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.

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.

Technology reached a tipping point this week in America

This brutal week in America had a number of technology stories buried underneath that mark a significant shift going forward.

The first was the prevalence of live video, particularly by the victims themselves. Over the past few years, we have seen interesting things with cell phone footage and dash cams - but it has all been recorded and transferred after the fact. We are now living in realtime, and this changes everything from who owns the news (Facebook) to how we can handle it psychologically. 

The second technology story was the killing of the Dallas police sniper by a bomb carrying robot. This is the first time an American citizen was killed in this way. We have become desensitized to the daily drone killing overseas, but this marks a potential shift in how domestic terrorism will be handled by authorities (think about Orlando and if they could have infiltrated with robots immediately). This isn't Terminator as these robots and drones are human controlled, but changes the game all the same. 

Third, is the power of social media in either starting or stopping another civil war (I can't decide which). We are learning that developing advanced data science around social sentiment will be critical in predicting potential danger zones (think Minority Report). 

Finally, in order to protect ALL citizens, we need to invest in research of a non-lethal, 100% effective device that immediately incapacitates a person. Similar to a stun gun from Star Trek. Tasers are not 100% effective and guns are lethal - we need something in the middle.

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.

Five Channel Trends to Plan for in the New Year

With 2016 now in full swing, I am preparing to speak at the 2016 ASAP Global Alliance Summit, “Partnering Everywhere: Expert Leadership for the Ecosystem,” on March 1-4 at the Gaylord National Resort & Convention Center, National Harbor, Maryland, outside Washington, D.C. Here are some of the observations I will share on the ever-changing technology channel.

We are witnessing a changing of the guard from a channel perspective. Fewer companies will fit the traditional reseller or solution provider label, as many have transformed (or born into) a recurring revenue business model around managed services, cloud, SaaS integrations,line-of-business, and vertical specialists.

The channel topped out at roughly 1,000,000 companies worldwide in 2007, employing more than 10 million people. In addition, hundreds of thousands were employed indirectly at vendors, distributors, associations, and media organizations. The deep recession of 2008 had a major impact and hasn’t bounced back the way most of us expected. While the broader economy is trending back up to 2008 levels, the channel continues to slide.

What is happening out there?


1. The channel is shrinking at an alarming rate: Recent reports from CompTIA and IPED show a current North American technology partner base of 160,000 companies (600,000 worldwide). It may sound like a healthy number, but it is down 36 percent since 2008 and continues to face 10 percent to 15 percent annual attrition for the foreseeable future.

Keep in mind the 160,000 includes a much broader audience than just resellers—it includes all kinds of consultants, coaches, etc. A more accurate number, including people who directly influence and resell hardware and software products, is closer to 75,000 (with half of those selling enough product profitably to sustain a business). Your future channel and alliance partners will be smaller in number, but more focused, specialized, and effective.

2. The channel is getting younger—much younger: Todd Thibodeaux, CEO of CompTIA, kicked off his ChannelCon keynote with several pieces of research. First, an estimated 40 percent of the entire channel will retire in the next 10 years. Yes, 4 in 10. Second, those retiring will be replaced by millennials. In fact, in 10 years, 75 percent of the channel demographic will not have been alive when IBM introduced the PC (and the channel as we know it) in 1981.

This generation grew up on computers and will be pursuing different business models than the traditional reseller models we have today. They will look more like vendors, with in-house development teams, software products, and intellectual property. In the future, strategic discussions with partners will be less about incentives and education and more about integrations and co-marketing.

3. The channel is small business, and getting smaller: Much of the attrition that I mentioned above has come from within channel companies. They are doing more with less. The average channel partner has eight employees, and 97 percent of them have fewer than 50.

With the rapid growth of freelancing (think oDesk and Elance), offshoring (Fiverr), and rapid software development (Mechanical Turk), many companies are outsourcing their own functions, such as marketing, operations, finance, and custom development. Vendors are looking at opportunities to help their partners with these functions and keep them focused on (selling and) delivering solutions for end customers.

4. Vendor numbers are exploding: The above trends have an interesting side effect—the number of vendors in the marketplace is growing at a surprising pace.

Channel companies are leveraging their deep industry knowledge with unique integration skills (across dozens of vendors’ APIs) and creating products and specific intellectual property to deliver niche solutions.

At one time it was called “value add,” but today partners are incorporating these ideas into new companies and products and then going to market themselves. These products have narrow addressable markets, and the need to find resellers will continue to grow.

