7 Trends that Will Steer the Channel's Trajectory in 2024
In the rapidly evolving channel, IT vendors/suppliers and their channel partners must adapt to the latest trends together or fall individually.
January 8, 2024
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At the crux of IT vendor-partner relationships are partner programs designed to provoke channel partner sells of vendor solutions. These programs must evolve with the market to remain attractive to partners. Enhanced channel partner programs will emerge as game-changers, fostering stronger relationships and creating win-win situations. These programs will consist of more tailored incentives, comprehensive training, and personalized support, ensuring that partners are equipped to deliver maximum value to end customers.
According to our Quarterly Market Outlook Survey Insights – 3Q23, essential items MSPs said they need from vendors to successfully go to market were lead generation then increased funds (market and business development funds). Expect partners’ needs to progress as technology and distribution models evolve, requiring suppliers to enhance their programs accordingly.
The rise of online marketplaces is revolutionizing how products and services are distributed within the channel. With an increasing number of buyers using digital platforms, vendors and channel partners must adapt to this shift in buying behavior. Embracing these online platforms will be imperative for diversifying routes to market and achieving sustained.
According to Canalys, an Informa Tech company, global sales of third-party vendor software and services through cloud marketplaces will hit $45 billion by 2025, an 84% CAGR over five years, led by the big three: AWS, Microsoft Azure, and Google Cloud. Also, various other technology distributors i.e., Ingram Micro, Pax8 and AppDirect, are offering their own online marketplaces. Expect these companies to experience substantial increases in their marketplace subscribers and transactions.
Artificial intelligence (AI) will no longer be a futuristic concept but a practical tool driving real results. AI will be used for more practical use cases like personalized content creation, enhanced security, and automated customer interactions e.g., chatbots and virtual assistants. Channel partners will be tasked with leveraging these AI-powered solutions from vendors to improve decision-making processes and provide more personalized experiences for their clients.
According to our Quarterly Market Outlook Survey Insights – 3Q23, AI was the top technology area for vendor additions by MSPs (40%). There were various reasons why MSPs added vendors, led by supplementing existing tools/technologies (53%). Asa result, vendors will need to ensure their AI solutions can address the most demanding use cases.
In an era where the headlines are dominated by cybersecurity breaches, ransomware attacks and other vulnerability exploitations, autonomous cybersecurity is paramount to organizations protecting their most valuable data assets. Vendors will be required to be at the forefront of this trend, offering partners cutting-edge security solutions that provide robust defense against evolving cyber threats.
Managed security, particularly cybersecurity, was the most-deployed revenue-producing technology by MSPs in the last 12 months and stated as the biggest area for 2023, according to our Managed Service Provider (MSP) 501 Survey Insights – 2023 report. Expect this trend to continue in 2024.
The demand for cloud services continues to soar, driven by the need for scalability, flexibility, cost-efficiency, and integrated cloud computing services designed to support emerging technologies like AI and data analytics. Channel partners with expertise in deploying cloud services will be capable of quickly capitalizing on this trend, offering clients an easy transition to the cloud while unlocking additional recurring revenue streams.
The big three cloud hyperscalers — AWS, Microsoft Azure and Google Cloud — are major benefactors of cloud services adoption, but they also need channel partners to help them address rising demand. Microsoft’s Azure cloud services are being sold by partners and used by clients the most, according to our Managed Service Provider (MSP) 501 Survey Insights – 2023. Expect to see hyperscaler cloud services adoption continue to grow at record levels as newer cloud-hosted technologies surface.
The channel is experiencing the ripples from previous M&As. As a result, vendors and channel partners will be tasked with continuously adjusting their go-to-market strategies to adapt to these market transformations. M&As and their residual effects will occur, driven by partners seeking increased buying power, faster access to new technologies, customer base expansion, specialized talent, etc.
There was a notable amount of M&A activity in the previous 12–24 months, per our Managed Service Provider 501 Survey Insights – 2023, which showed that 26% of MSPs bought or sold a company in that timeframe and (47%) expect to be involved in M&As in the next 12 months, which will likely sustain in 2024 as well.
Executive channel leadership turnover remains a constant in the industry. Embracing change and maintaining strong relationships between vendors and partners will remain essential for success in the channel. Channel leadership attrition and turnover will persist due to
Prominent industry growth and increased demand for experienced executives
Constant M&As causing leadership roles to be reshuffled
Career and monetary advancement
Scarcity of experienced high-level executives, resulting in talent poaching
Executive channel leadership turnover remains a constant in the industry. Embracing change and maintaining strong relationships between vendors and partners will remain essential for success in the channel. Channel leadership attrition and turnover will persist due to
Prominent industry growth and increased demand for experienced executives
Constant M&As causing leadership roles to be reshuffled
Career and monetary advancement
Scarcity of experienced high-level executives, resulting in talent poaching
Staying ahead of the curve is essential for success in the dynamic channel landscape. As we start the new year and a new era begins, several trends will forcefully steer the direction of the channel and present both challenges and opportunities for vendors and partners.
In 2024, the ultimate determinator of channel winners and losers will be vendors’ and partners’ ability to maintain current sales while capitalizing on the newest trends that will expand their customer base and revenue streams. To be successful, companies must understand the top trends and how their business will be affected by them, then design strategic plans to benefit from them
Scroll through the gallery above to see, based on insights and analysis from the Omdia 2024 Trends to Watch: Channel Ecosystem report, the seven key trends that will have the biggest impact on the success and failure of companies within the channel ecosystem are.
For help understanding how to capitalize on the latest channel trends, contact Omdia’s channel research and consulting team by email or visit our website.
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