Channels in the Time of Coronavirus
Precautions to stop the virus’s spread will cause short-term disruptions and long-term changes to the way vendors go to market.
By Larry Walsh
The world and technology market continues to deal with the immediate impact of the coronavirus (COVID-19) outbreak, as the pandemic disrupts supply chains, travel, and business operations. The question we must ask today: What will be the lasting impact of this black swan event on the way we go to market in the modern era?
Speaking with numerous channel chiefs and professionals over the past few days, the conventional wisdom is all vendors will adjust their forecasts and restate earnings projections as a result of coronavirus. They believe the supply–chain disruptions, event cancelations, travel bans, and office closures are too much for any company to absorb. Moreover, most channel pros see significant disruptions to channel operations and productivity.
Amid the disruption, though, shine glimmers of opportunity. Pushing employees to work from home and forcing alternative operations is pushing vendors and partners to think differently about sales, marketing, fulfillment, and support. In some cases, these new operating conditions will allow well-positioned companies to thrive.
Based on conversations with channel pros that represent hardware, software, and cloud vendors, the following is an aggregation of what’s happening around the industry and the channel:
Cloud computing promised to make on-premises information technology a thing of the past. However, not all things IT are in the cloud. Companies and their employees need endpoints and local infrastructure to access cloud-based resources. Vendors are racing to fill gaps caused by supply–chain disruptions. Many hardware vendors are bracing for inventory backlogs and shortages due to factory shutdowns in Asia.
On the channel side, product fulfillment will be impacted by the coronavirus outbreak. Many vendors say their technologies require little to no on-site support for deploying, integrating, and configuring. However, getting products to customers may prove difficult. Moreover, getting more complex hardware stacks working will be challenged by component shortages and access restrictions.
Set aside the potential budget crimp of a virus-induced recession, widespread disruption of the traditional face-to-face sales process will challenge vendors and solution providers alike. B2B technology sales are dependent upon relationships and human connections. Without the ability to do site visits, talk with influencers and decision-makers, and curate trusted relationships, technology companies will likely struggle to develop new customers and close new deals.
Marketing and Lead Generation
The coronavirus pandemic will affect marketing more than any other part of the current GTM model. The prescribed medical countermeasures of curtailing travel are exposing the industry’s dependence on events and conferences for lead generation and customer development. Beyond the lost time and money to canceled live events, marketers are grappling with the challenge of keeping pressure in sales pipelines. Digital events and webinars are a short-term stopgap, but marketers say they don’t have the same impact as face-to-face meetings and relationship development.
Some companies – such as Microsoft and Cisco – are taking novel approaches to the coronavirus-inspired “work from home” scenario by offering free trials of their collaboration tools. Other vendors are following suit with freemium offerings. While freemium is good for vendors and customers, they’re not so good for solution providers as they more often lead to direct sales.
Travel restrictions will also change the way products are marketed and sold through distributors. Vendors won’t conduct their usual floor days, lunch and learns, and on-site promotions to distributor sales organizations. The disruption could cause vendors to rethink how they interact and incent distribution sales teams when they cannot touch them directly.
Marketers are looking to reinvent the way they market to customers, as well as with and through channel partners. Few have answers for how they will do this. Through–channel marketing automation (TCMA) can leverage existing content to entice customers with products and services. However, marketers worry that buyers can only watch so many videos and webinars in a day before tuning out.
Potential winners amid the coronavirus crisis are marketplaces and automated digital sales channels. The state of marketplaces and eCommerce in the technology market is spotty. While the capabilities exist, few vendors see the marketplace model as an equal to legacy route-to-market channels. Even solution providers with eCommerce capabilities treat digital sales as a secondary channel. Displaced workforces and travel bans may get vendors and solution providers to rethink their marketplace and automated digital sales strategies to provide customers with the option of buying without interacting with salespeople.
Managed Services & Automation
Potentially the best and worst positioned part of the channel is the managed services segment. As vendors send their workforces home, they’ll become more reliant on IT management automation tools and managed service providers to administer and maintain their systems. While MSPs have an advantage in aiding distributed organizations, they will also struggle with operations. It’s difficult to operate a network or security operations center (NOC/SOC) when your workforce is home. Some vendors are questioning whether MSPs can scale with the surge in remote workers. On the upside, the quarantine protocols may prompt more businesses to redistribute their workforces and embrace managed services as a means of scaling resources.
An unintended consequence of the coronavirus disruption could be technology simplification. Some processes, products, and services are unnecessarily complicated due to legacy thinking and models. Having to operate under extreme circumstances may compel vendors to wring out complexity in their sales, fulfillment, and support models to make getting products to market easier. On the surface, that sounds like a good thing. However, simplicity is the enemy of channel partners. “Channel ready” means having a product that is within the technical reach of channel partners but outside the capabilities of customers. Too much simplification could result in vendors not selling certain products and services through channel partners.
It’s far too early to speculate on the long-term ramifications of the coronavirus outbreak’s impact on go-to-market strategies and channel models. The industry is adjusting to meet the challenge. Channel pros are already thinking that they may discover new ways to partner and sell products different from contemporary models. As one channel chief put it, “We operate the channel on frameworks built 15 and 20 years ago. We need a change, and this may be the catalyst for it.”
Other channel chiefs say they don’t know what the industry will look like on the other side of coronavirus, but they wouldn’t be surprised if they learn they can live without many of its legacy constructs.
Larry Walsh is the CEO of The 2112 Group, a business strategy and research firm servicing the IT channel community. He’s also the publisher of Channelnomics, the leading source of channel news and trend analysis. Follow Larry on Twitter at @lmwalsh2112 and subscribe to his podcast, Pod2112, on iTunes, Google Play, Spotify, and other leading podcast sources. You can always e-mail Larry directly at firstname.lastname@example.org.