Changes Ahead for Traditional Channel Companies

By Jessica Davis  |  Posted 2007-11-27 Email Print this article Print
 
 
 
 
 
 
 

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Solution providers will need to re-examine their businesses as they look to alternative delivery methods such as SAAS and managed services, according to Gartner.

New IT delivery models such as software as a service, infrastructure utility and managed services have the potential to turn the traditional VAR and solution provider channel upside down.

That's according to a research report from Gartner that further said the changes will impact the way traditional IT channels and distribution companies operate. With their very business models on the table, solution providers and the vendors they work with need to prepare for the changes ahead.

The traditional channel faces many questions going forward, according to Tiffani Bova, channel sales research director at Gartner and author of the report. For example, in this new delivery model, who owns the customer? How will IT vendors adjust products to support new delivery modes? And how can the channel make money from selling to and servicing customers? Will distributors play a role too?

"While all these questions facing traditional channel companies are daunting at first blush, they also present a tremendous opportunity for them to take a look at their existing book of business and find ways to do it more profitably and with greater ability for scale," Bova said in her report. "This is not an all or nothing scenario—balancing traditional project-based business with alternative delivery models will provide the time needed to determine which is the best model for growth over the long term, gain acceptance from internal personnel and existing clients, and put a plan in place."

For more on how SAAS could hurt solution provider sales, click here.

As the players in the traditional channel start to do just that, Bova expects some trends to emerge. For example, she expects to see an increase in partner-to partner collaboration as channel partners look to each other for help with alternative delivery models. And the talent crisis that has dogged channel companies in recent years will continue unabated as companies must continue to find personnel with technical skills.

To address the challenges ahead, Bova offered several suggestions. For example, she said, successful solution providers will need a good understanding of fixed-fee, value-based contracts and how to finance them. Companies will also need to continue to invest in training to ensure their staffs have the skills to implement and service their accounts.

Those staff members must be skilled in the new way of selling as the relationship between the channel company and the customer evolves to become more consultative than tactical and execution-oriented.

As more traditional channel companies try these alternative delivery methods over the next few years, a clearer business model is likely to emerge.

"Ultimately, there is no right or wrong way in which channel companies are leveraging alternative delivery models," Bova said, "nor is there a clear indication which model will deliver the greatest opportunity over the long term."

 
 
 
 
Jessica Davis covers the channel for eWeek and Channel Insider. Her technology journalism career began well before anyone heard of the World Wide Web and has included stints at Infoworld, Electronic News/EDN, and the Philadelphia Business Journal. Her work has also appeared on CNN and Forbes.com. She has covered hardware, software and networking, as well as the business side of technology. She has won several journalism awards, including a national ASBPE award for best staff-written column, and was named Marketing Computers hardest working tech journalist on their inaugural list of top tech journalists. Jessica can be reached at jessica.davis@ziffdavisenterprise.com
 
 
 
 
 
























 
 
 
 
 
 

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