The 10-Part Formula for Winning in Today's Channel

A large number of channel programs get stuck in the exact same place. After countless hours of planning, building and executing a robust set of partnering strategies and mechanics, channel chiefs miss some very important steps in their go-to-market activities.

Having observed hundreds of channel programs and comparing their success in the marketplace, I have come to a couple of simple conclusions:


1. Some vendors win because their product wins. 

Many of the successful vendors that you see headlining shows today were in the right place at the right time with the right amount of innovation. Read Outliers by Malcolm Gladwell for a fascinating look at what might have happened if Bill Gates or Steve Jobs were born 5 years later.

When your product wins, building a channel is easier with thousands of partners lining up to get in on the action.


2. Other vendors win because they understand how to influence the channel.

This is much more difficult and the subject of this blog.

We all know that the channel is highly-decentralized - by specialty, geography, industry focus, customer segment, business model, and a myriad of other things. What smart channel chiefs understand is that influencing this large group of disparate people involves a wide array of tactics, and a ton of manual labor.

It is important to note that the channel is rarely fooled twice. There have been many examples of vendors becoming highly visible and not backing it up with the product, program, pricing, place, promotion and internal channel religion to make it sustainable. Assuming your ducks are in a row, it is time to execute the 10-part formula.

The formula boils down to a very simple concept. Partners are made up of people who, like all of us, need to feel part of something. There are over 600,000 technology partner companies worldwide, with millions of professionals working at them, who all need to connect, learn and engage to be the best they can be. (Want to know more about the size of the channel? Read here.)

Gartner reports that peer networking, associations and communities are the highest ranked ways that small and medium businesses learn, form opinions, and in the end, make decisions. However, these peer to peer connections are not made under some huge global umbrella organization. This is the crux of the problem I started with above - and a large reason that many channel programs under-deliver today.

What if you were able to sit down with millions of partners individually and ask them the following:

- What do you read?
- Who do you follow?
- What events do you attend? listen to? watch?
- How do you make vendor decisions?

The answers would probably surprise you - there are hundreds of sources of influence in the channel and they tend to have a very loyal and engaged subset of followers. (Want to learn more about marketing to a decentralized channel? Read here.)


10 MAJOR SOURCES OF INFLUENCE


1. Industry Media

In the technology and telecom space, there are 16 sizable media companies around the world who have been quick to recognize the communities trend, and have formed powerful offerings under their trusted brands. Looking at their advertising guides, you will quickly notice that unique readers are high among all of them.

Simply put, partners don't have the time to read a stack of magazines or a bunch of newsletters - they tend to choose only one brand to follow. How does this align with your media strategy?

2. Associations

There are numerous associations, both generic as well as hyper-focused. Surprisingly, the largest association in the world (by far) doesn't even reach 5% of the intended audience. Looking at your product portfolio, are you aligned with the macro and micro based communities where your partners are engaging?


3. Analysts

Depending on the size and maturity of partner channel you are recruiting, analyst firms can have a major impact on whether you are considered for your product category. Research by firms such as Gartner, IDC, Forrester, SiriusDecisions, and ZS Associates tend to carry a lot of weight as the size of partner grows.

There are hundreds of mid and smaller sized analysts that carry weight as channel consultants that also have power in making vendor decisions. Are you spending enough time building relationships (and getting into the right quadrant) in the analyst community?


4. Distributors

Depending on your product category, making the commitment to broadline or niche distribution will be important. From an influence perspective, especially in North America, the distributors have out-sized reach and marketing budgets to drive partner influence. Many small and midsized partners use distribution almost exclusively for learning and community.


5. Vendor communities

Several companies have built impressive communities that serve their ecosystem. For example, in the managed services world, companies such as ConnectWise and Autotask have built large and loyal followings of partners that they offer others opportunities to market through. There are many more examples ranging from SaaS ecosystems such as Salesforce Dreamforce to traditional vendors such as HP, Dell, Cisco and Lenovo.


6. Peer Groups

Many partners that I have worked with swear by peer groups. The ability to engage with like-minded folks and solve problems in a very human-centric way is a huge benefit for them. There are larger, more formal peer groups run by companies such as HTG, Taylor and TruMethods. In most cases, these peer groups try to avoid outside influence but do have sponsorships for events available. In some cases, vendors can actually participate.


7. Bloggers / Thought Leaders / Consultants

This is a broad group, but one that is important in breaking into several partners. I created a list recently on the Top 100 most visible people in the channel and many of these individuals ranked high on the list. Because they tend to be very visible, they have influence on a large number of partners across many of the communities mentioned here.


8. Tradeshows

There are over 150 channel-related technology tradeshows in the US alone each year. The majority of channel professionals will only attend 1 or 2 events so understanding your target partner and having a healthy tradeshow calendar is a must. I have written extensively on winning at tradeshows - including this infographic.


9. Social

Being on social means more than having company Facebook, Linkedin, Twitter, Instagram and Pinterest accounts. There are some vendors currently winning this medium, with very socially-minded channel managers engaging at a personal level on these platforms. There are thousands of partners engaged, with real business being conducted by "people they like".


10. Shadow Channels

Having written about this for the past 6 months, I would be remiss if I didn't mention it here as a major influence. With 72% of technology decisions now being made by line of business professionals, other types of partners such as consultants, integrators, ISVs, industry-based professional services firms, born-in-the-cloud, and startups are all disrupting what traditional channels look like.  (Want to learn more about the rise of Shadow Channels? Read here.)

The shadow channel is currently the wild-west, but the professionals do need to connect, learn, and engage like everyone else. The question, as it applies to your business, is which of these types of partners are important and how do they answer the who/what/where questions asked above?

100 Most Visible Channel Leaders - 2016

I have written in the past about Paul Revere and the applicability to the IT/Telecom Channel. It came from a chapter in Malcolm Gladwell's Tipping Point book. In the 'Law of the Few', Gladwell explains that a very select group of people are responsible for the "tipping" of almost all social epidemics. These people are special for their incredible abilities to communicate, teach, and persuade.

Check it out here.

Starting way back in 2009, when I moved to the U.S. from Canada, I began my fascination with how a huge global industry, with tens of millions of people across hundreds of thousands of companies, could be boiled down to about 100 influencers and superconnectors.

Back then, I collected all 16 channel magazines, attended dozens of tradeshows, studied associations, peer groups, bloggers and activity on social media and manually created a master spreadsheet. Every time I came across a keynote speaker, top industry list, writer, board member, trainer, community leader, or vendor/distributor executive, I would write their name, company and title down along with one check-mark. If I came across them again, another check-mark was given.

