Customer Demand for Innovation Is Driving Channel

A survey of 1,150 IT channel partners in 12 countries conducted by Accenture finds the channel is increasingly being driven by increased customer demand for innovative solutions as customers invent more heavily in digital business transformation initiatives.

In fact, the IT channel overall has reached an inflection point where many of the assumptions made about what motivates channel partners today are no longer valid, said David Sovie, high tech global industry lead for Accenture. 

“Innovation is now a much bigger driver,” Sovie said.

Partner responses

Innovation

The Accenture survey finds partners are being required by customers to develop more solutions on top of platforms provided by vendors (48%), support digital transformations (46%) and support smaller customers in different geographies (43%). 

Nearly half of respondents (45%) said their primary business objective is to expand their business by bringing more consistent innovation to their products and services.

Nearly two-thirds of respondents (64%) said they only want to do business with providers that prioritize investments to accelerate innovations across their products, services, industries and experiences. A full 85% noted they could grow their business 20-80% if vendors focused on some or all of the following: innovation, performance optimization, marketing and demand generation.

The ability to innovate is the top criterion for choosing a particular vendor, followed by brand reputation and technology compatibility, the survey also finds.

Customer and vendor demands

That shift reflects a desire on the part of end customers to employ a wider range of emerging technologies to drive transitions within their own organization faster, Sovie said. Nearly three quarters of respondents (74%) said the customer expects their business objectives to be deeply understood and that partners should bring value to their solution.

At the same time, channel partners are being pressured by IT vendors to drive innovation. 

Providers are not only requesting that more solutions be built on top of their platforms or products (48%), they are also asking channel partners to support new products and platforms at a faster pace (46%).

Cloud reliance

As part of their efforts to meet those customer requirements, channel partners are now more dependent on cloud service providers than they were just three years ago, Sovie said.

The Accenture survey finds Microsoft, Google and Amazon Web Services (AWS) account for the majority of revenue a partner generates. That’s a major shift from three years ago, when IT vendors with broad on-premises IT portfolios dominated, notes Solvie.

Vendor options

That shift has also brought more flexibility. More than three quarters of respondents (77%) also noted they have more IT provider choices than they did three years ago.

New business goals

Nevertheless, 60% of survey respondents reported they are challenged to find new customers and meet growth targets. More than 70% said these pressures will increase or significantly increase their operational costs, with 68% noting as customer and provider expectations rise, the cost of doing business will become unsustainable.

Partner-vendor relationship

Three-fourths of partners (75%) are also seeking a technology provider that can deliver the digital experiences to make doing business easier. An equal number also want a provider that is easy to do business with and that can add value to a product after it’s sold. Nearly three quarters (73%) are also looking for monetary benefits from the provider and for co-investing opportunities that can drive innovation.

However, the relationship with IT vendors is complicated. Many respondents (40%) noted they are encountering more competition from the professional services units and customer success teams of IT vendors. The irony is many of those professional services units are looking to hire the same IT talent that channel partners are hoping to recruit and retain.

In theory at least, 69% of respondents are also looking for a vendor capable of bringing together a community of partners and developers to collaborate effectively. However, a quarter of respondents (25%) said they currently work with other partners during the sales process, and 42% said they need to collaborate with other partners/companies to meet customer needs. Nevertheless, a full 83% said the future of their business depends on an ecosystem that fosters innovation and collaboration.

Analytics

Finally, channel partners have grown to appreciate analytics. Nearly three-quarters (71%) said they prioritize technology providers that offer analytics capabilities and share data and insights. A full 86% noted data and insights provide a critical path toward business growth for both partners and vendors.

Change in the channel

Put it all together and it’s clear the channel has matured considerably over the last few years. 

In the wake of the economic downturn brought on by the COVID-19 pandemic, many partners have had to focus their efforts on technologies that drove some immediate benefit for the end customer. That may change as more people start to return to the office after being vaccinated. There may be a significant number of previously postponed IT projects that may now be allowed go forward, especially in on-premises IT environments.

Regardless of how demand for IT solutions evolves in 2021, one thing is certain: going back to the way things used to be is not an option. The only path available is straight ahead as fast as possible.

Related articles

• Channel partners need IT vendors to up the automation ante

• Top IT channel partners: How to find the best one for you

• Cloud service providers deepen ties with channel partner customers