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Key Channel Market Trends: 2016

With midyear just a few weeks away, here’s a rundown of the key channel market trends that have emerged thus far in 2016:

Differentiation via intellectual property

At one point, just offering managed services versus reselling products was a point of differentiation. But today, most channel partners have made the MSP transition. That shift compels MSPs to seek out other forms of differentiation. The same theme holds true for channel partners reselling public cloud services — they need to find a way to rise above rivals serving up the same cloud offerings. The creation of intellectual property (IP) is one way channel companies are differentiating their services. IP can take the form of software. For example, a cloud service provider might develop a specialized app that ties into a particular public cloud platform (Salesforce, for instance). Or an MSP might create an IT monitoring tool for its customers. In some cases, IP can be a “productized” service — a branded cloud migration methodology.

Further reading:

Channel companies seek differentiation via IP assets

Differentiation via expanded service lines

Channel companies can also add new services to differentiate themselves in a crowded market. An MSP focusing on server monitoring may add IT security to the mix, for example. Or a company already offering IT security — managed firewalls, let’s say — may offer more sophisticated services such as identity and access management. Smaller channel partners may find adding services challenging and expensive. They may also find this approach hard to sustain, since they need to cover more ground with a limited number of employees. The struggle to broaden service portfolios has triggered another channel trend: Partnering among partners. In this approach, a channel company partners with a peer to offer a particular service.

Further reading:

Managed services companies rethink their portfolios
Cybersecurity services: MSPs look to expand portfolios

Security-as-a-service

MSPs or VARs looking to get into the IT security space may find it difficult to hire the right people to offer such services. Vendors offering security-as-service, however, can help channel partners add security services without having to build a security practice. Security-as-a-service vendors basically help channel partners make the MSP-to-managed-security-services-provider transition. Channel partners that already sell some, perhaps rudimentary, security services can supplement their offerings through a partnership with a security-as-a-service vendor.

Further reading:

MSPWorld 2016 highlights IT security opportunities, pitfalls

RMM technology shift

Remote monitoring and management (RMM) technology has long been the MSPs’ cornerstone application for delivering services to customers. But the technology has been around for 15 years and vendors are now working through significant product revisions. The main trends include improved integration between RMM and other MSP business applications such as professional services automation. There is also an effort to streamline RMM to make it easier for MSPs to bring on new customers and add new services to their portfolios. RMM vendors, as they update their wares, face challenges from hybrid cloud monitoring tools and may eventually bump up against robotic process automation. As a consequence, channel partners will have more tooling options than ever before.

Further reading:

IT services: Remote monitoring and management to get boost in 2016
Partner opportunity: Midmarket email migrations to cloud (scroll down to Autotask, AVG Business unveil MSP tools)

Service-oriented distributors

Distributors have long served as the main source of products for channel partners lacking direct relationships with hardware and software vendors. The rise of cloud computing, however, is pushing distributors into a different direction. As channel partner customers purchase less on-premise gear, distributors now place a greater emphasis on services including cloud-based services. Distributors offer cloud marketplaces through which channel partners can select among various cloud offerings and sell them to their end clients. Distributors also offer assistance with branding/marketing, IT asset disposition and government sales.

Further reading:

Role of distribution changes with accent on services
Cloud marketplaces: Can channel partners make money?

Cloud-based disaster recovery

Disaster recovery (DR) in the cloud — also known as DR as a service (DRaaS) — has become an important data protection opportunity for channel partners. Traditionally, smaller businesses have lacked the financial resources to build and equip an off-site DR facility. DRaaS, however, has transformed DR into a subscription-based cloud offering that eliminates upfront capital expenses. As the concept catches on, channel partners can offer DR to customers who could not previously afford it. Channel partners have the option of creating their own DRaaS capability or partnering with one of several DRaaS providers in the market.

Further reading:

DRaaS could open SMB channel opportunities

Regulatory compliance

Today’s regulatory environment calls for channel market companies to support customers dealing with compliance issues related to data security and privacy. But partners that want to move in that direction will need to acquire expertise in a particular industry’s regulatory setting — HIPAA (Health Insurance Portability and Accountability Act) expertise in healthcare or PCI-DSS (Payment Card Industry-Data Security Standard) expertise in retail, for instance. This transition will be easiest for channel firms that already focus on the business requirements of particular vertical markets. The rewards for delivering compliance support include greater competitive differentiation and higher valuations from a merger and acquisition standpoint. Partners, however, must be wary of the downside risk in compliance work and should consider purchasing professional liability insurance.

Further reading:

Compliance-as-a-service: How to stay out of hot water
MSPWorld: Regulations, emerging competitors shape the market

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