My hypothesis was that these connectors and influencers would be omnipresent in the industry - showing up at different shows, articles, press releases, top industry lists, communities, radio shows, and so on. A quick sort on check-marks would give me a visibility list - and what I thought was a solid influence list.

And I was mostly right.

Fast forward to today and I continue to keep track of numerous industry sources to keep the list updated. In fact, there are 36 sources that I regularly update including lists of channel leaders from leading global channel magazines, keynote speakers, various board and advisory council members, and others.

Disclaimer:  This is an objective view of the data - a scoring algorithm based on visibility across 36 different communities, importance factor, and timing recency. 

I do have another more subjective list that ranks people based on perceived influence, reach and leadership in the industry - but that is for another day.  :-)

A couple of interesting anecdotes:

1. The research tracks 2,855 people with multiple community touchpoints across 1,702 companies.

2. Social media activity is high among the top 100 - 65% of them are on Twitter, with just under half of those having 1,000+ followers. 99% of them are on Linkedin - here is looking at you Mike Cullen :-)

Anyway, here is a stack-ranked list of the top 100 IT/Telecom industry leaders by visibility:

1.  Rob Rae, Vice President of Business Development , Datto   Points: 57

2.  Janet Schijns, Vice President Global Channels, Verizon   Points: 50

3.  Dave Sobel, Senior Director of Partner Community, Solarwinds MSP   Points: 49

4.  Len DiCostanzo, SVP, Community and Business Development, Autotask   Points: 48

5.  Arnie Bellini, CEO, ConnectWise   Points: 48

6.  MJ Shoer, Chief Technology Officer, Internet & Telephone   Points: 44

7.  Vince Tinnirello, CEO, Anchor Network Solutions   Points: 41

8.  Craig Schlagbaum, VP, Indirect Channel Sales, Comcast   Points: 40

9.  Brooks McCorcle, President, Partner Solutions, AT&T   Points: 38

10.  Scott Barlow, VP, Global MSP, Sales & Marketing   Points: 37

11.  Ted Roller, Owner, GetChanneled   Points: 36

12.  Gary Pica, Owner, TruMethods   Points: 34

13.  Arlin Sorensen, CEO & Founder, HTG Peer Groups   Points: 34

14.  Renee Bergeron, Vice President, Cloud Computing, Ingram Micro Inc.   Points: 31

15.  Larry Walsh, CEO and Chief Analyst, The 2112 Group   Points: 30

16.  Jason Bystrak, Executive Director - The Americas, Ingram Micro   Points: 30

17.  Mary Ellen Grom, VP US Marketing, Synnex   Points: 29

18.  Dave Seibert, President, SMB TechFest   Points: 29

19.  Wendy Bahr, SVP Global Partner Organization, Cisco Systems   Points: 28

20.  Dina Moskowitz, CEO, SaaSMAX Corp.   Points: 28

21.  Shannon Mayer, Vice President of Channel Development, ASCII   Points: 28

22.  Neal Bradbury, Co-founder & VP of Channel Development, Intronis Inc.   Points: 28

23.  David Graffia, VP Sales, dinCloud   Points: 28

24.  Mike Cullen, VP of Sales, Solarwinds MSP   Points: 28

25.  Tiffani Bova, Global, Customer Growth and Innovation Evangelist, Salesforce   Points: 27

26.  Stuart Crawford, CEO, Ulistic   Points: 27

27.  Karl Palachuk, Owner, Small Biz Thoughts   Points: 27

28.  Ted Hulsy, VP of Marketing, eFolder   Points: 27

29.  Ed Correia, CEO, Sagacent Technologies   Points: 27

30.  Stuart Selbst, President, Infratactix   Points: 26

31.  Nancy Hammervik, Senior Vice President Industry Relations, CompTIA   Points: 26

32.  Toni Clayton-Hine, VP, Global Marketing & Value Proposition, Xerox   Points: 26

33.  Darrin Swan, CEO, CloudRunner   Points: 25

34.  Cheryl Cook, Vice President, Global Channels & Alliances, Dell   Points: 24

35.  Meredith Caram, Executive Director - AT&T Partner Solutions, AT&T   Points: 24

36.  Jamison West, Founder & CEO, Arterian   Points: 24

37.  Carmen Sorice, SVP, Global Channel Sales and Programs, Sungard AS   Points: 24

38.  Shannon Sbar, VP Channels North America, APC by Schneider Electric   Points: 24

39.  Leslie Bois, Vice President Channel Sales-North America , Kaspersky Lab   Points: 24

40.  Michelle Accardi, Chief Operating Officer, Star2Star Communications   Points: 24

41.  Brooke Cunningham, AVP, Global Partner Programs & Operations, Splunk   Points: 23

42.  Jeannine Edwards, Sr Director, Platform Strategy, ConnectWise   Points: 23

43.  Luis Alvarez, President & CEO, Alvarez Technology Group   Points: 23

44.  Dan Wensley, President, Passportal   Points: 23

45.  Alessandra Brambilla, Vice President WW, Hewlett-Packard Enterprise   Points: 23

46.  Curtiz Gangi, Vice President, US Channels, Datacenter Segment, Eaton   Points: 23

47.  Frank Vitagliano, VP North American Partner Sales, Dell   Points: 23

48.  Bob Gault, EVP Worldwide Sales Services Channels, Extreme Networks   Points: 23

49.  Scott Dunsire, VP GM Americas Channels, Hewlett Packard Enterprise   Points: 23

50.  Todd Thibodeaux, CEO, CompTIA   Points: 22

51.  Bill Lipsin, VP Worldwide Channels, NetApp   Points: 22

52.  Amy Babinchak, Owner, ThirdTier   Points: 22

53.  Theresa Caragol, Founder & Consultant, Theresa Caragol Consulting   Points: 22

54.  Kevin Royalty, Managing Partner, Total Care Computer Consulting   Points: 22

55.  Susan Bradley, Partner, TSHB   Points: 22

56.  Justin Crotty, Senior Vice President Channel Sales and Marketing, NetEnrich   Points: 21

57.  Tracy Pound, Managing Director, Maximity Limited   Points: 21

58.  Carolyn April, Senior Director of Industry Research, CompTIA   Points: 21

59.  Barbara Spicek, VP Worldwide Channel Sales, Gigamon   Points: 21

60.  Colleen Kapase, VP Partner GTM, Incentives and Programs, VMWare   Points: 21

61.  Donna Grothjan, VP WW Channel Distribution, Hewlett-Packard Enterprise   Points: 21

62.  Kendra Krause, VP Channels, Sophos   Points: 21

63.  Cindy Bates, Vice President US SMB, Microsoft   Points: 20

64.  Kimberly Martin, VP, Worldwide Partner Strategy & Sales, Citrix Systems   Points: 20

65.  Erick Simpson, Co-Founder, Senior Vice President and CIO, SPC International   Points: 20

66.  Terry Hedden, CEO, Marketopia   Points: 20

67.  James Foxall, President, Tigerpaw Software   Points: 20

68.  Ron Culler, CTO, Secure Designs Inc.   Points: 20

