Annual predictions are a challenging topic, and having read, with interest, my colleague Kenneth Fox’s piece on what he sees coming for the channel in 2023, I wanted to share my predictions for what channel teams – within both vendor & partner organizations – may encounter in 2023...
Top 5 Channel Predictions for 2023
1. The Rise of Co-Opetition and Collaboration to Meet the Needs of the End Customer
The sheer number of solutions available in the market often creates a complex problem in relation to understanding what product to buy. Customers are now looking for “complete solutions” that drive significant value, be it measured in increased productivity, reduced costs, higher quality outcomes, or enhanced security posture, etc. However, with the ongoing global specialist IT skills shortages, we will see an ongoing trend for vendors, and a myriad of channel players, to work together in order to ensure customer needs are fulfilled.
I see this evidenced by numerous cybersecurity vendors now leveraging multiple channel partners to fulfil end customer deliverables. The typical mix being a Value Add Distributor (VAD) supporting a Global System Integrator (GSI) who then engages the services of a local specialist IT services/consulting firm and/or an MSSP/MSP. Or look at what’s happening with Hardware vendors with supply chain disruptions and/or long lead times to fulfil complete orders. End customers are now open to deploying multi-vendor solution components to achieve an overall working solution stack. With both vendors and partners struggling to build a bank of skills, we will see more close collaboration across multiple players in the channel, to pool the necessary resources. Ultimately the end customer is the key determinant of how valuable the channel is for vendors.
2. The Need to Educate Sellers on how to Position “Why Buy” to the CFO
The IT channel has seen a massive switch from dealing with IT as the primary buyer of goods, to dealing with Line of Business buyer groups. This has radically changed the buyer journey and sales lifecycle from a traditional “linear” model to an ofttimes convoluted journey. Now, with the prospect of a looming global recession coupled with the “broken promises” of the predicted business benefits of digital transformation, vendors and partners will likely have to engage more with CFO stakeholders during the sales cycle.
With a CFO’s perspective being different, it’s imperative sales teams familiarize themselves with this new language. They must learn to be in a position to answer any questions that come their way. All investments, not just technology services/solution/product/IT spend, will be under significant CFO scrutiny in 2023. So, ensure you are ready to handle any questions that will be asked.
Hint/Tip: Many salespeople find the prospect of engaging with a CFO daunting – it shouldn’t be. As a starting point, look inside your own company and if you have an in-house CFO, ask them for guidance on how to prep. Or, better still, invite them to join you on a prospect sales call with their CFO.
3. Get Decision Grade Information out of your Data Silos – Fast!
A perennially asked question from the vendor C-suite is “What is the channel actually doing for us”. CEOs/CFOs/CROs continue to be frustrated at how difficult it is to get visibility on what the channel brings. In simple numerical terms, they just want to know key performance indicators such as:
1. “How much revenue did Channel bring in YTD” or
2. “How many new customer logos did the channel register”
This is critically important if the vendor has both a direct sales route to market as well as indirect. However, despite advances in the deployment of business platforms such as CRMs, ERPs, and Analytics tools, generating meaningful insights is still elusive. This will have to change in 2023.
4. Channel Complexity – only the “automated” will Successfully Scale
The channel is not getting any less complex! And complexities have a financial cost. Importantly, vendors need to consider the affect this has on their partners, as partners struggle to keep up with the changes. Let’s consider for a moment, this simple formula for channel Go-To-Market (GTM) complexity…
Channel GTM Complexity =
#Partner Types x #Partners x #Partner Programs x #Products x #Geos
Now, let’s say a new scale-up vendor wants to leverage the channel to enter 5 key countries in EMEA and utilize 6 partner types (Distributors, MSPs, Consulting Firms, System Integrators, Marketplace, Referral). They want to recruit 50 partners within 18 months and offer 3 products. They will serve up 2 Partner Programs, Deal Reg and Referral.
Channel GTM complexity = 6 x 50 x 2 x 3 x 5 = 9,000
Now, consider a more established vendor that operates in 10 Geos, utilizes 10 partner types, 600 partners and serves up 5 partner programs (Deal Reg, MDF, Rebates, SPIFFs, Referral) and 25 product SKUs.
Channel GTM complexity = 10 x 600 x 5 x 25 x 10 = 7,500,000
Clearly, the only way to scale is leveraging automation to drive partner self-service and automatically calculating program outcomes accruing to each partner. This is especially true for complex programs such as Rebate and SPIFF entitlements.
5. Startup / Scale-up Vendors will find it hard to get Channel Mindshare
We saw early signs of this in 2022 and it will only exacerbate in 2023 as the number of startups/scale-ups looking to the channel as their route to market, increases. No more so than in the growing cybersecurity space. The challenge for Distis, Resellers and other partners is that their teams are maxed out trying to work with the portfolio of companies they already work with. 2023 will be a transformative time in channel as the more experienced channel people retire, leaving a lack of experienced professionals to replace them.
To overcome this, startups/scale-ups need to position themselves better to be “channel ready“. They should seek guidance on their journey, especially if they lack channel experts internally. A start-up needs channel knowledge to be successful, they need the right connections, understand what programs, assets, and tools are required to keep partners happy and they need playbooks, sales demos and battlecards. It’s time to bring their A-game.
Will I be correct with my channel predictions for 2023? Who knows…the channel is a complex entity. And because “the only constant in life is change“, who really knows what the next surprise around the corner for us might be. But I look forward to finding out. Watch this space!