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Why Channel Transformation is the Next C-Level Priority

Tom Perry
by Tom Perry - February 11, 2021

The past year has seen a huge technological transformation as the Covid pandemic has truncated three years of tech advancement into 11 months. The Vendor, Partner and channel community is no exception and as 2021 progresses, a defined shift in Channel strategy is also progressing that will have many C-level executives sitting up and taking notice.

Why? Let's take a look at some of the factors.

Channel Revenue is on Average 60%+ of Total Revenues 

This in and of itself deserves your attention.

For most tech companies, total revenue derived from the channel is in excess of 60%, and yet the channel organisation, technology and human infrastructure required to successfully grow and accelerate revenue from the channel is under-invested and has been for the past decade.

Marketing, channel and alliance leaders should seriously examine levels of investment in this area – a 3-5% uplift in channel and alliance revenues (which is distinctly possible by-the-way) will have an exponential effect on a company’s fortunes and market valuation. But it requires specialist knowledge and a brave heart to tackle those areas in channel and alliance management that will deliver growth.

Canalys predicts that organisations are currently rushing to the cloud to transform digitally. A number of Vendors we speak to have analysed their current Partner portfolio and realised it needs an injection of different types of Partners to take advantage of this.

👉 Related [Channel Insights] State of Channel: 2020 Lessons and Channel Transformation in 2021

New Partner Types

Gone are the days of the single model ‘resell’ only channel. The evolution of channel Partners that can deliver exponential growth in a cloud and SaaS environment is here, and these new types of Partners and channels require different types of support from their Vendors. But this specialisation of Partners into categories such as Buy, Build or Serve is beneficial to the end customer and you, as the Vendor Partner.

Partner management programmes have to adapt quickly to support these new types of Partner. The old ways of quarterly MDF and accreditation models are no longer fit for purpose. Vendors need to be building and managing marketplaces that place the consumer at their very heart.

Channel, Partner and Alliance Technology Under Investment

Managing new and different types of Partners requires new levels of automation and there is a raft of new channel orchestration technologies being developed at pace.

The current crop of PRM systems is limited in functionality, ageing quickly and don’t deliver on the promise of AI or machine learning. The tech stack required for the new channel environment we see emerging places revenue management via Partners at its centre. And it is no coincidence that Salesforce’s latest product initiative is in this area.

Partner Positivity/Partner Strategy

Not Just Lip Service. Tradition dictates that the ‘channel’ part of any tech business has not had as much airtime or resourcing as its direct counterpart has, especially in relation to marketing and technology investment. It is not where ‘brand’ decisions have traditionally been made and to be honest ‘channel’ has just ‘worked’ for the last 30 or so years, delivering steady but large proportions of revenue.

However, if a year of change brought on by Covid has taught us anything, it is that all parts of a business are in the crosshair for transformation, especially channel.

A core group of technology Vendors such as Salesforce, Google, IBM and HPE have committed to significant Partner and Channel investments to make this new customer-centricity prominent in their strategies. IBM’s recent announcement regarding its investment in PartnerWorld demonstrates this.

There is also a bi-product for Alliance leaders here – your Alliance Partners must be on the same trajectory to avoid an imbalance in service and product provision. Get the channel eco-system right and Alliances and OEM relationships benefit as well.

True Specialisation is Born and Delivered in the Channel

Consumers of technology, whether they be individuals or corporations, are becoming more demanding, require deeper specialisation and demand instant solutions. The channel is by far the best and most scalable vehicle for this specialisation to be developed and delivered. What support can Vendors give to speed up specialisation?

Your Customer Experience (CX) is in the Hands of the Channel

With the advent of new marketplaces and eco-systems we’ve described above, it is clear that as Vendors you are placing more trust with the channel to deliver a consistent and excellent customer experience. 

Providing the tools and training to ensure consistent CX is vital and of course, allied to the whole Partner Experience (PX) of working with you. CX follows on from PX. There is a direct correlation between the CX you prioritise for your end-users and how you work with Partners across all aspects of their business to achieve it. Collaboration, innovation and rigorous planning with Partners will ensure joint success.

I’ve tried to relay some of the main topics we are seeing throughout our network of global tech Vendor clients. Our own research conducted in 2020 working with 30+ Vendors on their readiness for Channel Transformation shows there is a way to go for most vendors in the key areas required to push channel revenue onwards.

Channel Transformation is upon us – activating a strategy around this is now something that should be moving up the agenda for senior tech executives, whether they are channel or direct executives.


For more information or to discuss how Sherpa can help you, please get in touch:

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