Business people

Another existential crisis for the channel

(Image: Stockfresh)

6 September 2017

Billy MacInnesHow long can our current channel model continue? It’s a question that has been asked (and answered) so many times at so many different places over course of the history of the technology channel that you’d think someone would know by now. Down through the years, there have been quite a few people willing to pontificate on the demise of the channel as we know it. To date, despite their confident predictions, the channel has refused to cease to be.

The good news is that people are still willing to stick their heads over the parapet and contribute to the long-running “is this the end of the channel as know it?” saga. Next month, for example, the Canalys Channel Forum, hosted in Venice, has a session dedicated to exactly that topic, featuring luminaries from Dell EMC, HPE and HP Inc.

You can see why people are asking the question yet again. As the synopsis for the panel debate points out, digitalisation has caused massive disruption and channel changes in a number of industries already. True, the technology industry has been relatively unscathed but is the channel model about to change?

Here’s where cloud rears its head. The panel will be discussing if cloud eradicates the need for distribution as part of a go-to-market strategy and looking at whether marketplaces will “take the software opportunity away from the channel?” Also, does the move to as-a-service mean credit will become less of an issue?

Which brings us to the main question: “Do distributors and resellers have a future in the digital economy?”

If the channel was purely a fulfillment model for products, I’d be inclined to say no. Just as I would have done in reply to all those earlier questions about the future of the channel.

But the product is just a part of it. In many cases, I’m not sure it’s actually that significant a part of it. It can be pretty easy for a reseller to sell one vendor’s product today and its direct rival tomorrow – especially if that’s what a customer wants it to do.

So what is the channel providing? Advice, knowledge, support, service. The ability to look beyond whatever ghetto a particular vendor operates in, see the bigger picture and understand a customer’s overall needs. Which requires the capability to support that bigger picture and traverse the boundaries between vendors in any technology implementation.

Cost of ownership
In a cloud-based as-a-service model does it matter if the reseller doesn’t own or supply the product? Probably not. The relationship is a different matter. While it’s true that vendors could, potentially, forge closer ties with customers in an as-a-service model, it’s just as likely that customers could turn to partners for the same advice and support in this model as they do currently.

You could argue that the product and the delivery platform have changed (or are changing), but the main role of the channel partner for the customer remains unchanged. That doesn’t mean it never will change. If, for example, we were ever to reach a point where IT was as much a utility as electricity or water, there would be far less requirement for trusted advisors to help customers with their IT needs. But the requirement wouldn’t disappear,

In that scenario, we would probably end up with a handful of large scale suppliers (as we have with electricity and water) of the IT service or utility. But even with electricity and water, we still need electricians and plumbers to service and fix equipment or upgrade the infrastructure in our house or office. And unlike resellers, plumbers and electricians have no problems getting customers to pay the quoted price for fixing things or replacing equipment.

So, in answer to the well-worn question over the channel’s future (or lack of it), I tend to incline to the view there will always be a role for the channel but that the channel might be very different in the future. Or it might not.

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