When you read an article or blog post about the optimism of channel companies, does that cheesy ‘80s song from Timbuk 3 get stuck in your head? A healthy portion of solution providers do believe their future business prospects are looking quite bright, though the need for sunglasses was not part of the research for the Fifth Annual CompTIA State of the Channel study.
That’s right, optimism is alive and well in the industry and the most surprising thing of all is that some of the issues formerly listed as inhibitors have now become drivers. The cloud has driven some of the biggest changes. This business model’s explosive growth and business adoption has forced many channel firms to reevaluate its merits to their end customers and, in many cases, it has affected the relationships providers have with their vendors, distributors and other partners. VARs and MSPs are finding that the required business transformations not only allow them to survive, but give them greater efficiencies to thrive moving forward.
In other words, those who are embracing the cloud and other revolutionary channel innovations are seeing the light. They are lessening their reliance on one-time transactions in favor of a more comprehensive portfolio of support services and customer-specific solutions. An ever increasing number of IT firms are also adopting more client-oriented long-term strategies while they continue to shift a larger amount of their resources to non-traditional offerings. Those includes consultation and training programs, policy development (security, compliance, etc.) and a host of other support services developed to meet the needs of particular vertical market customers.
Survey Says…
What’s the takeaway from the latest CompTIA report? My interpretation is that solution providers who are more receptive and responsive to the cloud (and change overall) have a much brighter outlook on the channel’s prospects. That’s just my take, so be sure to check out the report and come up with your own conclusions. The key findings include:
- More than half of cloud, telecom and integrator firms are optimistic on cloud computing opportunities and the channel’s future.
- More than 1/3 of respondents believe the broader technology adoption by end users (the consumerization of IT, BYOD, mobile apps, etc.) will drive demand for more skilled IT professionals. They’ll need experts who can integrate, customize and manage IT as well as provide consulting and training support.
- Another 1/3 believe the increasing complexity of solutions will solidify the need for outside IT experts.
- Vertical specialization is seen as a key provider differentiator.
- Demand for managed services is another optimism booster for 40 percent of channel respondents.
Not everyone is as optimistic about the channel’s future. The State of the Channel report found that the smaller IT services firms (10-99 employees) and businesses that had been open less than five years were the most pessimistic (19 percent and 21 percent respectively).
When you consider that 50 percent of new companies fail within five years (according to the U.S. Small Business Administration), this IT industry pessimism rate seems rather small in comparison. In the early stages, most entrepreneurs lack sufficient experience and have minimal access to capital and credit. Some end up growing faster than anticipated and can’t keep up with demand and support. Others improperly or poorly assess the competition or develop sales projections without following effective market evaluation processes. Even if none of these factors come into play and the organizational strategy is sound, things just happen. It’s hard to plan for disasters and unexpected events, especially those that affect entire communities or segments of your customer base.
Should it be a major concern that those with less channel experience are somewhat skeptical of the future? Probably not, though it’s good to note the specific reasons for their uncertainty (especially around the cloud). Results of the state of the channel survey include:
- 46 percent of respondents are concerned that IT has become easier to deploy and manage internally. Approximately 40 percent worry the cloud will siphon on-premises IT business.
- 42 percent of cloud providers are concerned about direct sales competition, while another 44 percent worry about potential skills gaps for emerging and more complex technologies.
- 40 percent of those most invested in cloud and telecom have some level of concern about the economy, rising interest rates, the lack of access to credit or capital, or the inability to recruit and hire skilled employees.
Brian Sherman is Chief Content Officer at GetChanneled, a channel business development and marketing firm. He served previously as chief editor at Business Solutions magazine and senior director of industry alliances with Autotask. Contact Brian at Bsherman@getchanneled.com.
