKinsey.
As the folks at Pax8 in particular can tell you, the more that businesses drop on-prem technology in favor of software and infrastructure as a service purchased through a marketplace, the less certain it becomes that MSPs will be involved in the process.
“Everything’s in the cloud,” Schijns observes. “You can buy Microsoft and it’s pretty intuitive.” Your local bakery or mechanic will still need guidance and onsite support. “But all these new companies, kind of born-in-the-cloud companies, they’re going to buy services differently,” Schijns predicts.
Not that they won’t need IT providers too, mind you, to recommend, assemble, and secure solutions. It’s just that why they need IT providers won’t be as obvious as it was in the pre-marketplace era when IT providers were how you bought IT. And unless they have specialized solution or vertical industry expertise, those IT providers may not be as differentiated from one another as they used to be either.
At that point, Schijns continues, the skill that most separates winners from losers in the channel will be the skill most channel partners call their weak point: marketing. “The one who wins is the one who can tell the story in a compelling enough way to attract customers to them for a full solution,” she says. That’s something the channel’s never seen before, she adds. “It’s always been about the service or the product or the locale or local support, and now it’s [who’s] the best marketer.”
But wait, MSPs, it gets even better. If you’re like most of your peers, you’re great at tech and bad at marketing. Guess who’s great at marketing and increasingly comfortable with tech?
“What we’ve yet to double click on in the channel to understand is that your next competitor isn’t going to be the VAR down the street. It’s going to be the marketing agency,” Schijns says. After all, she notes, they’re already helping businesses build websites, run webinars, conduct email lead gen campaigns, and craft social media profiles.
“They use a lot of technology. They need the servers to be good, they need a good cloud strategy, they need unified communications,” Schijns says. “Why would they not become a huge competitor?”
The last (and arguably least important, for a change) factor in all this disruption is AI, which already has some vendors mistakenly suspecting they can soon automate much of what their partners currently do.
“As with anything, the simple answer is almost always wrong,” Schijns says. “I think you’re going to see innovators in the vendor space lean in, not cut costs or cut partners, but lean in and help the partners use [AI] to lower their costs so that they can spend more time selling and marketing.”
Which brings us full circle to those five people JS Group hired this week, which my friends at ChannelPro have covered for you well. In one way or another, according to Schijns, all of them will be loudly making the case that the channel is as relevant as ever.
“We truly need to make sure that the vendors, the distributors, the ISVs, the suppliers, the whole ecosystem understands why the channel is still critical, even if they’re not your transaction channel, they’re just your influence channel,” Schijns says. “There’s a shift coming, and we want to be there for it.”
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MSPs meet GPT in mspGPT
As far as I can tell, though, that fact was not the inspiration for a startup I recently learned about called mspGPT. In fact, the company’s co-founders—Ian Barkley (pictured left), a serial startup launcher who’s currently head of enterprise solutions at Simeon Cloud, and Nick Ross (pictured right), a former Pax8 exec who’s now VP of product development at Sourcepass—don’t even know when or how they’ll make money on it.
“We’re more or less just making sure that the product and the roadmap is well-defined in terms of features that we want to build before we worry too much on the monetization model,” says Barkley.
Based on a separate, slightly earlier solution called eduGPT currently being used by thousands of teachers at hundreds of schools, mspGPT aims to serve as a centralized, interactive, natural language knowledge base for topics like network security and collaboration or vendors like Acronis, ConnectWise, and SentinelOne. Coming soon is chatbot functionality MSPs can use as a self-serve interface for clients with billing questions or support needs.
“There’s a lot of things that I think from a help desk perspective you could eliminate because you have a pre-trained bot that actually knows the majority of answers that customers generally have,” Barkley says.
Other vendors have chatbots for MSPs already, of course, but Barkley says that mspGPT’s will offer more comprehensive content based on everything in OpenAI’s GPT-4 large language model plus additional content not found there. “We can embed videos from YouTube, we can add worksheets or PDFs or links, things that are curated by us or by the vendor that OpenAI wouldn’t have access to,” Barkley explains.
mspGPT, he continues, also features an intuitive interface originally designed for eduGPT that makes training the system relatively easy. “I had to build it for school teachers to be able to train bots,” Barkley says. “It’s very, very simple.”
All of that is apparently interesting enough to a lot of people that even though the system is in the midst of extremely quiet beta testing at present it’s been attracting interest from vendors working on similar platforms themselves plus a couple of hundred MSPs.
“As soon as we put it out there, I got a lot of calls,” Barkley says.
A first production release is slated to reach market mid-November. The timing will give Barkley and Ross a chance to complete the chatbot component and settle on a monetization model, which might involve charging vendors but giving MSPs access for free or charging MSPs “a small fee” too. It will also allow the duo to incorporate some new functionality OpenAI has told them about that will arrive between now and the first-ever developer conference the company announced this week.
Plans beyond that milestone include the addition of hyperautomation functionality that MSPs can use to streamline tasks like rotating passwords, onboarding a new client, or preparing a quarterly business report. Barkley and Ross are also working on an additional AI-based system for MSPs and enterprise IT departments called M365ai that will help users with tasks like configuring a Microsoft 365 tenant and researching different licensing options. Ross, it’s worth mentioning, is responsible for the popular T-365 website.
In the meantime, Barkley encourages anyone interested in mspGPT to join the beta here.
Object First’s channel strategy is all Veeam and partner only
Regular readers may recall a piece I wrote back in May about a young backup storage vendor, founded by the same two people who founded Veeam, named Object First. I got a chance to learn about the company’s channel strategy during a call with some of the company’s executives this week.
First, a refresher. Object First’s sole product is a purpose-built appliance designed to give Veeam users a plug-and-play, utterly immutable place to store backups. As I’ve reported before, 93% of companies struck by ransomware in the prior year say the attacker tried to delete or modify their backups, and 75% say those efforts were at least partly successful, per research from Veeam. Immutability is an essential defense against that threat.
Like Veeam itself, Object First is channel only, which means its sole route to market is a very specific, though also sizeable, swath of companies: the more than 35,000 transacting Veeam partners currently supporting over 450,000 customers. The company’s value proposition for those potential resellers begins with how easy the system is to deploy, according to Vitaly Sukhovsky, Object First’s vice president of channel sales.
“We’re talking literally about 15 minutes,” he says. “Rack, stack, and run your first backup job.”
Most Veeam resellers already have all the skills required to support the solution too. “We do have enablement and certification materials, but they’re so simple and so complementary on top of Veeam knowledge that it’s a no brainer,” Sukhovsky says.
Partners can use the system as an add-on offer for existing Veeam clients or bundle it with Veeam software to boost the value of what would otherwise be plain old BDR sales. Either way, notes Object First CEO David Bennett (pictured), “this is truly a new revenue stream for them.”
Object First’s partner program aims to make that stream profitable too. Entry-level silver members need only earn a simple sales certification to get a 10% discount on new appliances. Sell eight units across any number of deals and you immediately ascend to gold status, where you get an extra 15% of margin plus deal registration. At the invitation-only platinum level, members get further margin plus lead sharing, collaborative marketing campaigns, MDF, and more.
Though Object First’s solution is a little shy on features MSPs generally look for at present, like multitenancy, that hasn’t stopped a number of managed service providers from exploiting functionality in Veeam’s platform to use centrally-stored Object First devices as effectively multitenant hosting platforms for subscription-based backup storage services. New, MSP-friendly functionality is in development as well, according to Bennett, who declined to provide further details.
“We’re working through that with a number of dedicated MSPs today to make sure we actually bring something unique to the marketplace, rather than just putting something out,” he says.
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