69.  Carl Mazzanti, Founder and CEO, eMazzanti Technologies   Points: 20

70.  Colleen Browne, Director, NA Channel and Enterprise Sales, Viewsonic   Points: 20

71.  Linda Brotherton, General Manager, ConnectWise   Points: 20

72.  Alex Rogers, CEO, CharTec   Points: 20

73.  Mary Campbell, Vice President of Marketing, D&H Distributing   Points: 20

74.  Steven Banks, President, Banks Consulting Northwest Inc.   Points: 20

75.  Jeanne Hopkins, Senior Vice President & CMO, Continuum Managed Services   Points: 19

76.  Vincent Brissot, Head of Channel Marketing & Operations, HP   Points: 19

77.  Marie Rourke, Owner & President, WhiteFox Marketing and Communications   Points: 19

78.  Greg VanDeWalker, SVP and General Manager, GreatAmerica Leasing   Points: 19

79.  Paul Dippell, CEO, Service Leadership   Points: 19

80.  Julie Hens, Vice President, U.S./Canada Channels Distribution, Cisco Systems   Points: 19

81.  Craig West, SVP, Channel Sales, NetSuite   Points: 19

82.  Jim Lippie, Chief Advisor, Clarity Channel Advisors   Points: 19

83.  Nancy Reynolds, Vice President, Americas Channel Sales, LogRhythm   Points: 19

84.  Barry Williams, Executive Director, Indirect Channel Sales, Comcast   Points: 19

85.  Robin Robins, Owner, Technology Marketing Toolkit   Points: 18

86.  Phil Sorgen, Corporate VP - U.S. Enterprise and Partner Group, Microsoft   Points: 18

87.  Jed Ayres, CEO, IGEL Technology   Points: 18

88.  Jane Cage, Managing Principal, InsightFive22   Points: 18

89.  Peter Sandiford, CEO, Netsone Technologies   Points: 18

90.  Jan Spring, Vice President, Channel Development, eFolder   Points: 18

91.  Gavin Garbutt, Strategic Advisor, VIPSoftware Co.   Points: 18

92.  Jerry Koutavas, President, ASCII   Points: 18

93.  Harry Brelsford, Director of Business Development, LeadSCORZ   Points: 18

94.  Terry Wise, Vice President, WW Alliances, Channels and Ecosystem, Amazon   Points: 18

95.  Vince Bradley, CEO, WTG   Points: 18

96.  Tricia Atchison, Vice President, Global Partner Marketing, CA Technologies   Points: 17

97.  Amy Luby, Vice President Sales - US, Sinefa   Points: 17

98.  Zak Karsan, Co-Founder, SecureEDEN   Points: 17

99.  Dee Dee Acquista, Vice President, WW Channel Sales, Proofpoint   Points: 17

100.  Erin Malone, Vice President, NA Channel Sales, Sophos   Points: 17

Next time you are at an industry conference, make sure to say hi to these folks. 

Applying the law of Kevin Bacon, you will be one-degree of separation of millions of people by knowing these leaders. Also, follow them on Twitter and Linkedin - some of the best thought leadership you will find anywhere!

THE RISE OF SHADOW CHANNELS - 5 New Competitive Threats for IT and Telecom Partners

I have written extensively this year about the changes happening in the traditional IT and telecom channels. Here are some of the major industry trends that have accelerated these changes:

• 30% decline in the number of traditional channel partners since recession of 2008
• 40% of partner owner/principals plan to retire in the next 8 years
• 75% of technical professional services will be delivered by millennials at that time
• 72% of all customer technology decisions led by Lines of Business (growing to 90%)

We know that millennials are not joining leadership/ownership roles within traditional channel companies in sufficient numbers. Business models based on managed services, client/server management, hardware sales, and break-fix do not seem to be enticing the next generation.

Channel margins have been challenged for over a decade, with eroding hardware, software and services resell opportunities. Further, increased competition and more efficient tools and processes has commoditized the delivery of IT and telecom. There is also a degree of consumerization that threatens traditional cash cows with the rise of Apple, Google and the like.

Millennials are joining the broader technology industry and other industries that are radically transforming themselves into tech companies. Read the annual reports of the Fortune 500 and you would think that they are all technology companies.

The changes in how companies make technology decisions, led by the lines of business, used to be called “shadow IT” or “rogue IT”, but today is the new normal. This change in the customer buying journey has been heavily influenced and accelerated by several “shadow channels”.

Who are these shadow channels?

The shadow channel is a broad and diverse group of companies from all backgrounds who engage, influence, recommend and even resell technology to lines of business. It is useful to break them into categories:

1. SaaS ecosystem consultants and integration partners
2. Independent Software Vendors (ISVs)
3. Industry-based professional services firms
4.  “Born in the Cloud” IT and telecom firms
5.  Start-ups looking to disrupt traditional industries

Let’s take a closer look…

1.  SaaS ecosystem consultants and integration partners

The growth of the software-as-a-service industry since early in 2000 has been staggering. Major, multi-billion dollar revenue streams are still growing north of 30% - 15 years later.

We are now seeing clear winners in each of the line of business categories. For example, 10 years ago there were over 300 CRM solutions competing in a very fragmented market. Salesforce has now secured almost 1/5 of all CRM opportunity and competes in a more narrow, established market between on-premises and cloud offerings.

Other winners include companies like Marketo, Netsuite, Workday and many others. All of these winners have built impressive ecosystems around their products where all boats are rising – and quickly. For example, Salesforce has over 1,000 partners globally that drive over $20B in revenue. That is estimated to be $4.14 for every $1 a customer spends on the CRM license (according to IDC). Similar numbers are seen across all LOB ecosystems.

This is primarily consulting and integration revenue. The Salesforce ISV and customized developer partnerships drive billions of more dollars of value. In fact, Marc Benioff, CEO of Salesforce, outlined a $290B ecosystem opportunity value over the next 5 years for those that want to compete.

