Bengaluru: The new generation channel players, which includes non-technology organizations may take over legacy channel partners, claims The 2112 Group’s 2017 Channel Forecast.
The state of the channel is healthy, but facing pressure. Given the situation, many partners are actively transforming their businesses to meet the current and evolving technology needs of their customers, says the report.
The report pegs channel partner growth grossly between 11 and 15 percent for 2017, which is a dip from 2016’s expected rate of 16 to 25 percent and eventual average growth rate of 16 percent.
This is also because of, as the study predicts, the entry of several new players into the channel, as non-traditional technology companies take on greater roles in the resale, integration and influence of technology product and service sales, adding that these new entrants will pose a challenge to legacy partners.
“Over the next several years, 2112 anticipates the declining performance of legacy partners will either drive out or marginalize a large percentage of the channel population. At the same time, next-generation channel partners and new non-technology partners will not just fill the void but expand the channel’s capacity to address the growing total addressable market,” highlights the report.
The claims that most partners are getting more conservative in terms of their growth expectations and sales potential. At the same time, they’re doubling down on investments in their existing products and services. “In other words, they’re slowly adapting to the realities of the Interconnected World – the digital fabric connected by cloud computing, mobility, big data, the IoT, AI and automation,” the report says.
These latest technologies and emerging trends also have an influence on solution providers’ operational outcomes, according to the report.
“Partners report that their sales cycles in 2016 got longer,” the report says. “The profitability of products remains stable, but most of their profits are coming from professional services and not emerging technologies. Moreover, partners are looking to well-worn legacy products to drive their growth.”
The report states that forecasts around “mass channel extinction” are usually “overstated”, despite these challenges and those that indicate diminishing profit margins, changing business models and a talent shortage.
“Instead, 2112 believes the value proposition of respective partners will create vast gaps between contributing and opportunistic channel relationships,” the report says. “2112 feels the value of channel partners to vendors and end users will come from their ability to effectuate and perform complex business services and workloads.”
Partners can come to a better position by adopting cloud computing and recurring revenue models and by managing customers’ workloads and business functions. 64 percent of partners says that security is a major growth driver, 32 percent of 2017 revenue will come from professional services and 18 percent of partners would want to excel in their business through acquisition.
The research is based on a series of surveys with an average of 150 solution provider respondents from between 2014 and 2017.