Channel Outlook: A Look at What's Brewing
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Channel Outlook: A Look at What's Brewing
Professionals at channel firms are largely optimistic about future business, yet when it comes to the cloud, some see the glass as half empty and some as half full, CompTIA research shows. -
Channel Value
Approximately two-thirds of core IT products flow through or are influenced by the indirect sales channel. -
Channel Optimistic Overall
63% of respondents are generally optimistic about the channel's future. This is similar to the 6 in 10 who expressed the same sentiment last year. -
Half Full: Cloud Top Reason for Optimism
The top reasons for optimism include cloud computing, a broader use of tech by all customer types, solutions and services complexity, and demand for managed services. In fact, 39% of channel firms said cloud computing is the top reason to be optimistic about the channel's future, and 60% said the cloud has generally strengthened their customer relationships. -
Half Empty: Cloud Contributes to Pessimism
30% said cloud computing is the top reason for pessimism about the channel's future, and 24% said the cloud has generally weakened their customer relationships. -
Other Top Concerns
Other top reasons for pessimism include new types of competitors, more vendors going direct, the aging of the channel and the lack of younger-generation pros filling the void, the shift away from on-premises IT, and the skills gap. -
New Business Spurring Channel Growth
46% of channel firms expect the majority of revenue to come from net-new customers in the next two years, while 39% expect most of their sales from existing customers. Key revenue drivers include cloud infrastructure (61%), security (59%), mobility solutions (59%), backup/DR (58%), storage (67%), databases/data analytics/BI (57%) and cloud SaaS (57%). -
Wanted: More Skilled Workers
The availability of skilled workers (38%) is considered most critical to the channel's future, followed by more widely available and valued professional certifications (35%), and the availability of business and technical training (34%). -
Keeping Channel Pros Up at Night
One-third of channel firms worry about new competitors entering their market, led by telecom-based companies and non-traditional players, including those that resell and manage SaaS applications for ISVs and digital marketing agencies. -
Adapting to the New Norm
The channel's top sales and marketing moves include creating incentives to drive sales in new business areas (33%), rebranding their businesses as service providers (32%) and increasing their marketing budgets (31%). -
Losing Value
With channel companies more invested in their own sales and marketing, about one-third of the channel finds vendor sales spiffs, up-front discounts and back-end rebates less important today than two years ago. -
Vendor Partnerships
39% and 45% of respondents are very satisfied and mostly satisfied, respectively, with their vendors in 2016. While 57% said their line cards remain unchanged, 35% are exploring new vendors and 8% are shifting to new vendors. -
Partner Programs
74% of channel companies that are optimistic about the channel expect a net gain in program participation next year, compared to 24% of pessimistic companies. Overall, 56% expect a net gain, while 21% expect no change and 20% expect a drop in participation.
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Why Metrics Matter to the Channel A majority of channel companies are optimistic about future business, despite mixed sentiments about their prospects in cloud computing, according to CompTIA's Sixth Annual State of the Channel Report, based on a poll of 350 U.S. IT channel company executives and professionals. Highly effective sales and marketing, vertical market expertise and specialization are behind the positive outlook. Although nearly 40 percent of the respondents said cloud computing is the No. 1 reason for their optimism, nearly one-third of those polled cite the cloud as the top reason for their pessimism. Why the dichotomy? Carolyn April, CompTIA senior director, industry analysis, explained that the channel is undergoing a reality check now that it has more experience working with the cloud, which has moderated their expectations around cost and return on investment. The report reveals that companies in the channel are exploring new vendor partnerships and finding less value in sales spiffs, up-front discounts and back-end rebates from vendors. This could indicate a need for vendors to revamp their channel programs to keep partners happy. We examine key survey takeaways from the CompTIA study.
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