“Evolution” is defined as “a process of gradual, peaceful, progressive change or development.” So it is really no wonder that the team at Channel Partners chose to change their “Cloud Summit” conference to the “Evolution” conference instead.
Why is it no wonder? Because evolution is what’s required in the channel, or should I say the channels.
The Channel Partners Evolution Conference was held from September 25-27, 2017 in Austin, Texas. Attending were members of the telecom channel as well as many from the IT channel. Exhibiting at the show were many carriers and other providers of telecom services. Also exhibiting were more IT vendors than before. One major manufacturer of routers, switches and other network equipment had nothing more than a table and chair. No booth. Little collateral. Signs of a nascent presence that can only grow.
Tale of Two Channels
Evolution is an excellent opportunity to witness the difference between the telecom and IT channels close-up. Viewed from the end-customer back, they look like this:
IT Channel
Customer – Companies large and small, usually connecting with either LoB or IT managers
Reseller/Solution Provider/VAR/Systems Integrator – Primarily in business to deliver technology solutions yielding high business value and solving operational and other challenges. Cloud is seen as a selection of remote computing services that significantly reduce customer price while providing higher service levels. Cloud is also often viewed as a threat because it replaces hardware and software sales with lower revenue services paid out over time.
Distributor – Originally referred to as “Aggregator” because they served the function of reducing initial price of products by aggregating the purchases of all the Reseller/Solution Provider/VAR/Systems Integrators they served. Their primary function is to warehouse large quantities of products from many manufacturers ready for rapid delivery to Reseller/Solution Provider/VAR/Systems Integrators as needed. Many distributors also provide related logistic, financial, and technical support services.
Manufacturer – Companies that design, develop, and produce hardware and software products including servers, storage devices, switches, routers, other networking products, and the wide variety of applications that run across them. They turn to distributors to reduce their cost of operations and minimize the number of accounts receivable they need to manage.
Telecom Channel
Customer – Companies large and small, usually connecting with either LoB or telecom managers
Sub-Agents – The core of their business is to sell carrier services to customers. They also sell related provider services that augment or otherwise enhance the carrier services. Most or all the services they sell are provisioned and deployed by the carriers or the providers. They align with Master Agents to avoid having to fulfill an enormous quota required to qualify them to sell large carrier services. Sub-Agents see cloud computing as a workload that justifies the sale of more carrier circuit bandwidth services.
Master Agents – Similar to distributors in the IT channel, they achieve quotas and obtain superior discounts from carriers by aggregating the sales of all their sub-agents. They also broker connections between telecom service providers and sub-agents.
Providers – These companies either produce or broker the sale of telecom-related services through Master and Sub-Agents, such as data backup, disaster recovery and business continuity, various cloud-based services, and more.
Carriers – Companies such as AT&T, Verizon, T-Mobile, and Sprint as well many regional CLECs and others. They sell the use of their network through the telecom channel.
Why the Need for Evolution?
Cloud services are continuing to disrupt the channel, leaving Reseller/Solution Provider/VAR/Systems Integrators needing to re-imagine and redefine their business models. The past several years have seen the IT channel transition from a core focus on selling products with value-added services to a core focus on delivering superior services. Now that focus has expanded to include the innovating of new services to meet growing and diversifying needs.
Looking at the telecom and IT channels, there is an intriguing synergy emerging. With a large community of sub-agents who are experienced and incredibly focused on selling, and a large community of IT channel partners who are experienced and incredibly focused on delivering and deploying solutions, there is a tremendous opportunity to join forces, leverage each other’s skills, and create a powerful new combined channel.
It is very likely that this is what they had in mind when they renamed the conference Evolution.
One panelist at a session at Evolution asked the packed room if they sold either of two very large, popular ERP packages. Not a hand went up. He then admonished them that they’d better start learning about them because that’s what customers will be looking for. That was akin to telling them they’d better learn how to handle nuclear fission. It’s never going to happen. It was ridiculous and the audience knew it.
The takeaway is this. If you’re an IT channel partner of any kind, start seeking out telecom sub-agents to partner with. Offer your services for them to sell. Offer to introduce them to your customers in return for a piece of the deal. They are the bona fide experts at sharing pieces of deals. Create that two-way street with them and grow some business together. If you’re a telecom sub-agent, start vetting IT channel partners to see if they have services your customers would buy.
This will be an evolution by accretion. The more we partner, the more we work together, the more we build a bigger, bolder new channel that delivers end-to-end computing and communication services.