Cloud, Managed Services Brighten Channel Outlook
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Cloud, Managed Services Brighten Channel Outlook
The channel is relatively bullish about its outlook for reasons ranging from cloud computing opening doors to robust demand for managed services, CompTIA finds. -
Channel Sales From New, Existing Customers
Nearly half of channel firms expect revenue growth to come mainly from net new customers over the next two years, while 30% anticipate more sales from existing customers. The other 24% expect their revenue mix to remain balanced. -
What the Channel Is Selling
Solution providers are shifting from reliance on product sales to project-based solutions and services and recurring revenue streams from managed services. In the next 12 months, product sales are expected to grow at a lower rate (47%) than project solutions (56%) and recurring services (59%). -
Rate of Business Transformation
Nearly eight in 10 U.S. channel firms say they have experienced some transformative activity to date, but 55% say hardware is still important, while 37% say it's somewhat important. Almost half (48%) identify consulting as top source of revenue, followed by IT projects (46%) and product margins at (43%). -
Participation in Channel Programs
The number of vendor partner programs that channel firms say they participate in remains consistent. On average, each solution provider participates in eight programs. Larger firms tend to participate in more programs, while smaller firms tend to join fewer, with six in 10 involved in between one and four programs. -
Number of Channel Programs Plan to Participate In
More than half (56%) forecast a net gain in the number of programs they will join in the next year, while 14% expect a net drop and the remaining 28% maintain the status quo. -
State of Vendor Relationships
Partners are either very satisfied (41%) or mostly satisfied (52%) with vendors, but nearly four in 10 say they are open to new vendor partners and 11% say their vendor alliances are shifting. -
Amount of Conflict in the Channel
Nearly half (46%) say they perceived an increase in channel conflict to at least some degree, while 36% say conflict in the field remained about the same. -
Top Reasons for Dropping Vendors
The top four reasons cited are cost of membership, vendor products not fitting customer needs or business model, difficulty in doing business with vendors and constantly changing requirements. -
Vendor Financial Incentives
Just over a third expect vendor financial incentives to increase either significantly or moderately over the next two years; four in 10 expect no change. The other 23% are predicting a net decrease. About a third say they would reduce business with a vendor if incentives dropped, and 15% say they would drop the vendor. -
Mix of Customers
Respondents report that 30% of their customer base consists of "micro-sized" companies (fewer than 10 employees) and that another 30% are small companies (10 to 99 employees). The remainder are either midsize (100 to 499 employees) or large (500+ employees) organizations. -
Drivers of Sales Opportunities
Close to half report developing revenue opportunities organically through their own company efforts, with the remainder coming nearly evenly from vendors, distributors and other solution provider partners. -
Top Technologies Driving New Sales
Top technology areas where channel firms expect growth next year include security, cloud infrastructure, storage, custom application development, data analytics/business intelligence and cloud SaaS. -
Sales and Marketing Effectiveness
More than half (55%) say channel sales and marketing efforts are moderately effective, while 32% say they are highly effective. -
Channel Outlook
More than 60% expressed optimism that the channel will fare generally well in the years ahead. The most pessimistic were firms with10 to 99 employees (19%) and those in business less than five years (21%). -
Top Reasons to Be Optimistic
The top four reasons for optimism are cloud computing opening new doors, customer demand for managed services, customers wanting a local provider that is a trusted advisor and increased customer reliance on IT. -
Top Reasons to Be Pessimistic
The top five reasons are general business challenges, the skills gap, customers becoming more self-sufficient, new types of competitors, and IT is simpler to deploy and manage by internal IT. -
Keys to Keeping the Channel Healthy
Important ways for maintaining channel health range from business and IT training to the availability of skilled workers and vendors being truly committed to partnering.
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Why Metrics Matter to the Channel By U.S. government calculations, approximately 120,000 U.S. IT employer establishments make up the greater channel. A full 65 percent to 75 percent of the IT products and services sold in the United States are delivered through or influenced by the indirect channel, with the channel influencing U.S. sales of products and services to $350 billion to $400 billion. As such, how the channel is feeling about itself and the future is critical to the IT industry. However, a new report from CompTIA suggests that six in 10 solution providers feel pretty good about their future prospects. In fact, the survey indicates that rather than relying on vendor partners, solution providers are taking matters more into their own hands. The top reasons for optimism range from cloud computing opening new doors to customer demand for managed services. That said, the reasons for pessimism tie into general business challenges, skills gaps, more self-sufficient customers and other factors. Put it all together, and it's clear that that being a solution provider in the channel is not for the faint of heart.
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