Channels and Alliances
Predictions 2014 (10 of 10): Monthly buying models and a new breed of salesperson will become the new normal for cloud
Partner transition to cloud business models has been underway for some time and isn't over yet, so we are still seeing new aspects of adaptation. We expect to see two interesting changes accelerating in 2014: More options for a monthly buying model, and a newer, younger breed of salesperson.
For one, the days of the annual cloud payment contract are numbered as monthly billing can be more attractive, not only for the SMB sector but also for government and even Fortune 500. Partners want to offer their own products and services on a monthly payment plan and therefore are more attracted to relationships with software vendors who allow them to resell cloud solutions on the same terms. That's why we predict the decline for annual payment schemes for cloud in 2014.
Cloud will also…
What's the future of Distribution? Well it's flying drones, of course! Just kidding (I think?).
Clearly logistics, inventory management, and pick, pack and ship are redundant when software is delivered as a service. However, this doesn't mean we think there is no role for distributors in 2014 and beyond. There are several reasons behind this.
First, all of the major distributors in North America have created tools for aggregating SaaS, Paas and IaaS offerings that allow partners to present a single consolidated, consistent bill to their customers. This is good news for solution providers who were wondering if they were going to be disintermediated, or at best play only a peripheral role within referral fee programs.
Then there are the things distributors have always done well, such as the necessary evils of credit checks,…
In contrast with the way it used to work, the bulk of technology innovation is now originating from the consumer world rather than from the realm of business. Companies that were originally focused on the consumer marketplace are now expanding to the enterprise through partners. Some of these companies began selling to business with a direct model but found they couldn't match the reach and breadth offered by the channel.
Google Apps and AWS started as consumer and small business products and are now sold through the channel, substantially growing their penetrations in larger businesses. Dell, whose roots were direct to the end user, with a no channels strategy, has jumped on the partner bandwagon, and now approximately 40% of Dell's revenue comes from commercial sales.
In June 2013, Dropbox announced the launch of its Partner Network, a new program for partners to resell, manage, and support Dropbox for…
As SaaS, PaaS and IaaS commoditizes traditional offerings, differentiation is the key to partner survival. The cloud is based on more consistent architectures necessitating fewer customized products. This sets up greater vendor price competition and makes it difficult for partners to attain healthy margins. Partners will not be successful unless they differentiate their solutions and create their own secret sauce that cannot be easily replicated. This has always been the approach of the cream of the crop, but now it is table stakes.
In 2014, we expect to see partners demonstrate more vertical and micro-vertical specialization, develop or acquire deep line of business knowledge, and capitalize on extensive domain expertise in specific business processes. We will also see the rise of partner involvement in applications and IP to enable the Internet of Things (IoT), which will require very specific industry expertise and the ability to be on the same page with manufacturing and product development departments. IoT is a…
We will be sharing the top 10 Channel and Alliances 2014 predictions throughout February. This blog post looks at the sixth of those predictions: that New Alliance Metrics Will Emerge to Address Business Value.
One of the thorniest problems with alliances has and will continue to be how to measure success. Many quantitative measures, like revenue and profit, don't reflect the true business impact because the results can't be directly attributed to a particular alliance. Many strategic alliances not only involve a direct product revenue element but also include influence, co-selling, or other less tangible degrees of involvement in deals. Also these indicators are actually 'lagging' indicators,…
We will be sharing the top 10 Channel and Alliances 2014 predictions throughout February. This blog post looks at the fifth of those predictions: that Alliance Portfolios Will Foster Incubation.
Strategic alliances have the potential to contribute a huge multiplier effect to technology vendors, yet many continue to be hard-pressed to show tangible value. In recent years, with the development of the 3rd Platform, traditional alliance functions have been challenged with not only managing their traditional alliances, but also with managing an expanded diversity of new partner types that require a different approach.
This year, we think that some leading vendors will opt to "break out"…
We will be sharing the top 10 Channel and Alliances 2014 predictions throughout February. This blog post looks at the fourth of those predictions: that Telcos Will Become the New Jedi Masters.
Telcos are already forging relationships within the partner ecosystem and can be an excellent conduit for distributing applications and providing an integration platform. For example, in 2013, AT&T launched its first partner program to build deeper relationships with ISVs, and Verizon introduced a significantly revamped version of its program, focusing on letting partners be very flexible in the type of relationship they choose to engage with. Telcos are also becoming more active in…
We will be sharing the top 10 Channel and Alliances 2014 predictions throughout February. This blog post looks at the third of those predictions: that Partner Programs Will Reflect New Partner Business Models.
In a recent IDC survey, only 16% of partners earned 100% of their revenue from their own services, from their own products, or through resale. In fact, 84% of partners do at least two things and 37% do three. It is becoming more and more difficult for vendors to classify partners into one single type.
Another dynamic at play is the rise in importance of new sources of influencers and partners, including digital agencies that have the pwoer to dictate technology preferences to their clients,…
We will be sharing the top 10 Channel and Alliances 2014 predictions throughout February. This blog post looks at the second of those predictions: that Partner Enablement will Become the New Currency.
IDC believes vendor and partner success in 2014 will be directly proportional to the quality, breadth, and extent of sales and technical enablement developed and provided by vendors to the channel. Enablement will become the new currency, superseding financial incentives in driving the vendor/channel relationship. Vendors that provide the most compelling and useful enablement for their partners will gain channel dominance.
There are a number of factors behind this:
- Partners are continuing…
We will be sharing the top 10 Channel and Alliances 2014 predictions throughout February. This blog post looks at the first of those predictions: that North America Indirect Software and Infrastructure Spending Will Increase Slightly.
Indirect software spending has been on a gradually increasing trend and is expected to reach 45.5% by 2017. Key trends that affect the percentage of indirect software sales include:
- As a software market matures, the percentage of indirect sales tends to increase.
- The overall go-to-market strategies of the major vendors have a direct impact on the indirect share. For example, any market dominated by Microsoft will have a very large proportion of indirect sales.
- The small and medium-sized…
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