By Jay McBain, Co-Founder of ChannelEyes – The mobile platform for the Channel
Upwards of 30% of Channel Partners that were in business a couple of years ago are no longer operating. This is double the traditional attrition rate that comes from businesses going bankrupt, being acquired, or just shutting down to pursue other opportunities.
Adding to reduction in customer spending due to the economic downturn, the Channel has had to deal with hardware margins that have bottomed out, software margins collapsing due to the cloud and new licensing scenarios, and most troubling, the commoditization of traditional and managed services.
The good news is that partners that have weathered the perfect storm have likely transformed their businesses and are well positioned to take advantage of these future opportunities:
1. Channel evolving to be Vendors – We have seen this trend escalate in the past number of years. Partners have developed such deep industry and customer expertise that they have built custom software, services and in some cases, hardware to solve specific customer challenges. As the world has become flatter, these partners are finding customers across the globe for these specific solutions. In 2014 we may see a cross-over point where there are more vendors than Channel Partners in the world!
2. Managing the Internet of Things – As we enter 2014, the average knowledge worker owns 3 devices that they are looking to add to the company network. This BYOD trend has been around since 2010, but will escalate significantly when the average worker will have 10 devices in the next 5 years. Planning, consulting, policy creation and deployment, provisioning, protecting, remotely managing, ensuring industry compliance, and controlling data fragmentation and portability will drive significant Channel opportunities over the next decade.
3. Infrastructure becomes important again – The Channel WILL sell hardware – and lots of it. The Internet of Things will drive significant upgrades in basic infrastructure such as wireless capacity, audio/video equipment, mobile printing, document management, and building electrical. Yes, 10 devices will have 10 charging dongles. New hardware such as in-memory computing, extreme low-energy servers and cloud-enablement and security devices will provide additional opportunity.
4. Line of Business overtakes IT – Key opportunities over the next few years reside outside of the IT department. Sales, Marketing, Finance, HR and Operations are driving forward with technology requirements on their own because of the cloud and consumerization of hardware. Just look at the growth of companies like Salesforce, NetSuite and Marketo. These decisions are sometimes rogue in nature and bypass the IT team completely. BYOA, or Bring Your Own App, is also compounding this problem as (well meaning) individuals are adding consumer-grade apps onto their personal devices and using them for business purposes. Security, compliance and data fragmentation are usually afterthoughts.
5. Small data feeds big data – Small and medium customers drive important data that can be leveraged upstream. The future of Big Data actually resides in bringing together information from multiple smaller sources on demand, replacing the single data warehouse model. The Channel will have the skills and connections to make this happen, driving new sources of business intelligence for customers that didn’t have this access before. All boats will rise.
The Channel has always profited from confusion and complexity. While the cloud and pervasive hardware devices appear (to the customer) to simplify the environment, the opposite is happening.
Managing security, compliance, data portability, fragmentation and supporting all these new devices will provide significant opportunity for Channel Partners in 2014.