More Self-Reliance Leads to Brighter Channel Future

It is often said that necessity is the mother of invention and nowhere is that more apparent than the “Fifth Annual State of the Channel” report issued by the IT industry trade association CompTIA.

The report makes it clear that solution providers in general are much less dependent on IT vendors than at perhaps any other time in the history of the channel. For example, nearly eight in 10 U.S. channel firms report they have experienced some transformative activity to date, with almost half (48%) identifying consulting as a top source of revenue, followed by IT projects (46%) and product margins (43%).

“The recent downturn in the economy was a wake-up call for the channel,” said Carolyn April, senior director of industry analysis for CompTIA. “Partners are selling themselves more than the vendors.”

While that transformation has been years in the making, more than half the solution providers surveyed (55%) also report that hardware is still important to their businesses. As a result, while solution providers, in general, are less dependent on vendors, most of them still maintain close ties to core vendors that enable them to deliver higher-margin services. They’ve not quire reached the point where they are willing to give products away to drive more profitable services revenue, but products are clearly a means toward driving a more profitable end.

In fact, not only is the relationship between solution providers and vendors evolving, so too is the way solution providers interact with distributors. Case in point is Avnet, which has been investing in developing IT solutions for specific vertical industries, such as sports and entertainment, using advanced technologies, such as IBM Watson Analytics cognitive computing solution, that partners can resell without having to make major capital investments.

“The amount of money that Avnet can make on a software transaction is fairly limited,” said John Lucas, director of solutions delivery for Avnet. “We’ve started a small unit within Avnet that focuses on identifying solutions for vertical markets that we can build and then share with our partners.”

Put it all together and it’s clear that the channel is maturing in terms of both the sophistication of the business models it relies on to drive revenue and the diversity of emerging technologies it has embraced over the last few years. As demand for those products and services continues to increase, many a solution provider is now finally in a position to cash in on transformations that have actually been years in the making.

Michael Vizard has been covering IT issues in the enterprise for more than 25 years as an editor and columnist for publications such as InfoWorld, eWEEK, Baseline, CRN, ComputerWorld and Digital Review.

Michael Vizard
Michael Vizard
Michael Vizard is a seasoned IT journalist, with nearly 30 years of experience writing and editing about enterprise IT issues. He is a contributor to publications including Programmableweb, IT Business Edge, CIOinsight, Channel Insider and UBM Tech. He formerly was editorial director for Ziff-Davis Enterprise, where he launched the company’s custom content division, and has also served as editor in chief for CRN and InfoWorld. He also has held editorial positions at PC Week, Computerworld and Digital Review.


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