I predict that in 10 years, the number of vendors will outnumber the amount of pure-play resellers. Start thinking about future competitive threats and how to manage co-opetition moving forward.

5. Influencers and connectors are becoming more important: Without naming names, our entire channel ecosystem boils down to a small number of individuals who connect large amounts of like-minded people. You probably know many of them!

For example, the North American IT channel has roughly 100 people that will get you one degree of separation from anyone else. These super-connectors are very different from one another—some are media, some run associations, others are vendors or distributors, others make a living on making connections for you.


Some things are clear...


The amount of noise and clutter will not stop growing. People buy from people they like. Economic scarcity is evolving into information scarcity. The network effect will drive winners and losers in the next 10 years. Start thinking about your network—do you have the right mix of influencers and connectors to drive your channel sales?

Seventy percent of all IT dollars are now being spent outside of IT by people that vendors and channel partners don’t know all that well. Sales, marketing, finance, HR, operations, and development teams are rapidly deploying technology, and it is forcing the channel industry to get smarter.

These trends are reshaping the channel, not replacing it. As with every other threat in the past 30 years, the channel will come out stronger, more nimble, and better able to serve evolving customer needs.

Happy Belated New Year!


- Jay

ASAP Info:

I will be presenting the session “Five Future Channel Trends That You Need To Be Planning For Today” 

http://www.strategic-alliances.org/page/sum16sessions, 

March 1–4, 2016, ASAP Global Alliance Summit “Partnering Everywhere: Expert Leadership for the Ecosystem,” at the Gaylord National Resort & Convention Center, National Harbor, Maryland, USA.

What Did I Learn After A Month Of Lifestreaming?

We are living in interesting times. The technology to track every step, minute of sleep, calorie consumed, and heartbeat is literally at our fingertips.

This blog pulls together two of my own stories:

1. Lifestreaming starting at a young age - keeping track of every penny I have ever earned and spent, scanning every document as proof, and digitizing every photo going back generations. More on that story here.

2. After 6 months of owning the Apple Watch, I can now give my official thumbs up on the product. I was hesitant at first, citing 10 reasons on why to buy it and 8 reasons why not to. More on that here.


Tools of the Lifestreaming Trade

First of all, I didn't go nuts on equipment - no blood pressure monitors, wearable cameras, audio recording devices, etc.

What I did use:

Apple iPhone
Apple Watch
Withings WIFI Scale
Sleep++ App
MyNetDiary App

This was sufficient to give me insight into every moment of the day, 24/7. I started on November 1st, and my primary goal was to watch and regulate my sugar intake (a day after Halloween of course).


What I Learned

Working in a computer related job makes it difficult to get to the magical 10,000 step count that every magazine and fitness wearable manufacturer seems to be touting. Other than some family walks and Black Friday shopping, the average is 3,851 for me. That results in 1.84 miles per day.

I use my weekly hockey game as high-intensity exercise. Averaging 96 minutes of aerobic exercise a week keeps me in reasonable shape.

I learned long ago that fitness is scientific. If you can get 20-30 minutes of high intensity workout, 3 times per week, you will be in the top 5th percentile in fitness in North America. This doesn't mean walking or warming up at the gym - it means high heart rate, deep sweat type of working out.

Using the Apple Watch 24/7, I can gauge heart rate every minute of the day. On the days I have hockey you can see spikes up to 200 beats per minute. This is beyond my maximum, but those games have me between 135bpm and 180bpm which is optimal.

I do realize that I am not lifting at the gym which isn't optimal - aerobic and weight training should be combined for optimal metabolism and injury avoidance.

Sleep is a critical component of health. Not getting enough (or getting too much) is not good for you and a simple Sleep++ App combined with my Apple Watch monitored every second of sleep.

I was pleased with the 7 hour 30 minute average but there were some 5 hour ones tucked in there. The quality of sleep was about 95% meaning I only tossed and turned about 20 minutes a night.

I also fall asleep within minutes of hitting the pillow which is great. November had me going to bed, on average, after 1am which is not ideal.

Now for the fun part.

By tracking every meal, every snack, and even every vitamin I take, some interesting results were produced.

I learned that tracking every bite ended up putting me on a diet - I only ate one desert in November which was Apple Pie the day after Thanksgiving. My original goal was to curb sugar in my diet and that ended up restricting my calories to 1,579 per day.

