The channel ecosystem has shifted and changed throughout its history. Today, that continual movement goes on. Keeping an ear to the ground has always been essential, as having an idea of the challenges that are emerging allows resellers, MSPs, distributors and vendors alike to keep pace with – or ahead of – the game.
One clear transition that has taken place is the move away from one vendor shops. Ali Hastings, senior channel director for the UK and Ireland, Avaya, explained, “A multi-vendor approach is a must as the days of one vendor are gone. Best in breed still remains prominent in the market due to the shift to cloud-based solutions and recurring revenue models as on-premise declines.
“New emerging vendors continues to enter the market and challenge legacy due to customer demand and the need for constant innovation and new customer experiences in accelerated timelines.”
Changing consumer technology behaviours are pushing into the Channel. Alan Hayward, sales and marketing manager at SEH Technology, said, “The last couple of years has seen the IT channel ecosystem change dramatically. The biggest driver has been the way that tech-savvy customers purchase and consume technology. As a result, channel partners need to be primed to sell new services and products, and play a key role in the development of the next wave of technology trends.
“In some circumstances, channel partners will streamline processes in order to bring new service offerings to the market. This is because they understand that services are an essential part of their developing business model, and the future lies in consumption.
“Across the entire channel, from partners to distributors and systems integrators, we are seeing partners start to ready themselves and their business models for a new technological landscape and how to keep their offerings relevant within it. Partners are looking five years ahead to anticipate what they will be selling and where their revenue will be coming from.
“Ultimately, it’s not just about the product anymore, the industry is seeing networks open up a new world of services and solutions for the channel to deliver a cutting-edge customer experience.”
Technological change
Vincent Disneur, managing director, Union Street Technologies, pointed to the onset of new eras of technology standards as having a knock-on impact on the Channel ecosystem. He said, “The withdrawal of WLR3, the move to FTTP, the rollout of 5G, and the increasing dominance of cloud services, each represent substantial technological change for the channel.
“Consumerisation of B2B relationships means business users expect the same level of service they get in their personal lives, with their work interactions. Demand for subscription service models is increasing, as is a general preference for having less suppliers with customers preferring to source more services from one supplier with one bill.
“All of these factors give rise to a wealth of opportunity that is sure to reinvigorate the channel’s role in the supply chain and offer huge potential for resellers and MSPs to differentiate their propositions and add value. Whether it be through organic growth or mergers or acquisition, many providers are already moving away from specialism in one product and diversifying their range of services.”
That chimed with the view of John Igoe, business partners sales manager, CityFibre. He said, “Undoubtedly, the channel is changing, and the way partners are thinking about their go-to-market strategy is changing too. Over recent years we have been talking about connectivity from the view of the impending PSTN switch off, which looms ever closer and quickly.
“The ecosystem needs to adapt quickly and partners should embrace the opportunity of full fibre for UK businesses. We’re in an exciting period for the channel – now is an inflexion point and now is the time to revisit their go-to-market strategy and engagement.
“There is also a need for adaptability within the channel. The partners who thrive are those who can adapt to new products and become go-to experts to guide their customers. This is where those at the top of the ecosystem need to lead the way by offering the right guidance and knowledge, as well as commercial opportunities.”
Similarly, Paul Taylor, sales and marketing director, Voiceflex, discussed the impact of the pandemic on how business is conducted, as well as the rapid adoption of UCaaS, as two elements that are reshaping the channel ecosystem. He explained, “We have seen a marked change in the channel and the way business is done. It’s a threat to the traditional way business has been done, but we are in a new world. Teams and Zoom first, face-to-face is a nice to have but not required for deals to be done.
“End users have found ways to do business: even my plumber quotes via pictures sent, saving him time visiting then quoting. This, in turn, results in orders placed quicker and lead times falling.
“UCaaS is a marked threat to the traditional voice only market. Although, it’s been available for a long time, with traditional pre covid working practices it was never seen as a contender. The benefits were never enough for the additional cost.
“The tables have turned the threats are there, end users are far more informed, they now understand the benefits of UCaaS and how it can help their business. Many channel partners have reacted to the threats, and this is unlike any change we have seen. SIP may have taken 12 to 15 years to dominate over ISDN, but UCaaS will be dominant in half that time.”
Opportunities for growth
For Jeff May, UK sales director at Konftel, the channel ecosystem is facing a number of significant changes which present a challenge to some and an opportunity for forward-thinking resellers.
He explained, “The way resellers do business is changing, especially with online sales around plug-and-play technologies, which can lead to less of a consultative approach. Equally more product presentations are taking place remotely as the sales process continues to evolve. These factors can be a threat but also an opportunity for growth for those investing in the right areas.
“We are finding by embracing our interactive room type guide increases customer confidence and is becoming a valuable reseller tool. It’s always been about relationships but now there will be a lot more random and anonymous enquires so resellers need a strong online presence. They need to help customers search for the right equipment in a fast and compelling way.”
Resellers and MSPs are also increasingly needing to expand their portfolio to capture all customer requirements. Disneur, from Union Street Technologies, said, “With more demand than ever for resellers and MSPs to act as a single source supplier for all IT and communications services, there’s excellent opportunities to diversify product ranges, cross sell services and maximise the value in each customer account.
“However, as new products and services are added to the portfolio, this presents additional challenges for quoting and ordering services, with resellers and MSPs often having to visit the ordering portals of multiple suppliers in order to build competitive quotes. The same will apply when an order is accepted and needs to be provisioned. There’s also the need for resellers and MSPs to ensure that all one-off and recurring charges that are charged by suppliers are onward billed to customers, which can be easier said than done if this is a manual process.”