According to Goldman Sachs research, the SaaS economy drives $106B in revenue this year, growing by 30% CAGR for the foreseeable future. With the opportunity of $5 for every SaaS dollar, we are looking at a half-trillion dollar opportunity that hasn’t yet been realized. I personally don’t believe the number is that high, but anything multiplied by $106B is significant.


2.  Independent Software Vendors (ISVs)


Keeping on the Salesforce example, the ISV ecosystem is called AppExchange and it has 3,000 apps, generating 4 million downloads, $20B in ISV revenue (including a sizable chunk that Salesforce takes off the top in a revenue share). An impressive 75% of their customers use Apps in addition to the core software.

There are several unicorns (companies worth over $1B in market value) that are completely reliant on these SaaS ecosystems. Adding tools, workflow, customized and specialized industry solutions, and other value adds is a very lucrative environment for entrepreneurs. The investment community of venture capitalists are also eager to back companies in these ecosystems with hundreds of dedicated funds.

The shadow competition comes in the form of free services. In the rush to grab share, many ISVs (and the investment community behind them) measure recurring revenue on the software and tend to give away or look negatively upon one-time, project based services.

3.  Industry-based professional services firms


Every company is being forced to become a technology company. Whether it is a car company with Tesla sneaking up, transportation company with Uber, hospitality company with AirBNB, or any other of the 27 industries, technological disruption is threatening traditional companies with extinction.

This means that every ancillary service or consulting company supporting these industries is being forced into technology as well.

CompTIA did an excellent piece of research in late 2015 focused on the professional services vertical. Looking specifically at accounting, legal and marketing firms they drew a couple of important conclusions:

1. These verticals are huge, rivaling the size of the IT and Telecom Channel in terms of number of firms. The best estimate for IT firms in North America is 160,000 while legal has 190,000, accounting has 133,160 and marketing has 105,180.
2. More than just size, these companies are rapidly converging into the broader IT and Telecom space. For example, 51% of accounting firms resell software today, with 33% more considering it. The numbers are similar for offering IT compliance, consulting, advisory and assessments.

By the year 2020, more than 80% of accounting and marketing firms will be indistinguishable from traditional IT channel partners. Legal is slightly lower at 55%, but still heading the same direction.

Now think about every company, in every industry becoming a competitor for these technology dollars that lines of business are increasingly spending. This casts a huge shadow and is very tough to compete with.

4.  “Born in the Cloud” IT and telecom firms


Much has been written about born in the cloud – and most of it turned out to be wrong.

Don’t get me wrong, there are many successful companies that have been started in the cloud era, with business models purpose-built for this environment, and finding success as brokers, integrators and building trust within lines of business. I spoke at an Ingram Cloud event earlier in the year with 1,300 of these eager folks in attendance.

The great influx of millennial, born-in-the-cloud VARs and MSPs hasn’t materialized as predicted however. The technology industry is struggling to stay in the top 10 of most desired industries for college grads.

Technology is so intertwined with business today that younger people look to themselves as sales, marketing, HR, operations or finance leaders and that technology is an obvious and ubiquitous part of their job role.

With all that said, born in the cloud is still a formidable shadow channel as the skill level is high, business model optimized and energy level high.

5.  Start-ups looking to disrupt traditional industries


It is difficult to measure startups, as many countries don’t keep track. The best estimate from the Global Entrepreneurship Monitor is there are about 613 million people trying to start about 396 million businesses. About one third will be launched, so you can assume 133 million new firm births per year, with just shy of 2 million of those being technology startups.

Forbes reported 50,000 companies get Angel funding in the US, with 4,000 of those moving on to secure venture capital funding per year.

These are big numbers – but safe to say that innovation and entrepreneurship is as hot as ever. Each of these companies have a new idea or, what they think, is a better way to do things.

The shadow channel effect is that traditional service-based opportunities could be automated, replaced or deemed redundant in the future. The traditional channel is not immune to the reported 47% of jobs that could be replaced by artificial intelligence, machines and robotics in the near future.

Summary


It is hard to predict the impact of each of these shadow channels against the future technology opportunity. We do know that competition for traditional partners is shifting from the business across the street to a myriad of influencers on end customers.

The good news is that the pie is also growing. The technology industry is expected to grow by 5.1% this year and is looking positive for years to come. The skills and resources to take advantage of this pie look much different than they did even 3 years ago.

The shadow channel is currently the wild west - the equivalent of where the traditional channel was maturity-wise in the early 1990’s. They are putting customer businesses at risk everyday by playing fast and loose with customer data, financial and even HR data. Proprietary information is flying everywhere across public clouds by smaller startups with little control or regard for the ramifications (or regulations).

The traditional channel has an opportunity to play a crucial role. Through strategic partnerships of their own, mergers, acquisitions, hiring/adopting the right skills, as well as business model changes, they can ensure that maturity is injected back into the system. Things like business continuity, security and compliance are critical requirements of  the LOBs – and very few in the shadow channels can execute at this point.

An Open Letter to CompTIA

As the time counts down on another successful ChannelCon, I wanted to document some thoughts before I return back to the grind.

First and foremost, the event this year in Fort Lauderdale was fantastic, the CompTIA staff is amazing, and the get-together feels like a family reunion (even comes complete with some crazy uncles and aunts!).

Two years ago, Todd Thibodeaux, CEO of CompTIA said two things that I personally found startling about the channel:

• 40% of partners are going to retire in the next 10 years
• 75% of the channel will be made up of millennials at the end of those 10 years.

These are both coming true, and probably faster than predicted.

Herein lies the challenge for the traditional IT and Telecom channel, and CompTIA in particular. 

Millennials are not joining leadership/ownership roles within “our” channel. They are, however, joining the broader technology industry and other industries that are radically transforming themselves into tech companies.

Todd mentioned in this year’s keynote that Technology was struggling to stay in the Top 10 of desirable industries. With the surge of AI, virtual reality, robotics, IoT, mobility, self driving cars, Pokemon and other cool stuff – this seems perplexing.

When Marc Andreeson predicted that “software will eat the world” 5 years ago, we felt that the channel would lead the charge on driving this change with their customers. With deep skills in security, infrastructure, compliance, and a host of other important things, the IT industry would enjoy a renaissance of sorts.

Well, the opposite has happened.

IT departments have steadily lost power, and the CIO has relinquished purchasing control to the line of business executives. In fact, Gartner reports that 72% of all technology spend is now being led out of LOBs – much of the time without IT influence. In only a few years, this will be 90%.

This was once called “shadow IT” or “rogue IT”, but today is the new normal. Much to the surprise of CompTIA, and the channel industry as a whole, this change in customer behavior has also spawned the “shadow channel”.

