In a recent IDC webcast, "Worldwide IT Channels and Alliances Predictions 2014," the worldwide channels and alliances team shared some insights as to what might lie ahead for the channel this year. The research organization pinpointed the top alliance and channel trends that partners should be watching. SearchITChannel caught up with one of the authors of the webcast, Darren Bibby, program vice president for channels and alliances research...
at IDC, to discuss the impact of some of those trends on channel partners and why they should be paying attention.
For starters, the webcast discussed software revenue moving through the North American channel. According to IDC, indirect spending on software -- including applications, application tools, such as middleware and databases, and system infrastructure, such as operating systems and network management, for example -- accounted for $78.7 billion in 2012 and is predicted to reach $109.6 billion in 2017.
"As software matures, the percentage of indirect sales tends to increase. And, today, we no longer have too many immature parts of the software market. However, there are some new entrants, such as social software, that's more direct right now but over time could go indirect," Bibby said.
Still, there is a saturation point for indirect spending, but for software, that type of leveling is still five or six years away, according to the analyst.
On the other hand, hardware spending -- which includes networking, storage and servers -- was $33.2 billion in 2012 and is expected to reach $39.8 billion in 2017. That growth rate indicates hardware spending is starting to level off.
Partner enablement is another channel trend to watch in 2014 as partners move from being resellers to selling solutions. Enablement will become the new currency, more important than incentives, Bibby said.
"At this point, a partner becomes more interested in how a vendor will help them grow their capability and capacity, and provide opportunity to add value to customers," Bibby said. At the same time, partners will lessen their focus on how many discount points they can get and what the vendor's rebate structure looks like, for example.
Another key focus for partners will be transitioning to cloud and turning to vendors for help or enablement. "With cloud, the economics change, the culture changes, the people, skills, compensation for the sales people changes. What vendor is going to be the best to help their partners make the transition to the cloud?" Bibby said.
Watch to see which vendors rethink their partner programs in 2014, as major partner program redesigns are a must in the new year, according to the IDC researchers. Programs need to change to address multiple activities, new partners, new influencers, and top and loyal partners.
The importance of telcos is another top trend for partners to keep an eye on in 2014 because they can play so many roles in the ecosystem. They have a lot going for them; for example, they may be aligned with IT vendors, they have a huge base of small- and medium-sized business customers with whom they have billing relationships, they're tightly aligned with cloud and mobile, and they have great marketing engines, for example.
"They can be a great partner to market IT offerings, especially the simpler cloud offerings," Bibby said.
Telcos also have their own channel programs -- look at AT&T and Verizon as examples -- and can be service providers with their data center capabilities. Watch this space.
Partner differentiation is also on the list of the top 10 channel trends of 2014. With cloud commoditizing traditional offerings, partner differentiation becomes key to survival in 2014 and beyond.
With Software as a Service offerings, customers need less infrastructure, which is the bread and butter for many partners. "So what's going to be the thing that sets any partner apart?" Bibby asked.
To set your business apart, he suggested focusing on particular industry expertise or a particular business process, learning the vocabulary of the line of business and differentiating your partner business based on your unique intellectual property.
And finally, Bibby said, partners must make the transition to a cloud business model -- making a monthly buying model an option for customers. Also, expect to see a new breed of salesperson become the new normal in 2014.