Trends, opportunities and challenges that are driving the need for greater automation
If you work with channel partners, there’s a strong chance that your world has seen more upheaval in the past two years than in the previous five. Everything from business economics to technological innovation to customer buying habits is undergoing change. Navigating this post-pandemic period will be a significant challenge, unless you have some help to guide you.
That’s why we are here.
Here’s an overview of the top business priorities that channel partners have heading into 2022 and beyond. We present them now so you can factor these realities into your future partner plans and programs. Note: most trends examined below formed before the pandemic set in. They will likely have significant influence long after Covid-19 and its variants subside.
Let’s start with a big one, the future of work, careers and organizations.
Step into the Future of Work
Channel partners face a number of challenges and opportunities, none more pressing the aligning their organizations and capabilities to the broad concept known as “the future of work.” Thanks to the pandemic, technological advances and shifting social norms, we can safely say that the future of work will be more mobile, virtual and automated than before. It will also be more measured, decentralized and specialized.
“Companies are now looking at a permanent shift in how they work — reassessing workflows, processes, business logic, and even real estate investments,” writes Forrester Research analyst Jay McBain.
The implications for channel partners couldn’t be greater. Regardless of industry, they will have to rethink their own workplace realities not to mention retool to better serve customers. Consider McKinsey & Co., whose research finds that between 20-25% of workforces in advanced economies could work from home between three and five days a week. “This represents four to five times more remote work than before the pandemic and could prompt a large change in the geography of work, as individuals and companies shift out of large cities into suburbs and small cities,” according to McKinsey research.
In addition to new workplace norms, channel partners are working to better understand how occupations are changing. By 2030, virtually every occupation, for example, will be influenced or directly involved with digital technology, making every worker a knowledge worker in some fashion. What is more, as much of a quarter of the workforce will seek new occupations — not just new jobs — as a result of all the change. While estimates vary, one study predicts that nearly two-thirds of children today will eventually work in new jobs that don’t yet exist.
In addition to individuals, organizations themselves are changing. According to Gartner Research, “Companies will focus on expanding their geographic diversification and investment in secondary markets to mitigate and manage risk in times of disruption. This rise in complexity of size and organizational management will create challenges for leaders as operating models evolve.”
Thanks to these and other changes, channel partners of all stripes are working hard to plan and prepare for the future of work for 2022 and beyond.
Embrace disruptive innovation
In the tech world, thousands upon thousands of managed service providers (MSPs) have desks dedicated to tech specialists whose job it is to respond to customer trouble tickets all day long. Initially, many MSPs were cool to the idea of handing some of that work to artificial intelligence (AI) bots that could respond to low-level customer requests such as resetting a password. Many MSPs owners worried about the level of service the bots would provide to customers, and the toll such bots would have on workers who feared for their jobs.
Fast-forward to today. More MSP owners are comfortable with the increased sophistication of bots and more MSPs engineers are, too. The bots provide good, base-level service and free engineers up for more advanced duties. It’s a case of disruptive innovation that works for everyone.
Not all disruptive ideas, of course, do. (Taxi drivers and homeowners’ associations aren’t fans of Uber and Airbnb for a reason.) But where possible, channel partners have put disruptive innovations at the top of their lists of priorities both for themselves and their own customers. A third of tech industry channel partners who have added new vendors to their line cards of late say they have done so to “enter new markets like emerging tech,” according to tech industry trade association CompTIA.
In pharmaceuticals, channel partners are embracing new pharmacovigilance technologies that help prevent the adverse effects of incompatible drug prescriptions in care environments. A few years ago, such technology threatened Big Pharma middlemen but no longer. Channel partners are availing themselves of the latest innovations so they can offer unparalleled levels of services to their customers.
Then there are software marketplaces, which many tech partners are trying to figure out. Once thought to be a disruptive threat to their worlds, technology resellers now recognize that software marketplaces serve as a complement to their efforts to sell software. Many have embraced them to address specific customer needs, freeing them up to focus on higher-level deals and integrations.
Leverage new business models
What do HPE, Dell, Cisco, Nutanix and other tech giants have in common? They all have committed to offer most if not all of their tech portfolios as-a-service within a mere few years.