This intake is too low for a guy my size.

The app further breaks down food into dozens of nutrients and other components. Here is a sample of the daily averages:

The 1,579 calorie average drove 202 Carbs, higher than Atkins would approve of, but significantly lower than my normal. Fat and saturated fat stayed in an acceptable zone and protein was always in a good range.

The real stat I was after was sugar. Consuming 76 grams per day was probably half my normal intake and very difficult to do. In fact, starting my day with an apple, mandarin orange and banana already put me half way there.

The World Health Organization recommends 50 grams of sugar per day and I am not sure how to get there without cutting out fruit.

I am not sure the Withings scale has this completely accurate, but it did show a gradual decline in body fat percentage during the month of November.

The thing that is accurate is weight - take a look at this decline in November driven by a limited sugar / calorie diet with normal exercise:

I ended up losing over 10 pounds in the month. Not ideal as the target should be 1-2 pounds per week maximum. It was definitely interesting to see what a shift in eating would do while keeping other variables constant.

It is a recommendation that experts give - if you want to change behavior, write it down! In this case, technology did the writing down for me and having this as a constant reminder did in fact change almost everything I ate.

The question is whether this is sustainable in the long term. The technology is still a bit manual - having to record food and tell your watch when you are going to work out or sleep begs for human error.

These technologies will get better with time - more predictive and utilizing machine learning. Recording food by UPC code was slick, and there are now services that you can just take a photo of your food and someone else will determine portion size and calorie content.

All in all, a good experiment and I am excited to see wearable technology drive better nutrition and life choices in the future.

The Channel Technology Stack - Future of Channel Management

We have been witnessing an explosion of software vendors in the past 5 years. In fact, it has been the fastest growing segment of the technology industry and a big reason why the number of vendors will outnumber partners by 2025.

The go-to-market of these new software companies is very different than it was in the past. Before cloud and SaaS (software-as-a-service) industries became mainstream, software companies built foundational software which tended to have wide functionality and appeal.

For example, in heathcare, over 300 companies competed with Allscripts and GE for a slice of the EMR (electronic medical records) market. When Salesforce started it's meteoric rise in share of the CRM market, it also had about 300 competitors.

Once the winners started to emerge in each line of business (think Salesforce, NetSuite, Workday, Eloqua, etc.), a new phenomenon started around integrations and open API's.

This was the unofficial start of the stack concept. 

Layering highly targeted, narrow focused software tools together started to become the new normal. There was no way that wide platforms could optimize across different industries, geographies, segments, job roles and lines of business.

Example of Marketing Technology Stack:

Marketing, sales, finance, HR, customer success and operations were all early adopters of the technology stack. Channel and indirect sales groups have been laggards up till this point. The quality of software for channel professionals has been steadily improving.

With 72 key attributes of a strong program, no one piece of software can manage all the moving parts effectively.

A channel technology stack is a grouping of technologies that vendors leverage to conduct and improve their partner programs, compliance, revenue and loyalty. Often, the focus of channel technologies is to make difficult processes easier, and to measure the impact of multiple activities and drive more efficient spending.

The channel technology landscape is rapidly evolving, with dozens of different software technologies growing in an ever-increasing number of categories. With so many choices, it’s essential for channel professionals to have a clear understanding of which technologies are most fundamental to their business and program goals and to understand how technology can help.

The type of channel program you have will also impact which technologies you might find important, and how they should be organized. When assembling a channel technology stack, it’s important to know which technologies are foundational, and should be put in place first.

Here are some essential parts of the channel technology stack:

Partner Relationship Management (PRM) - Foundational software that manages the plumbing of a channel program. Partner management, portals, incentives, training, certifications and the like. Players such as Salesforce, Relayware, IMPARTNER and Channeltivity play here.

Partner Marketing Automation - The ability to score, nurture and have visibility to partner online behavior is critical to good channel management. On top of traditional marketing players such as Eloqua, Marketo, Pardot and Hubspot, there are channel specific options such as Zift Solutions, StructuredWeb and MindMatrix.

Portal and Content Management System (CMS) - technology that powers a partner portal, website, blog, or other relevant web properties where channel marketers want to engage their partners.

Mobile-first Partner Enablement - New mobile technologies that drive real-time communication, share selling and support tools, as well as driving partner motivation and loyalty are growing quickly in prominence. Companies like ChannelEyes are leading the way here.