The shadow channel is predominantly made up of “born in the cloud” millennials that have built successful businesses inside the ecosystems of SaaS companies. For example, Salesforce has 695 partners that drive over $20B in services – none of them present at ChannelCon.

In fact, NONE of the Top 100 SaaS companies in the world had a booth at ChannelCon 2016.

Dreamforce, an annual conference in San Francisco (run by Salesforce) is now the largest software tradeshow in the world. With over 150,000 attendees, you can see the new shadow channel in action – consultants, integrators, and other experts at serving the LOB customer, solving customer pain points and delivering real business outcomes.

As much as we try to convince ourselves differently, things like security, backup, disaster recovery, remote management and the plethora of other business critical solutions the channel faithfully delivers, do not drive business outcomes in the same way. Hence, the disconnect.

While the traditional channel has shrunk by more than 30%, the shadow channel has exploded in numbers over the same time period.

Not only did none of the Top 100 SaaS companies have a booth at ChannelCon, their partners were not in attendance either. CompTIA needs to immerse into their ecosystems to understand where (and if) it can provide value. Where do they go to learn? How do they certify their people? What do they read? Who do they follow? How do they run their businesses?

THIS is the channel of 2024, where 75% of the participants will be millennials. By then, we won't be calling it shadow channel any longer - it will be the new normal. Does CompTIA represent and lead this new channel or stay with whatever is left of the traditional one?

Action needs to be taken – and fast.

The shadow channel is currently the wild west - the equivalent of where our channel was maturity-wise in the early 1990’s. They are putting customer businesses at risk everyday by playing fast and loose with customer data, financial and even HR data. Proprietary information is flying everywhere across public clouds by smaller startups with little control or regard for the ramifications (or regulations).

The traditional channel has the opportunity to play the adult in the room. It may not be sexy to talk about business continuity, security or compliance with LOBs – but someone needs to do it. If the IT department is losing power, the channel needs to step up to protect these customers. Mistakes in these areas can cause business-ending catastrophes or even put executives in jail.

CompTIA, its members, staff and Board all need to take stock. Software is eating its world too. Larger hardware and software companies are busy making a pivot for survival (perhaps why they weren’t exhibiting this time around) and the association needs to as well.

These LOB focused SaaS companies – as well as their partners and ecosystems – are the future of IT, at least for the next decade. How does CompTIA help train them? How does it speak for them in Washington? How does it design communities and councils to attract them? How does it deliver relevant research and events?


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Building a Channel Partner for the Year 2020

Steve Jobs and Warren Buffett made a quote by Wayne Gretzky go viral in recent years: “I skate to where the puck is going to be, not to where it has been.” It was sage advice that Wayne’s father (Walter) gave him growing up – and landed him in the Hall of Fame with dozens of records that may never be beaten.

If you are one of the nearly 600,000 VARs, agents, solution providers or MSPs in the IT & Telecom channels worldwide – it is advice that is now more important than ever.

I have written extensively in the last couple of months about disruptions in the channel caused by the cloud and changing customer buying models. The most popular of these blogs were: 

1. Here is why the traditional IT & Telecom channel is shrinking at an alarming rate – and what to do about it

2. Where are all of these so-called “Born in the Cloud” Partners Anyway?

3. The End Of The IT Channel As We Know It. (And the start of something amazing!)

There are changes happening in the industry that require action. The good news is that they are playing out over the next 5 years - giving time to properly plan, build a strategy and execute.

As correctly predicted by Marc Andreeson in the Wall Street Journal 5 years ago, software is indeed eating the world. Every industry has been transformed, including the buying journey itself. The center of gravity for buying decisions has fundamentally shifted to cloud software and into the business units. 

5 years ago, about 80% of technology decisions were researched and made in the IT department, today it is only 28%. In fact, Gartner predicts that it could be as high as 90% of decisions made outside of IT by 2020.

This radical shift in buying process has already had a couple of major impacts on the channel:

1. By the year 2020, the spending on IT cloud environments will surpass the total spending on enterprise IT infrastructure according to IDC. Cloud infrastructure is growing by 13.1% compounded while traditional is shrinking by 1.4% per year.

2. New channels, many powered by millennials, are growing at an exponential pace. These new partners are joining ecosystems built around SaaS software companies (Salesforce, Marketo, Workday, etc.), lines of business (sales, marketing, HR, etc.), solutions (CRM, HCM, EPM, ERP, etc.), industries, sectors, geographies and even customer segments.

Back to hockey – where is the puck going to be?

With 72% of decisions now made by lines of business professionals, and growing the 90% by 2020, the obvious answer is verticals. It is actually more complex than that – I made up a term called “vectors” to highlight the intersection between industry and LOB, including other factors such as segment, sector, solution and geography.

Today, these vectors are implementing 15 different categories of solution. From largest to smallest, these are:  Enterprise Resource Planning (ERP), Customer Relationship Management (CRM), Product Lifecycle Management (PLM), Human Capital Management (HCM), Content Management, Analytics and BI, Collaboration, Supply Chain Management (SCM), Procurement, eCommerce, Treasury and Risk Management (TRM), Enterprise Performance Management (EPM), Project & Portfolio Management, IT Service Management (ITSM), and Sales Performance Management (SPM).

Perhaps more important than size is looking at the growth rate over the next few years. Some of the smaller solution areas have the most explosive growth – TPM, EPM, SPM, eCommerce and ITSM all have CAGR’s of 4% according to Apps Run The World.

Another major area is to look at the fastest growing industries. Healthcare, Life Sciences, Hospitality, Professional Services, Insurance, Media, and Education are the hottest sectors (in order) all with over 2% CAGR until 2020.

Once a channel partner lands on vector(s) that they will build skills and capacity for, the hard work begins. Deciding what vendors and distributors to partner with, understanding the ecosystem of where customers congregate, learn and engage, and building relationships in new, and sometimes uncomfortable places.

Get ready for new competition

Every potential customer is being forced to become a technology company. Whether it is a car company with Tesla sneaking up, transportation company with Uber, hospitality company with AirBNB, or any other of the 27 industries, technological disruption is threatening traditional companies with extinction. 

This means that every ancillary service or consulting company supporting these industries is being forced into technology as well.

CompTIA did an excellent piece of research in late 2015 focused on the professional services vertical. Looking specifically at accounting, legal and marketing firms they drew a couple of important conclusions:

1. These verticals are huge, rivaling the size of the IT and Telecom Channel in terms of number of firms. The best estimate for IT firms in North America is 160,000 while legal has 190,000, accounting has 133,160 and marketing has 105,180.

