Partners cheap at any price
What a time to be a channel partner! The people over at Canalys are full of positive news for channel companies, even in this time of economic uncertainty. Actually, it’s almost because of it.
MicroScope reports that in his keynote at the Canalys EMEA Forum in Barcelona, CEO Steve Brazier was very bullish on the prospects for the channel, arguing that vendors would seek to push even more business through partners.
“What does the channel do?,” he asked what you would like to believe was a rhetorical question to a room full of people from the channel who, hopefully, had a good idea of what it was that they did.
“The channel expands the market for vendors, and that’s mainly why you get signed up,” Brazier explained. “But what do we see in these difficult economic times? It is also cheaper to sell through the channel than to do it all yourself. That’s why we will see more and more companies switch to the channel.”
There are people who might take offence at being called cheap but, thankfully, channel partners are not among that group.
In any case, Brazier’s point is clear evidence that the old arguments advanced by some vendors annoyed at “giving up their margin and profit” to channel companies to sell their products or services to customers are pretty much dead and buried. Turns out that it’s more cost effective to use partners to get your product or service to customers.
Even more so when times are tough and your business is under relentless pressure to keep a tight lid on costs. In that context, it’s much easier to give away something you already have (like a little bit of margin) than to spend resource on something you don’t (like building up or strengthening your direct sales operation).
According to Brazier, even if the channel’s cheaper, that’s not stopping it from making money. He noted that the top European partners had delivered strong growth of 15% in a tough market in the first half of the year.
Longer term, even as vendors return to growth, the trend is likely to continue. According to Jay McBain, Canalys chief analyst, channels, partnerships & ecosystems, just over 70% of the addressable IT market, valued at $4.7tn, goes through and with partners.
You might wonder if that figure could shift downwards as things pick up, but McBain has an interesting perspective, arguing that large numbers of CEOs are investing more in partnerships. They really are interested in partners and how they can help them get to where they want to go.
More intriguing still, was his theory concerning the effect of the growing number of millennials in buying positions. “By five quarters from now, our end buyer, both in number of buyers as well as budget, will be a millennial,” he stated.
So what?, you might think. Millennial, schmennial. But it could make a very big difference. “This is a different buyer,” McBain claimed. “We’ve been watching this buyer for a while now in software as a service, how they go through their cycle and how they buy. They use more partners.”
He summed it up with an interesting phrase: “You’ll never hear a millennial say, ‘I’m looking for a single throat to choke’.” In my experience, it’s not something most people would say, apart from when they are people having conversations in the IT industry.
Anyway, when you think about it, it could be viewed as reassuring for a supplier or partner to know the likelihood of only their throat being choked by a millennial was lower but, equally, it might be viewed as slightly disturbing if the suggestion is millennials would prefer to be in a position to choke multiple throats.
Which gives us another possible answer to Brazier’s question: “What does the channel do?” Answer: “It tries to avoid getting its throat choked.”
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