Coulda, woulda, shoulda -- maybe your partner business plans didn't pan out in 2013. Well, the year is over, but...
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it's not too late to think about and plan for 2014. To help you do that, SearchITChannel rounded up input from industry experts on information technology trends that will affect the channel in 2014. Here's what they had to say.
Enablement for self-sufficiency
The trend of purchasing power moving from the IT department to the line-of-business manager will have far-reaching impact for the channel.
How vendors enable partners for self-sufficiency is going to be a big topic next year. Expect to hear more from vendors on how they will holistically enable their channel partners -- technically, but also with regard to sales, marketing and services. "Vendors want partners to be self-sufficient organizations so that [vendors] can scale and grow their business," said Diane Krakora, CEO of PartnerPath.
This fast-progressing conversation coincides, in particular, with the move to cloud, enablement around a new cloud business model, sales structures and compensation activity, she added.
Acceleration of the front-office buyer
The trend of purchasing power moving from the IT department to the line-of-business manager will have far-reaching impact for the channel. It changes the type of buyer, the type of capabilities this buyer requires, and the way the channel approaches the sale. For example, you shouldn't send a technical salesperson to a business unit buyer if the salesperson isn't capable of having a solution-oriented conversation rather than a technical one.
According to Tiffani Bova, vice president and distinguished analyst at Gartner, covering sales strategy and channel innovation, the industry is seeing some 35% to 40% of the total IT spending happening outside of IT. That means that in some cases the business units have their own IT budget or some of the IT budget is being transferred to the business units. The bottom line, and what's important for partners to understand, is that these buyers outside of IT are controlling spending around how they solve business problems.
So if you're a channel partner that focuses exclusively on the back end -- IT procurement and the CIO -- the spend pot is 55% to 60% of the total IT budget, leaving the other 40% to 45% to someone else. That someone else could be the born-in-the-cloud companies, the telcos, or even the vendors themselves. "It could be anybody," Bova said.
As partner firms expand to adapt more of their business to different models, business transformation will continue to be a significant issue for channel partners in 2014.
"Partners will have to consider the adoption of different business models to better serve their clients and react to the changing landscape of IT technologies, opportunities around cloud, business analytics, mobile and social, for example," said IBM's Dave Carlquist, vice president of worldwide channels for the Systems and Technology Group (STG).
As cloud looms large in 2014, survivors and casualties in the channel will become an issue. Industry watchers expect to see more partner business acquisitions in 2014 and 2015 because of the shift to the cloud and a recurring revenue model.
Out of 120,000 channel partners in North America, between one-third and one-half could disappear over the next couple of years because cloud requires that partners change their business model, and some will and some won't, according to PartnerPath's Krakora.
That's a big hit on partner businesses and also on vendors that rely on their partner community to drive a healthy chunk of their business.
Partners should anticipate that vendors will look under the hood of profitable partner organizations in their attempt to understand how these players achieve profitability. In other words, what are the profitable partners doing that others in the ecosystem need to learn?
As the momentum of cloud adoption continues, one thing has become very clear: Organizations will adopt a hybrid model. That means some businesses will have a percentage of IT on-premises and some off-premises -- whether off-premises involves private, public or community resources. In this hybrid world, the ability to manage and orchestrate a solution is far more complex and is a challenge channel partners have to prepare for.
So the skills required to actually develop, manage and maintain a hybrid cloud environment requires the channel to invest in areas they have not had to invest in historically -- things like cloud management platforms (CMP) and IT operations management, for example.
That said, it's still early in the game and the CMP providers are still figuring out how to manage hybrid cloud, so watch this space. Vendors such as CA, EMC, Hewlett-Packard, IBM, Cisco and others are all making acquisitions around the hybrid cloud environment.
The third platform
Mobililty, cloud, big data analytics and social -- collectively referred to as the third platform -- are expected to dominate growth in the next few years, with 2014 representing the most growth in the market, according to Paul Edwards, director of infrastructure channels research at IDC.
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"Some of that growth is going to be cannibalizing second-platform business, i.e. LAN/Internet and client-server," he said.
In 2014 partners will have to start thinking, if they haven't already, about how they'll engage in the third platform if they want to grow their business. Industry watchers suggest that partners pick up one or more of the components of the third platform.
Some channel partners have already made the leap to engagements in mobile and the cloud as a part of that. Pete Peterson, senior vice president of U.S. sales at Tech Data Corp., confirmed that, noting that given the success the company experienced in its cloud and mobility business in the past 12 months, he expects to see continued momentum in 2014.
Those partners who are able to gravitate to additional areas of the third platform -- big data analytics in particular is slated to be a big information technology trend in 2014 -- can expect even greater success.
Partners who follow this strategy will also heighten their value proposition to both customers and vendors, and expand their capabilities to sell to both the LOB and C-level executive from a more consultative perspective.