2. More than just size, these companies are rapidly converging into the broader IT and Telecom space. For example, 51% of accounting firms resell software today, with 33% more considering it. The numbers are similar for offering IT compliance, consulting, advisory and assessments. By the year 2020, more than 80% of accounting and marketing firms will be indistinguishable from traditional IT channel partners. Legal is slightly lower at 55%, but still heading the same direction.

Now think about every company in every industry becoming a competitor for these technology dollars that lines of business are increasingly spending.

The opportunity for channel partners in the future lies in the complexity of vectors. The permutations and combinations are somewhat endless and carving out new niches will be the new normal. Each partner must decide on “how” to get to the puck. It could be through skill and capacity development, partnering, mergers, acquisitions, or a successful mix of them all.

Here is why the traditional IT & Telecom channel is shrinking at an alarming rate - and what to do about it

We have hit a tipping point in the IT and telecom channel.

For years we have debated the impact of new technologies such as the cloud, mobility, and now IoT (Internet of Things). In addition, we looked at partner transformations and the evolving business models that were showing signs of success (such as managed services).

So much focus was put into these things that we lost sight of the end customer. Specifically, how the end customer makes technology decisions.

So here it is - 72% of all technology decisions are now being made by line-of-business professionals. Yes, VP's of sales, marketing, operations, finance, HR, manufacturing and other business units are leading the charge and the IT department has been mostly relegated to legacy infrastructure, support and, in many cases, reduced in size and strategic importance.

This is a radical change that almost no one predicted.

To put this number in perspective, it was only 2 years ago that it flipped over to 51%. In fact, Gartner is predicting that it will reach 90% by the year 2020. In a span of only 15 years, we have moved from 90% of technology decisions made by CIOs and IT departments down to only 10%.

Behind this revolution is software. Namely, cloud based SaaS (software as a service) companies that are disrupting every function, in every company across every industry. Companies such as Salesforce, Workday, NetSuite, Marketo, and dozens of other platforms have created new ecosystems that support tens of thousands of software startups and hundreds of thousands of non-traditional technology channel jobs.

Recent data shows that cloud implementations reduce IT resourcing by over 55% - including outsourced services that our channel has lived on since hardware and software licensing margins dried up.

Vendors and partners need to understand that having a vertical focus is today's equivalent of being a generalist. I explained it further in my look into what I called vectors. The new line-of-business (LOB) power centers are creating opportunities in very specific niches across 297 sub-industries, multiple sectors and segments, a plethora of technologies and different geographies.

Traditional IT providers that have verticalized are being beat by firms (or individuals) that focus on the 5 main vectors (LOB, sub-industry, segment, geography and technology). In many cases these aren’t “born in the cloud” companies, but industry or LOB focused consultants, service providers and independent contractors that have been forced into technology as the industries they serve have made that shift.

Real-world data is showing that cloud implementations are being won by ecosystem specialists as opposed to traditional IT and telecom partners. For example, Salesforce has 695 partners world-wide that are driving over $20B in consulting and integration services.

Using data and guidance from CompTIA and CRN, my best estimate is that the channel has shrunk by 36% since the 2008 recession. This is over 100,000 less partner companies in North America and 400,000 less world-wide. For those surviving, it is estimated by major distributors that a majority of their SMB partners are technically insolvent.

Adding to these discouraging numbers is that 40% of surviving partner executives are planning exits (retirement or M&A) in the next 8 years. On the flip side, CompTIA predicted that 75% of the channel will be made up of millennials in the same time period.

Where do we go from here?

Most of us assumed that these millennials would be starting new businesses based on reseller, VAR, managed services, agent/sub-agent or solution provider type business models. We affectionately coined the term "Born in the Cloud".

The problem is, the number of born in the cloud partners being created is drastically lower than the hundreds of thousands being lost. After attending Ingram's massive Cloud event a few months ago, with 1,300 cloud partners, it was clear that these companies were, for the most part, transitioning into this world and not being born into it.

If you are looking to meet and recruit some of these “born in the cloud” partners, your best bet is to skip the over 150 channel centric tradeshows world-wide this year. They simply aren’t in attendance. You will have better luck attending Salesforce Dreamforce, a Marketo event, or specific industry LOB conferences.

While the IT and telecom channel numbers are declining, this new generation of SaaS platform partners are exploding. Before jumping feet-first into this new vector-based, millennial-led world, you will first need to understand how your company and products play with line of business executives:

• Do your products integrate seamlessly with the major SaaS ecosystems mentioned above? 
• Are they priced in a per-person, per-month recurring model that can be added to the rest of the stack?
• Are they packaged in a way that consultants and integration specialists can profit?
• Does your channel program have finders fees and technology integrations as an option? These new millennial vector specialists don't tend to resell product in the traditional sense.

The current cloud opportunity stands at $204B according to Gartner, growing by double digits for at least the next decade. Almost inexplicably, 67% of current channel firms are reporting that cloud demand has outstripped their capacity, whether that is technical capability or bandwidth, while a new generation of non-traditional partners are growing and profiting in this new world.

Here is a profile of one of these firms - Bluewolf. They were founded sixteen years ago, specialize in all things Salesforce, quickly grew to over 600 consultants and just sold to IBM for over $200M. They are not the largest Salesforce partner either - in fact, they barely crack the top 10. There are 694 other potential Bluewolfs in Salesforce' ecosystems alone. Now multiply that by dozens of other line-of-business specialized platforms and you start to get the idea of where the new value channels are being created.

Ready to dive in? Check out how to execute a Go To Market plan for these new markets and use Dandelions & Blowfish marketing tactics to achieve quick success.

ChannelEyes CEO Recognized Again as a Top 20 Channel Visionary

ChannelPro-SMB, the premier source of business and technology insights for I.T. channel partners serving the small and midsize business market, has announced its second annual list of 20/20 Visionaries for 2016.

ChannelPro 20/20 Visionaries - Jay McBain

TROY, N.Y. - May 13, 2016 -  The ChannelPro 20/20 Visionaries are comprised of 20 influential, go-to authorities in managed services, cloud computing, and partner support and education from the vendor, analyst, and consulting communities, as well as 20 of the most far-sighted resellers, MSPs, and community leaders from the SMB partner community. These are the IT professionals who not only serve their SMB clients with top solutions and services, but move the industry forward with innovative ideas, a commitment to continual improvement, and a willingness to share what they know to help others succeed in the market.