Incentives and MDF Management - Focused tools that manage incentives, payments, compliance, fraud and ROI measurements. CCI is one of the leaders in this space.

Channel Data Management - Vendors that are generating mountains of transactional data are looking for new ways to analyze buying patterns, inventory controls and distribution effectiveness using modern data tools. Channel focused companies such as Channel Insight, Zyme and Entomo are leading this market.

Channel Social Media and Syndication - technology to monitor social activity, make social engagement easier and facilitate syndication of content is growing quickly as part of the stack. Companies such as Tie Kinetix, purechannelapps, ChannelRocket and Allbound play here.

There is a new part of the stack...

Channel Predictive Analytics, Data Science and Indirect Sales Workflow - ChannelEyes has developed the first ever Channel Sales workflow product that is based on advanced data science, business intelligence and channel analytics. It is called Optyx.

Replacing the spreadsheet, and sitting on top of the CRM system, this software-as-a-service product changes the game significantly. By combining different data sources, including transactional, point of sale, behavioral and external Big Data, this platform has the ability to predict, notify and prescribe the next best action with partners.

The average Channel Account Manager (CAM) is only managing 10-20% of their territory effectively. In fact, over 50% of their Executives fear that they are not calling the right partners with the right messaging at the right time.

Optyx changes that equation. It can watch EVERY partner with built-in algorithms that trigger alerts and notifications. I am sure a CAM would like to know if one of their key partners D&B credit rating dropped or another partner is on a hiring spree with a new successful practice just launched. What if a competitor just gave an award to one of your partners? Good information to know.

There are hundreds of data sources on the public web, however the most powerful information doesn't tend to be free. Even researching one partner could take a full day sitting behind a Google Search bar.

It isn't about data though. It is about action. Specifically, a CAM's next best action.




Optyx is a workflow tool that takes these alerts and notifications and translates them into actionable and measurable activities. Calling, emailing, social selling and even on-site visits can be prioritized based on predicted outcome and then noted and tracked in the CRM system, whether it be Salesforce.com or other.

Another powerful feature is the Partner Dashboard. Having transactional, behavioral and external Big Data all in one spot will make for informed conversations with partners and significantly cut down on the time and energy in tracking what a partner is doing and how they are performing.

CAM's report that 20% of their time is building reports for management and collecting information for partner Quarterly Business Reviews. This is now automated and that one day a week can go back to selling.

Long live the Channel Technology Stack!

Running a successful channel program is a complicated endeavor. Trying to do it with antiquated tools and gut isn't enough anymore. The channel is in need of advanced purpose-built tools based on the latest technologies such as cloud, mobility, social, predictive analytics and big data.

11 Ways The Channel Will Succeed with IoT (Internet of Things) - #11 may surprise you

Since my first presentation representing IBM on Pervasive Computing in 1995, I have had a keen interest on how the market would evolve. Using my trusty WiFi enabled toothbrush as a prop, I would try to paint a picture of a world with billions of devices and sensors changing our everyday lives, disrupting industries, and ushering in the end of client/server computing.

The drivers of this ubiquitous computing model included technologies such as GPS, which President Clinton created a dual-use system in 1996, and the first WiFi protocol standard (IEEE 802.11) was released in 1997. Around the same time, Chinese manufacturing was exploding, redefining business models the world over. The term IoT was coined by British entrepreneur Kevin Ashton in 1999.

On the consumer side, the momentum was slow. The lack of standards, customer demand and innovation in smart home technology delayed the market for almost 20 years. Even though circuit boards could be wrapped in plastic for a few dollars - the customer experience was poor and the need wasn't well defined.

A couple of remarkable things happened in 2007. First, the launch of the iPhone which drove the smartphone to be a mass-market "second device".  Later in the year, a new category of inexpensive laptops called Netbooks sold millions of units and became a "third device" to many. Netbooks ended up being replaced by a superior form factor, the iPad, or slate tablet, selling 250 million units in the first 5 years.

In the last couple of years, the battle over health wearables, including early entrants such as FitBit and Jawbone, and of course, the Apple Watch in 2015 competed to be our "fourth device". With most car manufacturers making Apple/Google decisions for the dash and almost every other category of product (electronic or not) designing themselves to be the next big thing, things are just getting revved up!

The parallel consumer and business evolution of this trend is helping it drive awareness and attracting billions of dollars of investment thus creating a new tech bubble around big data and endless devices and sensors.