The reason is straightforward, according to research from The Alexander Group, a market consultancy that caters to enterprise vendors and buyers of technology. A late 2020 study by The Alexander Group found that everything-as-a-service (XaaS) market leaders are growing revenue from existing customers by more than 20% annually and improving their net revenue retention by 11%.
Overall, sales of infrastructure-as-service, which includes AWS, Google and Azure, are growing 40% year-over-year whiles sales of software-as-s-service are growing 30% annually. This compares to modest growth rates for products such as servers, routers and more.
This is a massive business model transformation for vendors and channel partners, alike. In fact, experts believe it is the single largest transformation in technology in two decades. “New XaaS revenue models require post-land investments across the entire customer life-cycle and are critical for continued growth and scale,” says The Alexander Group.
For channel partners in tech, this means a reduced emphasis on product reselling and more focus subscription sales, which is good because the latter provide a more predictable revenue stream and a more durable economic model than a big-ticket, transaction-oriented business.
More than semantics, the transformation to XaaS has wide-ranging implications for how channel partners staff, fund, grow and manage their organizations. Rather than product margins, more channel partners look to make money by monetizing their influence, says Wayne Monk, senior vice president of global alliances and channel sales at tech integrator and consultant ASG Technologies. Writing for VARinsights in January 2021, Monk says “some partners are shifting their business to provide more advisory and architecture-oriented services, while others are electing to innovate and sell their solutions.”
In addition to what they offer, channel partners are rethinking how they offer their value. Consider the insurance industry, which is greatly dependent on independent agents known as “intermediaries.” At the beginning of the pandemic, roughly 90% of life insurance agents’ sales conversations and nearly 70% of ongoing client interactions were done in person, according to McKinsey findings. By May 2020, that figured dropped to just 5%.
In a report on the industry, McKinsey addressed the broader and longer-term impacts that external forces are having on the business models and best practices of insurance channel partners: “Agents accustomed to in-person interactions are rapidly recalibrating to provide uninterrupted service to clients who may be facing severe health or economic challenges. These agents are also rethinking how they build relationships with prospective clients as most rely on in-person meetings.”
Deliver superior customer experiences
For decades, study after study revealed that consumers loathe shopping for cars. But year after year, car dealerships clung to the No. 1 thing car buyers hated most: price negotiation.
Then the pandemic set it. When it did, consumers turned en masse to online buying sites such as TrueCar, Carvana and Vroom, which offer a haggle-free sales experience and at-home delivery. To promote its emphasis on superior customer experiences, Vroom ran a TV ad during the 2021 Super Bowl that parodied traditional car dealer experiences.
While some saw the move as an afront to their businesses, some dealers changes policies to provide better customer experiences. This includes Bill Camastro, a dealer and partner in Gold Coast Cadillac in New Jersey. Camastro told Automotive News, “I hope every car dealer in the country saw that commercial, to be honest with you. All it’s going to do is improve them.”
Turns out he is right. Since the pandemic, more car dealers have embraced “no-haggle” selling and beefed-up other services including free-loaner cars, free customer pickup and online appointment scheduling.
Intermediaries in other collaborative industries are similarly pulling out all stops to elevate the customer experiences (CX) they provide. To better respond to customer tech support inquiries, tech channel partners are investing in professional services automation (PSA) platforms to a greater extent. PSA technology has been shown to translate into a 48% reduction in customer dissatisfaction and a 28% improvement in channel partner response time, according to a Forrester/Datto study
As their business models shift and the need to provide superior customer experiences increases, more tech channel partners are embracing what tech publication VARStreet professes: “Customer experience is the impression customers have of your brand through all interactions across the entire customer lifecycle.” Ditto for their enterprises. Today, more channel partners believe customer experience is the responsibility of every person in their organization, according to the publication. More than a third say it’s the single most important competitive differentiator that they have, according to CompTIA.
Not surprisingly, more tech industry channel partners are retraining their sales staffs and support personnel to embrace this new reality. Salespeople, for example, are being retrained to be more empathetic to customers because their duties have grown beyond simply selling; they now include retaining customers, in many instances.
