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Two steps forward, one step back: Channel is undergoing 'reality check', says CompTIA

30 Nov 2016

IT channel firms are going through a 'reality check' in IT as the industry undergoes major transitions, says CompTIA.

The transitions have been stirred up by a number of factors, including new business models, non-traditional competitors, non-IT line-of-business buyers and shifting routes to market. The company says that these forces can change the way channel firms conduct their business.

“While most channel firms are reliably selling traditional solutions around backup/DR, storage and security, increasing numbers are expecting strong growth in emerging areas such as cloud infrastructure, SaaS and data analytics," says Moheb Moses, director, Channel Dynamics, and ANZ community director, CompTIA.

But there is still some indecision about how channel firms should adopt cloud, according to CompTIA's Sixth Annual State of the Channel report.

Almost 40% of companies say cloud computing is the top reason why the channel's future looks optimistic. Conversely, that same topic is a key reason as to why channel firms are thinking negatively about the future.

Carolyn April, CompTIA senior director, industry analysis, says the channel is still in the process of becoming comfortable with cloud.

"After several years of aggressive cloud activity, the channel appears to be undergoing a reality check," she says.

“As the channel has had more experience working with the cloud, they’ve seen the problem areas, tempered their expectations around cost and return on investment and are now in the refinement phase. It demonstrates that the channel’s shift to the cloud is not a linear, evenly-paced march, but more a case of two steps forward, one step back.”

CompTIA says there are three main macro trends affecting the channel right now:

1. Vendor partner programmes aren't keeping up Often vendor-provided margin is less than what a partner earns from their own services, sales and marketing. This is particularly the case in the cloud-based as-a-Service market, where vendor margin is far less important

2. Vendors and channel roles are becoming blurred ​CompTIA says that the channel goes beyond traditional vendor and channel roles. Now, competitors extend to other players including pure cloud, telecom providers and digital agencies. The company says that organisations outside the IT industry that are even threatening IT vendors.

Public cloud is also allowing solution providers to create their own IP such as SaaS, as well as proprietary methodologies and processes.

3. Customers could be anyone ​CompTIA says that the end customer could now be any line-of-business buyer: Educated about their desired technology purchase and hold significant leverage in deal negotiation and price transparency.

Channel firms will need to focus on business outcome-centric sales and marketing messaging, or maybe it means specialisation in a specific vertical in order to differentiate their offerings to customers and attract interest. “The status quo on a number of fronts is no longer a certainty for the channel. As well as cloud, there are other trends are changing the way that the channel both looks and acts. By understanding where the channel is rooted today, the full impact of the ongoing transition phase shines through," Moses concludes.

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