The channel has some notable IoT-deniers, but the analysts that are throwing out wild projections of 25 billion devices by the year 2020 are going to be right on this one. In fact, 83% of internet users see themselves with dozens of potential devices in the next 10 years (Pew Research).

The inevitable question for the channel is how to take advantage of this trend early and build the right organization and business model that can drive growth and profit in this upcoming chaos.

Here are some things to consider:

1. Complexity

Client/Server will look simple compared to linking endless devices securely and making sense of mountains of disparate data being generated. Business consulting represents a huge opportunity - both with lines of business such as marketing, operations, HR, supply chain, as well as IT who will own the security, redundancy, and performance of this new paradigm.

2. Policies, Compliance and Risk Assessment

While some devices and sensors will be innocent, others will be transmitting health, payment and private citizen data that is highly protected by multiple levels of government regulation and evolving legislation. Hacking will take on a new dimension on the edge of the network and security expertise will be one of the most valuable skills in the foreseeable future.

3. Procuring, Provisioning and Deploying

There will be little opportunity for hardware margin (not unlike today). The opportunity will be in finding and procuring devices and software from over 100,000 competing vendors, provisioning them with the right network and security protocols and staging them for deployment.

4. Software Integration

The permutations and combinations of 100,000 vendors producing hardware and software will invariably lead to a highly customized, industry specific set of skills that piece together software stacks, in many cases for the first time ever.

5. Software Development

An obvious extension to #4 is that vendors will not be interested in extending their API's or dedicating precious engineering talent for one-off solutions. The channel will write code and participate in the integration of technology like never before.

6. Premise Monitoring 

Banks, retailers, airlines, hotels and numerous other industries are placing sensors, cameras and other devices in areas where they do business with customers. The channel will offer location services as well as vertical expertise that solves line of business requirements.

7. Product Monitoring 

Companies embed sensors, software and other technologies into their products—coffee machines, refrigerators, big-haul trucks and aircraft engines—to monitor usage and performance. The channel will offer big data expertise including data cleansing, normalization and actionable intelligence. Only 5% of data today is being analyzed and that provides one of the biggest game changers in the next few years.

8. Customer Monitoring

Using mobile apps, beacons or wearables to track consumer behavior. The channel will come in with the marketing and sales skills to connect to funnel activities and customer nurturing, scoring and development strategies.

9. Supply Chain Monitoring 

Adding sensors, cameras and other digital devices to production and distribution operations. Channel partners with skills in manufacturing, factory operations, shipping and supply chain operations will provide the guidance and strategic best practices for driving cost out of organizations of all sizes.

10. Infrastructure and Support

There are significant opportunities, many based on today's skills and practices, that will be amplified in this new world:

• WLAN coverage, security and performance becomes critical to the success of IoT
• Employee support and helpdesk supporting endless devices with new use cases and unique environments
• Hot spare programs for mission critical devices, with provisioning and implementation
• Audio/Video/Environment upgrades with digital signage, new payment systems, surface computing, etc.
• Mobile printing/document management supporting new omnichannel environments
• Building/electrical upgrades - these devices will need power and current environments are not built to handle (think hospitals, shipping and manufacturing sites)

I am convinced that this will present the largest opportunity for the channel (ever). 

Many of the above services are high-margin. In fact, the permutations and combinations of industry, geography, customer size and line of business will almost eliminate the commoditization that has taken over the mainstream VAR business and managed services market today.

Now for the most important part...

How does the channel REALLY take advantage of IoT?

11. Become a vendor

Yes, I said it.

I have predicted a number of times that the number of vendors will surpass the number of channel partners in the next 5-10 years (in North America it is 100,000 vendors vs. 160,000 channel partners today).

Read over the 10 items again. This is not the horizontal commodity technology market with limited industry, geographic and size considerations that client/server represented. It is a highly specialized, industry optimized, line of business specific, use case orientated solution that will be hyper-local to a small set of customers.

The channel partner who understands the intersection of these micro-markets will be uniquely positioned to expand those opportunities on a national scale, and perhaps globally. Too small for an established vendor to take notice or get distracted, but large enough in revenue and profit to drive entirely new businesses.

This isn't new. Thousands of channel partners have already exploited their own intellectual property and started a side vendor business. Many have even exited the traditional VAR and MSP business completely and focused on the new venture.

Are you next?

