The Channel Is Improving Financially and Operationally

The Channel Is Improving Financially and Operationally

While double-digit growth is impressive, the real indicator of channel health is the number of solution providers growing at rates of 16 percent or more.

By Larry Walsh

Simply put, the channel is getting better. And according to our new 2015 Channel Forecast report, it’s not just getting better financially; solution providers, by and large, are improving their organizational structures, operations, and business discipline. The result is an increasingly more focused, productive, and profitable partner community.

The annual Channel Forecast study plots overall solution provider performance to provide directional guidance on sales and profit expectations for the next 12 to 24 months. The study examines factors such as gross sales and revenue, profitability, operational models and identifiers, business management acumen and planning, organizational composition, and sales and general channel trends. The composite created by these factors reveals the general health of the channel, as well as probability for future performance.

For the third year in a row, solution providers grew, on the average, 11 percent to 15 percent. While steady, double-digit growth is impressive, the real indicator of channel health is the number of solution providers growing at rates of 16 percent or more, which now makes up more than two-fifths of the overall channel population.

FIGURE-1-Average-Channel-Revenue-Growth-2010-2014
The increasing number of solution providers growing at rates of 16 percent or more is significant, as previous research by 2112 – The 15 Percent Rule – found that this is the point at which solution providers become net contributors to vendor channel performance.

A large part of this upward trend in channel performance is due to improved business management acumen and organizational focus. The 2015 Channel Forecast found that more solution providers are engaging in strategic growth and business planning, as well as exercising more governance over their operations. The result is better outcomes with less risk.

Our short- and long-term expectations for the channel remain bullish. For 2015 into 2016, 2112 expects the channel to continue to expand consistently at a low double-digit rate and average profitability to remain relatively flat. However, the trend lines indicate that the number of solution providers performing above the average range will increase 3 percent to 5 percent over the next 12 to 18 months.

In the 2015 Channel Forecast, we detail the performance improvements, including channel growth rates; profitability trends; level of business acumen among solution providers; future expectations for performance, opportunities, and challenges; and chief indicators for identifying partner performance potential.

Click here to purchase the 2015 Channel Forecast; a complimentary summary is also available.


Larry Walsh, The 2112 GroupLarry Walsh is the founder, CEO and chief analyst of The 2112 Group. You can reach him by email: [email protected]; or follow him on social media channels: Twitter, Facebook, LinkedIn.