Hayward, from SEH Technology, pointed to a recent report from Accenture that indicated the ability to innovate is becoming the top factor in the vendor selection criteria. This, he explained, links to the demand for an improved customer experience so partners will look for companies that can co-innovate with them to develop unique solutions for clients.
He added, “Previously, partners would select vendors based on profit potential, but this is no longer the case as the prioritisation of the vendor’s innovation capabilities is based on the customer’s requirements. With this in mind, vendors need to make sure that their digital projects are secure and resilient, to support customers’ digital transformation efforts.
“Taking this one step further, co-innovation relationships have emerged as an attractive option for partners and vendors. This means that vendors may have to revamp their channel programmes to support co-innovation, refining offerings and deliverables to drive long term value.”
Engaging with sustainability
When asked if there are any additional threats on the horizon, SEH Technology’s Hayward pointed to the need to change green intentions into a sustainability strategy. He said, “Sustainability has been somewhat of a buzzword in the technology sector for a number of years. Moving forward, the vast majority of UK executives and managers believe that green technology will be one of their company’s highest concerns, or will become a leading priority in the next five years.
“There are a number of factors that are motivating businesses to become more environmentally friendly, mainly in relation to the increasing importance that customers place on sustainability. Many consumers are now considering this when choosing brands to spend money with, and are even happy to pay a premium for sustainable products or services.
“There is no doubt that the environmental crisis has put immense pressure on technology and channel partners to demonstrate their own credentials around sustainability. With green technology moving up on the agenda, businesses need to make informed decisions about their impact on the environment. It’s up to channel partners to lead and change the industry’s behaviour, with the aim to help educate the market and make sustainability an integral part of their core offering.”
Rising costs
Additional threats are also challenging companies across the Channel. Union Street Technologies’ Disneur pointed out the reality that several pressures have peaked simultaneously. He explained, “2022 has started with a series of rising costs landing at the same time. 30-year high inflation, the well documented energy crisis, and rising labour costs brought by increasing wages and national insurance contributions, are all putting strain on UK businesses. In addition, the channel is being squeezed by the UK’s technology skills gap and price hikes from Microsoft and Amazon for cloud services.”
Disneur added that resellers and MSPs will be better positioned to tackle these threats if they take the time to examine their billing systems and processes. Ensuring the business is accurately charging customers, he said, will help alleviate some of the rising pressures. “As margins come under increasing pressure, we’d encourage all resellers and MSPs to adopt best practice billing techniques and leverage the features of their billing platforms to minimise revenue leaks and ensure everything is correctly billed.
“We frequently find instances of misbilling when onboarding new customers to our billing software and it’s surprising just how much of a difference fixing these can make to the bottom line. Not only will this help to optimise profitability, it’s also important for compliance. Most good billing software vendors will offer consultancy services to assist with this so even if you don’t have the time or resources to scrutinise billing in-house, you should have access to support if required.”
Moving online
Whilst the Channel has encountered various challenges throughout its history, there are a few challenges that are distinct to the current landscape. Hilary Oliver, chief marketing and experience officer at Tollring, pointed to the shift to the online world, whether during the decision-making process or the buying process itself.
Oliver noted that Google has been ahead of the game since the company recognised that relevance is key and the better the content matches a customer’s search query, the more likely it is that it will achieve a good ranking. She added, “The shift to digital marketing requires a shift in skills, as we see less opportunity for face to face selling. It is important for sales and marketing people to put themselves in the shoes of the customer online, positioning products efficiently, considering what they might search, where they might look, which adverts they might see, understanding the various persona profiles that would be most relevant to the proposition and how they might understand one proposition directly compared to a competitor’s.
“The journey needs to be thought through with easy contact, easy support, easy engagement and easy purchase, but before the journey even begins, services need to be matched digitally to the needs of customers as quickly as possible.”
The good news, Oliver explained, is that those working within the channel already have transferable skills that will help them adapt to this challenge. She said, “Those in the channel that have built their business on knowing what their customer wants and market needs, are supremely well-placed to take advantage of the digital shift.”
Rising to the challenge
Channel companies – whether that’s resellers, MSPs, distributors or vendors – can take various approaches to dealing with these tests. Hastings, from Avaya, said vendors need to play a role in helping their partners adapt. She advised, “Recognise the shift in channel dynamics and mirror and tailor channel programmes to address the challenges. For example, providing financial mechanisms and recognition to help channels and their customers move to recurring revenue models.”
Hastings added that Avaya’s own shift to software-based services will help partners adapt to the wider technological shift towards software. “By delivering more comprehensive, simplified software entitlements, partners [are given] the opportunity to upsell and create additional value to the customers to replace lost revenues in legacy technology and services.”
Tollring’s Oliver cautioned that adapting to changes within the channel ecosystem will not be a simple task, but vendors and resellers can thrive through remaining customer centric. She said, “The challenge comes down to visibility and clarity of proposition, alongside a clear customer success strategy. This is much tougher than it sounds, both for vendors and resellers. Resellers must grab the opportunity of being a trusted advisor and expert, layering their expertise and their understanding of customer needs on the proposition, to help them select the right tools and applications for their businesses – no matter where they do their initial research or how they choose to buy.”
Time is of the essence, and channel companies that push ahead despite these pressures will reap the benefits. CityFibre’s Igoe said, “As all the pressures of the moment continue, it may be so easy to sit and wait to see what happens in the market. This is the prime time though for resellers to discover how they can embrace the opportunities that the last two years have created. Stepping back and looking at how customers have had to review how they work and adapt to new agile working demands will enable resellers to re-equip these customers with the technologies to do that.”