P.S. There is an important nuance to this article. When I say "the channel" I don't necessarily mean the traditional SMB IT channel (think CRN, ASCII, SMB Nation, CompTIA, IT Nation, etc.) The channel that I see participating today are millennials at Dreamforce, Marketo, Hubspot, SXSW type conferences without much in terms of hardware, security, networking and backup type of experience.

The Apple Watch Officially Kicks Off Terminator & Borg Debates

Are you telling me that my Apple Watch is somehow funding Skynet? Arnold Schwarzenegger is coming back to stop the shipments of watches? 

Not quite, but let me get there after a little bit of background of wearing my watch for 12 days.

First, full disclosure. I am writing this on a Lenovo computer - I have tried really hard to honor my technical past and not become one of "those" Apple fanatics that buy everything that comes to market.

And I am failing miserably.

After 17 years at IBM/Lenovo selling industry standard, somewhat "open" technology, I just added the Apple Watch Sport to my collection of Apple products including the iPhone 6 Plus 128GB and iPad Air 2 128GB.

As far back as I remember, I have been excited about wearable technology - from the old do-everything Casio watches growing up to recent Fitbit and Jawbone experiments. In fact, I used to keynote about the future as far back as 1996 talking about "pervasive computing" where technology would infiltrate almost every product category - electrical or not.

I decided to wait on the smartwatch market for Apple to legitimize it.

By legitimize, I want to be clear - I don't mean make a better product, just a more popular one that will attract programmers and new companies that will incubate and innovate this new device category. 

With 3 million people now wearing (or waiting for) their watches, the mass market has officially started for wearable technology.

My first impression, however, was not good.

The kickoff event in 2014 was underwhelming. The initial view I had of the watch was very square, robust and clunky. Unfortunately that didn't change on April 24, 2015 when I unboxed the final product. While the packaging was stunning, sleek and undeniably Apple, the product itself looks like a version 1.

We will look back on this in 5 years and compare it to current product the same way we look at the first iPhone from 2007. Once the industry progresses on battery technology, smaller haptic and heart rate sensors, the watch will slim down to a more beautiful form factor. The square face is growing on me, but I was secretly hoping for round.

The syncing with the phone took about 20 minutes and used a visibly interesting QR code to pair the devices. Once I got my apps over and set the face to Mickey Mouse - I was off to the races. I was pleasantly surprised by the app support on day 1 - with a few notable misses from the likes of Facebook and Google (obviously).

My pleasant surprise soon turned to amusement as many of the apps don't do anything. Not that they aren't useful - it is that they literally have no value. For example, CNN sends me a push notification of breaking news and then tells me to take out my phone to read past the first paragraph. The mail app doesn't handle HTML and tells me to take out my phone. The Mint app tells me how much fun money to spend this month - that is it.

There are a few apps that deserve honorable mentions:

- Amazon really thought through the experience without a keyboard.

- Twitter allows you to look at trending and some timeline. (not a great experience, but not terrible)

- Slack (the fastest company to a $2B valuation ever) put some effort into the notifications, allowing instant replies.

10 Reasons why the Apple Watch is worth the $399 I paid:

1. I have already spent that amount on broken Fitbits and Jawbones that found themselves on the wrong end of the washing machine or hip check in hockey. This device is very well made, waterproof and there are only a couple of elements on earth that can scratch the screen.

2. The band fit and feel is excellent. Putting it on and taking it off is a snap (literally) after a few practice runs.

3. The battery life has been great and goes toe to toe with my iPhone 6 Plus for all day heavy usage.

4. Siri is 80% as good as the iPhone however with no browser on the Watch my frequent trips to Wikipedia require me to take out my phone.

5. The GPS on the wrist is clutch. It recognizes locations via voice command and I now use it instead of my in dash Navigation because of that. The slight tap on the wrist every time a turn is coming is a cool feature. Riding the Harley with this on my wrist has been a blast.

6. The messaging system is fantastic - getting updates on social, favorite apps and text messages is delivered in a nice way with a tap on the wrist or pleasant audio tone. Returning messages via voice or voice to text features is fast and easy, it won't solve the texting and driving problem however. Taking phone calls via speakerphone is another win - I thought it would be obnoxious in public places, but it is quiet enough to be personal and for quick 10 second "where are you in Walmart status calls" it works well.