Develop more sophisticated marketing and branding capabilities
For decades, intermediaries in many industries relied on the brands of others to attract customers’ attention.
Watch dealers, for example, counted on Rolex and Omega to bring people into their stores. Tech channel partners counted on Microsoft, Cisco and HP to essentially do the same.
But times have changed. The idea that channel partners aren’t really interested in marketing is a maxim that is an outdated as a business without a website. While it bucks conventional thinking, marketing spending as percent of revenue has actually increased among tech channel partners in recent years. Traditionally less than 5% of revenue in a given year, some partners now spend upwards of 7% or more of revenue promoting their brands. Smaller channel partners, in particular, spend a greater percent of revenue on marketing than their larger channel counterparts, on average.
Interestingly, building their own brand doesn’t necessarily come at the expense of building a vendor’s brand. Just the opposite. Research from the tech trade association CompTIA found in 2021 that nearly one-third of channel partners want to tap into digital the marketing expertise and social media know-how of vendor partners. In addition, channel partners want to “appear bigger and more sophisticated to the customer” thanks to new digital capabilities.
To burnish their images, channel partners in various industries are hiring more branding and marketing specialists. They are investing in new tools. And they are rethinking everything from the language they use to attract customers to the way they measure engagement and the journeys they create for customers.
These journeys have led them to affiliate with a variety of new influencers and thought leaders. In the tech industry alone, they are nearly 150 different social media groups for VARs, MSPs and other channel partners, according to Forrester Research.
Ultimately, what channel partners want is a way to attract new business that doesn’t detract from their ability to serve existing customers. Scaling, thus, has become a priority in everything they do.
Which brings us to our last 2022 channel partners priority: rationalizing an internal tech stack. That, of course, is the single most important lever a channel partner can pull to facilitate their ability to operate at scale.
Rationalize an internal technology stack
The adage that you cannot run a channel on spreadsheets is taking hold among channel partners in several industries. In tech, for example, some channel partners have gorged on tech automation — so much so that they are now trying to rationalize and standardize on a tech stack that’s optimized to help advance them in key areas including service automation, marketing, vendor relationship management, sales and more. Others — the bulk of channel partners — are just getting started.
Regardless of where they are in their journey, channel partners are eager to establish some norms and standards. Again, take a typical tech channel partner today such as an MSP.
In today’s market, an MSP typically runs its services division with a PSA and/or a remote monitoring and management (RMM) platform. It will also leverage a customer relationship management (CRM) platform such as Salesforce to help its sales team. And it will leverage marketplaces and dashboards provided to it by key distributors.
In addition to these tools, MSPs typically rely on one or more dashboards to monitor their cybersecurity operations and others for marketing. The most important tools for executive leadership are partner relationship management (PRM) platforms that provide business leaders a window into their sales pipelines, employee certifications, through channel marketing activities and more.
All of these compete for the time and energy of partners who have no time to slow down or patience for poorly designed interfaces. Nor can they afford to invest in redundant tools that confuse rather than simplify. Consider, for example, questions raised by tech consultant BCG: “Does the fourth collaboration software help, or does it just confuse us…? Finding the right balance is essential to making Smart Work productive.”
Not surprisingly, Monk from ASG Technologies believes the tech industry is entering an era in which channel partners are leveraging “hyper-automation.”
“To service these new demands from end customers, many channel partners are transitioning to hyper-automation, which is imperative to delivering a digital service because it builds resilience and improves the experience. Automation is top of mind because people aren’t in offices or data centers anymore. They’re confronted with manual tasks and human dependencies and need to stitch them together in an automated way,” Monk writes in VARinsights. “In the race to a digital-first, virtual-first world, partners that can keep pace will pull ahead.”
Which brings us to your company.
When it comes to your tech stack, are you helping or hurting yourself when it comes supporting your channel partners? To be sure you’re aligned with their priorities for 2022 and beyond, do yourself a favor and sign up for a demo from Impartner today. Let the market leader in PRM show you what hyper automation should look like and what it can do for your business.
For more on channel and programs, be sure to read, “Seven Signs Your Partner Program Is Too Complicated.”