Futurecasting Channels Starts with Understanding Existing Partners

Everyone knows the IT market is changing, and that will cause changes in the channel’s composition. Plotting the channel’s future state requires understanding the capabilities and capacities of existing partners.

By Larry Walsh

Over the past year or so, The 2112 Group has received many inquiries from vendors about what the channel will look like three to five years down the road. These questions have morphed into 2112 research and development programs, something we’ve come to call “channel futurecasting.”

One of the underlying questions of these exercises is: “Who will my partners be in the future?” It’s an interesting question because some vendors presume the partners of today will not only stop being partners in the future, but that they may not even exist.

We have a different take on the future partners question. Darwinism will run its course, and not every partner will graduate into the future. However, not every partner of today will fail to evolve into a useful role. In fact, the evolving partners are the foundation and catalyst of vendors’ future channel programs. Identifying them requires inspection, and 2112’s methodology for assessing and assigning partner value is more applicable than ever.

2112’s partner assessment approach is called “3C’s”: capabilities, competencies, and capacities. What makes the 3C’s special is that it clearly defines the total value and commitment of a partner to your channel organization.

Capabilities
Every partner is capable of something – technical acumen, ability to work on certain products, good salesmanship. The best way to describe a partner’s capabilities is to define its total breadth of operational capabilities and how they align (or don’t) to your business. Partners that don’t exhibit competencies or capacities are generally regarded as “jacks of all trades” or “generalists.”

Competencies
The partner excels at something specific; it has a practice, or practices, focused on a technology domain or a vertical market. Think of partners such as security specialists, application developers, and health care experts. Partners may have multiple competencies, as it’s possible to be good at more than one thing. The point is that they’re not diluted by trying to do too much.

Capacities
Does the partner have the resources, ability, and will to execute and expand beyond its base? Does the partner have the sales support, technical bench, marketing resources, investment funds, and ambition to develop and grow its business – particularly as it relates to certain vendors? This is the measure of capacities.

The 3C’s measure is cumulative. Generalists typically don’t have the capacity to grow, as they’re often diluted in their ability to execute if they don’t develop domain practices. Likewise, a domain specialist isn’t automatically a strong partner if it’s unwilling to apply those resources progressively.

You may say a generalist could grow if it invests in resources and infrastructure to facilitate expansion. This is the exception to the rule; in such cases, being a generalist becomes a practice (competency) in and of itself. Oftentimes, generalists will evolve into multiple domain practices out of a necessity to maximize resources.

At 2112, we’re monitoring the channel’s evolution. By our estimation, this evolution started with the Great Recession of 2009 and cloud computing’s coming of age. Back then, Gartner incorrectly predicted that 40 percent of the channel would disappear within five years because of the changes brought by cloud computing. Gartner missed its target, but it wasn’t wrong about channel attrition. Large swaths of channel partners will consolidate or exit the market because they can no longer compete or choose not to change.

We’re seeing that phenomenon play out in the consumer segment also, with retailers shuttering thousands of stores amid shifts in buying patterns. Some are shifting their focus to online selling or sales through online marketplaces. Others are just going out of business or careening toward oblivion. Look no further than the struggles of Sears for an example of a once powerful brand crumbling under the disruptive pressure.

Looking forward five years from now, the channel will have a vastly different composition. Traditional resellers and integrators will remain. Managed services will mature to the point of encompassing cloud and business operations management. Marketplaces will dominate the channel, consolidating points of purchase and limiting opportunities for legacy partners. And professional services specialists will take on the role of influencers, directing customers on what to purchase and from whom.

Amid all this change, 2112’s 3C’s are as valid as ever. Vendors should employ our 3C’s methodology to understand their current and future channel composition. Vendor channel evolution doesn’t start with the recruitment of new partners; it starts with building on the strength of existing partners. Vendors that can help willing partners with their evolution will have a much stronger foundation for their future channels than those that are constantly trying to build and rebuild their partner networks.

Defining a vendor’s future channel composition starts with understanding the capabilities, competencies, capacities, and ambitions of existing partners. Existing partners are the test beds of the future, the navigators of vendors’ channel development, the bedrock of future channels.

Often, change happens slowly and then suddenly accelerates. Don’t wait until competitors are speeding by to start your futurecasting process. 2112 is working with several vendors on assessing and evaluating current channel programs to project development scenarios and evolution strategies. For more information on how 2112 can help you futurecast your channel, send e-mail to info@the2112group.com.


Larry Walsh, The 2112 Group

Larry Walsh is the founder, CEO and chief analyst of The 2112 Group. Follow him on social media channels: Twitter, Facebook, LinkedIn.

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