Jay McBain represents ChannelEyes who continue to drive thought leadership in the global channel community by introducing forward-looking software to help vendors communicate, engage and drive more revenue with their valued partners. After success with Social and Mobile products, ChannelEyes recently introduced OPTYX - a Predictive Analytics platform that assists Channel Account Managers with the complicated task of managing a territory, prioritizing activities, and improving interactions with alliances and partners.

"We are proud to reveal this year's class of smart, insightful thinkers," said Cecilia Galvin, executive editor, ChannelPro-SMB. "Many of the honorees, such as McBain, who made the grade in 2016 did so last year as well, but there are some new faces too. What they all have in common is a deep understanding of the channel and how to thrive in it."

OPTYX is a predictive alerting, scoring and prioritization solution that helps channel organizations increase indirect sales by optimizing partner interactions based on data science. Designed as a workflow tool that runs seamlessly with Salesforce and other CRM systems, it automatically and intelligently processes internal and external data signals to help channel sales account managers work smarter, close more deals faster and continuously grow revenue.

Jay McBain - ChannelEyes

To develop the 20/20 Visionaries for 2016, the editors of ChannelPro-SMB turned an eye to the channel players and channel pros they have spoken with, listened to, and sat with face to face over the past year to compile a broad list of possible honorees. After much debate, the list of this year's visionaries emerged. Each year this process will be reprised, with honorees selected from many worthy channel candidates.

A complete list of the ChannelPro 20/20 Visionaries for 2016 appears in the May print edition of ChannelPro-SMB as well as on the ChannelPro Network website at http://www.channelpronetwork.com/article/introducing-2016-channelpro-2020-visionaries



About ChannelEyes Corporation:

Founded in 2011, ChannelEyes is a global software company that is reinventing how vendors drive partner sales and indirect channel and alliances growth. The SaaS platform includes ChannelCandy, the world's largest mobile-first product for partners, as well as OPTYX, the first indirect sales workflow product to help sellers with predictive analytics and leverage big data science to drive more sales. ChannelEyes has received numerous accolades for its technology including being named a Cool Vendor by Gartner and one of the fastest growing companies in New York's Capital Region by the Business Review. Learn more at: http://channeleyes.com/ and follow us on Twitter (twitter.com/ChannelEyes) and Facebook (facebook.com/ChannelEyes).


About the ChannelPro Network:

The ChannelPro SMB 20/20 Visionaries is part of the ChannelPro Network. Our network includes websites, events, awards programs, research, and the monthly magazine ChannelPro-SMB. The ChannelPro Network provides targeted business and technology information for IT channel partners who serve small and midsize businesses. The network delivers expert opinion, analysis, news, product reviews, and advice vital to a channel partner's business success. No other media company focuses on the small and midsize marketplace like The ChannelPro Network. ChannelProNetwork.com

Channel Focus (Baptie) Webinar - 5 Future Channel Trends You Should Be Planning for Today

The pace of change in the indirect sales world has been mind-numbing over the past few years. There are new business models and partner types popping up seemingly every day - driven by technology, economic challenges and customer behavior.

Combine this with an unprecedented demographic shift coming in the next few years, and the job role of the Channel Professional will radically shift - both inside the organization and out.

We will explore what this demographic shift means, as well as predict what Channel Management will look like when there are more vendors in the world than partners.

Here is the full 45 minute webinar:




If you don't have the time, here are just the slides:

Future IT Channel and Alliances Trends from Jay McBain

The End Of The IT Channel As We Know It. (And the start of something amazing!)

While exploring the question of where are all of these so-called “Born in the Cloud” partners are coming from, a bigger and more complex issue surfaced. Perhaps the competition isn’t coming from “within” the channel but somewhere else?

When Marc Andreessen wrote “Why Software is Eating the World” in the Wall Street Journal 5 years ago, a major shift was taking place in every industry. Infrastructure was firmly in place and technology was finally at a maturity level to start disrupting every business, across every sector.

What Marc didn’t predict is that the center of gravity for these decisions would fundamentally shift into the business units. In those days, about 80% of technology decisions were researched and made in the IT department, today it is only 28%. In fact, Gartner predicts that it could be as low as 10% by 2020.

The BBC made quite a stir last year when it predicted that technology could replace most workers in the next couple of decades. “Will Machines Eventually Take Every Job” walked through numerous industry segments from truck drivers to farmers, from factory workers to service delivery, and from knowledge workers to professional services.

If you wrap these articles together the irony is deafening: 

Line of Business professionals are busy stitching together the very software stack that will one day replace them! 

I don’t subscribe to the armageddon-style predictions, but do believe it will have one of the most profound effects on society since the industrial revolution. Anyway, enough meandering.

The biggest threat to the IT Channel today (already 36% down since 2008) is not the cloud. Nor is it internet of things (IoT), consumerization, mobility, or a host of other emerging technologies. It is the changing dynamic in how customers decide and purchase IT.

The 72% of all technology decisions that are now being made (or highly influenced) outside of the IT department aren’t traditional IT decisions. The Finance person isn’t buying a router. The Marketing Executive is not implementing security protocols, the Sales leader isn’t buying new servers for the rack. They are stitching together a software stack that drives business value for their department.

This myopic view could grow to be dangerous as costs are accelerating, duplication is happening across the organization, holistic security is nearing impossible and interoperability is challenging with the permutations and combinations of disparate solutions. However, I don’t see power shifting back to the CIO anytime soon. In fact, a magazine focused on CIO’s was reporting a trend where they were being demoted out of the boardroom altogether.

In the late 90’s, as PC and other hardware margins were plummeting, the rallying cry for the channel was to verticalize. Find that industry niche where you could get deeper into the business issues and understand nuances such as regulations, legislation and industry solutions. By bundling consulting, software, and focused services, more profit and customer stickiness would result.

By the mid 00’s, managed services were all the rage where individual hardware, software and services could be creatively bundled and profit could be generated by remote access and economies of scale.

Fast forward to today and 90% of companies are leveraging the cloud. In fact, 60% of companies have replaced more than 1/3 of their IT infrastructure already (Gartner). Only about half of that was with the assistance of some type of channel.  Even worse, over 2/3 of the current IT channel report that cloud opportunities have outstripped their capacity.

Yes, you read that correctly - the current channel is beyond capacity (either under-skilled or over-worked) while only touching half of the opportunity.

I reported before my feelings that “verticalization” is being replaced by hyper-focused “vectorization”. The new line of business (LOB) power center is creating opportunities in very specific niches across 287 sub-industries, multiple segments, plethora of technologies and different geographies.

Traditional IT providers that have verticalized are being beat by firms (or individuals) that focus on the 5 vectors (LOB, sub-industry, segment, geography and technology). In many cases these aren’t “born in the cloud” companies, but industry or LOB focused consultants, service providers and independent contractors that have been forced into technology as the world has shifted that way.

