2019: In With Next-Gen, Out With Legacy

If 2018 was the “Year of Figuring Stuff Out,” could a “Year of Making Great Progress” be far behind? In a Webinar hosted yesterday by Model N, Larry Walsh, CEO and chief analyst at The 2112 Group, shared insights on what’s to come in the channel in 2019 and beyond.

While it was clear last year that changes are afoot among technology vendors and their partners, the transitions have proved subtle rather than earthshattering. Automated digital sales and marketplaces continue to gain momentum; traditional reseller models continue to lose sway to recurring-revenue paradigms; and the dynamics between vendors and partners continue to evolve.

As Walsh posited during “Reinvent Your Channel in 2019,” last year was all about “figuring stuff out.” As technology companies started looking ahead – far ahead, by, say, five to seven years – to ponder what their future might hold, questions gave rise to more questions still. Walsh was quick to point out that’s not a bad thing. “It shows they know they need to challenge themselves and think long-term,” he said. “And it gets them out of the rut of being overly committed to whatever worked in the past.”

So, what lies ahead for the channel in the next 12 months? According to Walsh, the changing relationships between vendors and their channel partners will be front and center in 2019. Just as partners are becoming more independent of vendors, vendors are beginning to disengage with some of their partners as they come to the realization that they can’t continue to support entire partner ecosystems. Instead, vendors will double down on next-generation partners – those willing and able to leave their comfort zones and invest in their own growth – and cut the laggards loose. “Vendors will increasingly leave transactional and opportunistic partners to their own devices,” Walsh said.

At the same time, vendors have begun to re-examine the metrics they use to identify high-performing channel partners. No longer is gross revenue the sole key performance indicator. “Customer satisfaction needs to be paramount,” Walsh said. “Was the job done well in the prescribed amount of time? Were the customer’s expectations met? We can’t look at just how much revenue [the partner] generated,” he said.

Other trends on the horizon? Vendors will expand their channel programs to include non-traditional partners such as manufacturers, accounting firms, and legal practices. They’ll embrace marketplaces (enthusiastically now). And at the same time they’re giving end users freer access to products and services that don’t require a sales “middleman,” they’ll also be giving those customers the professional services they need to deploy and manage solutions that yield business outcomes. They’ll do that by formalizing and maturing their pro service channels.

The challenges will be legion, but aren’t they always? Technology companies have a way of hunkering down and “figuring stuff out.” Undoubtedly, they’ll continue to do just that.

Click here to listen to the Webinar.