The balance of power between IT vendors and MSPs has shifted in recent years, largely caused by managed service providers’ (MSPs) decision to sell monthly subscriptions instead of just software, plus the growth of MSPs that cater to distinct segments of the market. Yes, vendors remain at the head of the table. But, MSPs now sit at the place of honor to their right side.
“Today’s buying landscape is more complicated than ever,” said Joe Campbell, senior manager of cybersecurity strategy at Veristor. “This has created a heightened need for vendors to rely on partners to gain access to the customer, vying for their influence and attention.”
Channel partners like MSPs, after all, have a unique perspective about the customers they represent and their technology stacks, environments, and business goals. They’re in a unique position to recommend the right technologies and approaches, so their influence on buying decisions has grown significantly.
In parallel, the account executive, field rep, and support personnel numbers among vendors have been slimmed down.
“The field representation of account executives is thinner; it is more difficult to get the attention of vendors and actually see a person than it has been previously,” said Val King, CEO of Whitehat Virtual.
How Vendors Have Responded to This Power Shift
The response to this change among many vendors has been to compensate by adding software tools and automated platforms. Jay McBain, an analyst with Canalys, has been tracking the many technologies that have emerged to help companies develop, design, and execute plans to find, recruit, onboard, develop, enable, incentivize, co-sell, co-market, co-innovate, collaborate, manage, measure, and report on channel partners.
According to Canalys research findings, there are now over 200 companies serving these markets, generating $4 billion in annual software revenue in 2021 and forecasted to reach $9 billion by 2027.
“Software companies providing these technologies deliver automation of indirect sales processes, workflows, and partner programs and are becoming vital to a vendor’s ability to find, win, serve, and retain its customers and partners,” said Michelle McBain, global lead and channel evangelist for MSP and anything as a service (XaaS) at Cisco.
Implementing partner management technologies
Partner relationship management software, for example, includes features designed to optimize the communication methods preferred by partners. Some will answer a call from a rep, but many won’t. Some like text, some email, and others collaboration platforms like Zoom and Microsoft Teams.
Onsite visits are not common in most cases, but some partners like them if they’re oriented to demonstrating the value and features of software and helping them get those features across to customers. There are also interactive websites, chat bots, video, webinars, podcasts, gamification, trade shows, user groups, and social media to consider.
Vendors use partner management software and other tools to determine the best approaches to reaching their MSP audience. Some include self-selection features, whereby the partner ticks the boxes they prefer for ongoing communication. According to a CompTIA study, 35% of channel partners want to know if a vendor communicates over a wide range of applications and platforms as a factor in choosing which vendors to work with.
There are also plenty of tools that address channel incentives, pricing, and finances. CompTIA discovered that nearly 40% of vendors are adjusting their compensation models for the channel. This is in response to a changing marketplace where many channel partners now sell fewer direct products but deliver more complex services.
Incorporating the human touch
There is nothing wrong with software and automation. Expect to see more of it in the years to come. But, it’s no substitute for the human touch. CompTIA survey showed that nine out of 10 MSPs place high importance on the smoothness and responsiveness of vendor technical support processes. Effective communication is now expected.
“Smart vendors are constantly looking for ways to proactively build partner interest and loyalty,” said Carolyn April, senior director of industry analysis at CompTIA. “They realize that the personal touch still matters.”
Matt Scully, channel chief at Redstor, encourages vendors to look beyond automation and marketing software and take the time to communicate directly with MSPs. Asking questions like “What is the best way to be in touch with you?” can make you stand out from other vendors. He also recommends taking some time to gain a holistic view of each MSP’s short- and long-term goals.
“These things will help solution providers have the correct conversations to move the sales process forward,” said Scully.
Finding a Balance Between Software & People
Channel-facing vendors, therefore, need to achieve the right balance between the deployment of partner software and automated processes and one-on-one communication that caters directly to individual partner needs and goals. Both are crucial parts of a successful relationship.
Vendors should also continue to ensure they have the right staff to attract MSPs. Since MSPs have a more holistic and strategic understanding of each customer’s organization, they can make informed recommendations on the technologies and processes they need to secure the company’s infrastructure and data. Because these channel partners are invaluable to vendors, vendor staff support of MSPs is important for building and maintaining their relationships.
Bottom Line: Vendor Relationships With MSPs
Vendors that fully grasp the modern role of MSPs and other channel partners are likely to outperform their competitors, while those that don’t strike a balance between software and people might find themselves replaced in the market.
“A great partner is an advocate for the customer and helps to make critical technology decisions. They are consultative, not transactional,” said Campbell. “A true advisor has the power to say ‘no’ to vendors that are simply not the right fit or don’t deliver value. The best thing vendors can do with new partners is to fully articulate how they can deliver real value for mutual customers.”