-          Transportation logistics consultants are now selling end-to-end technology solutions.

-          Insurance compliance consultants are pitching big data and predictive analytics.

-          Healthcare advisors are now integrating EMR solutions with customer care technologies.

-          Oil and Gas consultants are leveraging technology to recommend hydraulic fracking and horizontal drilling to change breakeven economics.

-          And there are thousands of more examples.

The difficulty is that these new technology plays leverage very little of traditional IT hardware, software and services. Today's solution partners don’t have the relationships, experience, skills or capacity to engage at these levels.

Without these vector skills, IT providers are on the outside of these opportunities looking in. 

Traditional vendors are attempting to position themselves for this future. It has been painful to watch IBM shrink for 16 straight quarters, HP to split up, Dell to combine with EMC and go private, and Cisco to struggle in core areas. The top-line revenue for these companies will be significantly disrupted as the days of selling tons of big iron, monster software license deals and outsourcing are numbered.

For channel partners, it is important to recognize new battle areas for revenue growth and build, buy, partner, merge or acquire their way to success. Standing still is also ok in the short term as none of this will happen overnight.

Understanding the magnitude of vectors is mind-blowing – simple math is to multiply 287 sub-industries by 10 LOBs by 6 size segments by 20 technologies and hundreds of geographic areas (states, countries, regions, etc.) and you are dealing with 50+ million vectors.

We are nearing 100,000 SaaS vendors today and that number will continue to rise by an order of magnitude to capture the demand. I can see a world 20 years from now that over a million technology companies will compete across these 50 million vectors. Many of these companies will spawn from our current IT channel world-wide.

I do know that none of these technology companies will be happy swimming in their own lane for long. They will look at adjacent LOBs, nearby geographies, different sized customers or similar behaving industries for growth. They will also look for partners in those swim lanes where they can participate instead of reinventing the wheel each time.

Buckle your seatbelts.

Where are all of these so-called “Born in the Cloud” Partners Anyway?

This question was posed to me at the Ingram Cloud Summit this week in Phoenix. We all know that the cloud is quickly redefining IT, with over 90% of companies using some mix of public, private and hybrid cloud solutions. In fact, 60% of companies have replaced more than one third of their IT infrastructure with cloud products thus far (Gartner).

With 1,300 attendees at this cloud-focused conference, I asked the question: “How many of you are born in the cloud?” Only a couple of hands went up. The same result happened at CompTIA Annual Members Meeting last month.

With the cloud representing $204B in opportunity (Gartner), there must be some big-time winners right? 

Some are theorizing that cloud and “as a service” vendors are selling solutions direct to customer. The reality is that over 55% (and growing) of cloud sales are going through a channel (IDC).

Another theory is that traditional IT Channel Partners are not plugged into cloud demand at their customers. This is also untrue. CompTIA reports that 67% of channel firms are experiencing demand for cloud services that has outstripped their capacity. It could be a combination of technical capability and bandwidth – but they are seeing sufficient opportunities nonetheless.

I have heard some argue that “shadow” or “rogue” IT demand is being claimed by an unseen force. This is actually partially true. Half of traditional IT partners claim to have lost a sale to a non-traditional IT solution provider, such as a industry-specific consulting firm, vendor, distributor, or telecom carrier. This is happening with much more frequency than in previous years.

Here is my theory on “born in the cloud"

1. The biggest threat facing the traditional IT channel (36% decline in firms since 2008) has nothing to do with technology or transforming business models. It is the changing dynamic in how customers decide on IT. It almost sounds unbelievable, but 72% of all technology decisions are now being made (or highly influenced) outside of the IT department. Only 18 months ago I was blogging about the “Tipping Point” when 51% of decisions were outside of the CIO. In fact, Gartner is predicting that the number will grow to 90% by 2020.

2. Every company is being forced to become a technology company. Whether it is a car company with Tesla sneaking up, transportation company with Uber, hospitality company with AirBNB, or any other of the 27 industries, technological disruption is threatening traditional companies with extinction. This means that every ancillary service or consulting company supporting these industries is being forced into technology as well.

3. “Verticalization” is being replaced by hyper-focused “vectorization”. With 72% of decisions now being made by Executives in lines-of-business (LOB), specialization is diving deeper into sub-industry, geography, segment, technology and LOB. For example, traditional providers that may be specializing in a certain industry such as healthcare are losing to firms that hyper-specialize in lead generation marketing at mid-size, ambulatory care hospitals in New York State (5 vectors). The customer Executive likely doesn’t know (or care) about things like security, regulation, changing legislation, network capacity, backup, disaster recovery, uptime, support and dozens of other foundational skills the IT Channel would bring. They care about a business problem of generating more leads – and that is what born in the cloud firms are pitching. They are part of a marketing cloud ecosystem representing solutions such as Marketo, Pardot, Eloqua, Hubspot and hundreds of other software-as-a-service companies.

4. The Cloud is inherently unprofitable. The vast majority of cloud vendors are not making money (some of it by design). Even some of the cloud superstars such Salesforce and Amazon have only recently flirted with profitability. This doesn’t bode well for cloud resellers, looking to take a margin on these low-priced, recurring revenues. Successful born in the cloud firms have leveraged their hyper-specialization into rich consulting and service contracts. Last week, IBM bought one of these firms, Bluewolf, who specializes in Salesforce for over $200M. If you check Salesforce’s partner program, they have 695 of these type of partners generating $20B in services. This is over 3 times more revenue than Salesforce itself – and almost 10% of the world cloud opportunity ($204B) I mentioned above.

So if you are looking to meet and recruit some of these “born in the cloud” partners, your best bet is to skip the over 150 channel centric tradeshows world-wide this year. They simply aren’t in attendance. You will have better luck attending Salesforce Dreamforce, a Marketo event, or specific industry LOB conferences. While the IT and Telco Channel numbers are declining, this new generation of partners are exploding.

Interestingly enough, I have attended a number of these conferences in the past few years. The joke about well-dressed, skinny jeans wearing millennials making up this new generation of channel actually turns out to be true.

Their definition of break-fix is the Apple Genius Bar. 

Their definition of networking is finding a WiFi hotspot at Starbucks. 

Their definition of security is whatever the big guys like Amazon, Salesforce, Google, Microsoft and IBM are doing to protect their respective clouds.

However, if you want to know what the latest hacks are in nurturing marketing leads in mid-sized ambulatory care hospitals in Upstate New York – they will talk your ears off.