7. Filling up the main time screen with weather, calories burned, the date and my next calendar meeting is surprisingly useful. The countdown timer combined with Siri has been used at least a dozen times while cooking and BBQing. No more walking over to microwave to set kitchen timer. The remote camera shutter is also a nice to have for propped selfies - no more holding your smile for 10 seconds hoping you kept your eyes open.

8. I checked in for a Delta flight this morning using the Passbook - it took an extra second or two for the machine to recognize the smaller QR code (a second or two feels like ten when people are behind you late for their flights however!)

9. The heart rate monitor combined with the health app provides more value than the Fitbit and Jawbone step trackers as I can better understand the amount of aerobic exercise I am getting while sitting in an office all day (d'oh).

10. It has me wearing a watch again. Something I haven't done since cell phones took over in the 90's.

8 Reasons why not to buy an Apple Watch (at least version 1 of it):

1. I mentioned above that the design is underwhelming. I am sure the $17,000 gold version with sapphire looks stunning but I can't get over the boxiness. It is the Volvo of watches! The rotary dial reminds me of my Blackberry 15 years ago. This is the one element that Steve Jobs would not have approved. For those that had those calculator watches in the 80's - this will be the perfect form factor for you.

2. Limited and low value apps. I won't spend much time on this because it will get better. I just need to remind myself what the first iPhone was missing. Navigation can at times be clumsy - the circles are small so you need to stop walking and focus in to hit the right app. Returning to the home screen should take one touch and not the multiple that it sometimes does.

3. The reliance on the phone. I believe the next major release of the watch will incorporate a cellular and GPS chip allowing the watch to function without the iPhone. I normally have my iPhone with me, but I would rather leave it behind when I am on the boat, a bike ride, run, etc. Samsung and others are already doing this and it was a version 1 misfire.

4. No browser or HTML support. This is frustrating and makes the mail app useless and Siri very limited. I wouldn't care that the font would be so small you couldn't read it - I would still like to use a browser and pinch and zoom full desktop sites when needed.

5. The charger is a big fat plastic disk that attaches via magnet to the bottom. I don't mind that it doesn't use the same cable as the iPhone (as others have complained) because I want it to be waterproof and big holes have a way of letting in water. The design of the charger disk is so fat and clumsy however that it is also in the non-Apple category of design. If it were thinner, you could wear the watch while charging. (Think an office setting, not sleeping)

6. The Health app can get annoying. "Please stand up and move", "You are a sloth and haven't burned many calories today", "Are you alive?"  I see what they are trying to do, but it doesn't have the intended effect on my behavior.

7. The music remote control is ok - but only ok. I would have like the option to use the speakerphone and play music from the watch not my phone. When I have the phone hooked up to the boat or home stereo it is nice to be able to skip songs in the next room over. The experience needs work though.

8. The Apple closed system. While the watch works great, doesn't crash and didn't take a manual to learn how to run, I still am a techie at heart that wants to fiddle with pixels at times. The settings are very limited and you get what you get with only a handful of Mickey Mouse and butterfly variations.

Ok, enough of the pros and cons. Let's get back to the Terminator and Borg argument.

I have a future prediction about a feature no one is talking about:

Haptic IS the future of communication!

I believe in 10 years (people always overestimate where we will be in 2 years, and underestimate where we will be in 10 years - so I will choose the latter), haptic communication will take over a significant chunk of human communication. It will be a resurrection of a Morse Code type of language that will develop with your kids that are quickly becoming too lazy to type 140 characters.

It will be a generational change from today's Snapchat/Twitter/Instagram teenagers. The kids (who are born after 2005) will teach themselves a new language based on touch. Tapping your phone (or other wearable device) with different cadence and rhythms will form an entirely new language not understood by parents and difficult to control in school settings. Remember, the watch doesn't have to be on your wrist - the new wearable technologies will be everywhere and anywhere.

A modern version of Pig Latin!

My prediction is in 2025 you will find yourself saying, "remember the good old days when we used to communicate in a full 140 character prose? Kids today just go around tapping each other all the time."

It is another step to being fully controlled by technology. After novelties like earrings and other haptic piercings wear off in 5 years, we will be in the middle of the internal body integrated technology debate. The Terminator or Borg concept from Star Trek is going to become very real and we are guaranteed to face the moral, religious and philosophical questions in our lifetime.

And history books will point back to 2015 when Apple sold 3 million haptic devices in the first weekend - kicking off the idea that we want to "feel" others, and maybe it is ok to have that technology embedded rather than simply on our wrist.