The CP List: 20 Challenges, Tips for Channel Success in 2019

After all the holiday merriment, a new year lies ahead filled with new opportunities, potential roadblocks and breakthroughs.

This year saw rapid, continued M&A, the emergence of new partner types and business models, and technology advances, along with financial struggles, workforce reductions and changes in strategy to remain competitive.

CompTIA’s Carolyn April

So what’s in store for 2019?

Continuing business-transformation struggles, new competitors, an uncertain economy and the ongoing tech worker shortage will remain challenges for the channel in 2019, said Carolyn April, CompTIA‘s senior director of industry analysis and member of the Channel Partners Editorial Advisory Board.

“For example, respondents to CompTIA’s recently released Seventh State of the Channel report said the two main reasons to be pessimistic about the year ahead in the channel is the persistent skills gap for emerging tech (AI, blockchain, VR, IoT, drones and so on) as well as fear of new competitors such as those in the growing SaaS ecosystem and in non-technical professions such as accounting and law firms,” she said.

Josh Lupresto, Telarus‘ vice president of sales engineering, said “just as we help our employees look back, we want to help our channel partners do the same.”

Telarus’ Josh Lupresto

“As we look forward into what’s in store for 2019, it’s equally important to look back at the previous years,” he said. “With the addition of security specific suppliers like Quest, CyberReef, Office Depot, Thrive and IBM, 2019 will be the first year a partner can compete for every piece of a customer’s business.”

Below and in the pages that follow, we offer a list of challenges and tips for channel success in 2019 from members of the editorial advisory board and others in the channel.

Challenge: Security for Everyone

The buzzword that everyone hears is security. A lot of companies in the channel are somewhat apprehensive in entering any type of conversation surrounding this, and those that are comfortable going down the rabbit hole likely have their own security offerings and do not look to carrier solutions as frequently, if at all, said Bryan Reynolds, TBI‘s director of sales operations.

“If we look at the many, many offerings that providers have today, you find that some fall on the side of simple bundled services which can be easy to position … or on the side of complex, a la carte services, like any of the big providers out there, with the possibilities being endless — not to mention the army of highly credentialed resources that they make available, which can sometimes add more confusion,” he said. “Good because they can have the conversation, but bad because it can be menacing to the customer. Education not only on security, but also on the provider options and process will be a moving target, but necessary to move forward.”

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Challenge: Breaking Into the Millennial Market

The term millennial is now about as common as it gets, which makes way for a deluge of “experts” trying to tell sellers how to crack the code of this next-gen customer, Reynolds said. However, it has developed into noise that can hinder those who aren’t familiar or comfortable with this customer.

“This generation approaches and makes decisions very differently than any other, but are not impossible to obtain,” Reynolds said. “Gaining clout in this generation requires a new way of thinking and not relying on old-world ways. The main challenge here is getting in your own way.”

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Tip: Focus on Experience

TBI’s Bryan Reynolds

New sales are important, but the next generation of products are typically the add-on necessities, Reynolds said. You are the trusted adviser, but today’s customer requires a lot more of that.

“The value of the channel is that we are, have been and always will be trusted advisers; this isn’t new,” he said. “What matters more is the experience you create for your customers. Commodity is dead, experience is critical and relevance is not centered around having the ‘newest’ technology.” 

Tip: Adapt and Overcome the Fear of Change

You are in technology, so you are used to the ever-changing landscape of offerings through the channel, Reynolds said. However, are you prepared for the next generation of customer?

“Be cautious of the proverbial bandwagons that arise from new hypes — if you jump on the wrong one, you may have a hard time getting off and turning around,” he said. “Challenge yourself to think differently.”

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Tip: Keep an Eye on Public Cloud Providers

The larger public cloud providers will have more of an impact on the channel than you think, Reynolds said.

“They have some very interesting sales models and strategies for infiltrating markets that will continually disrupt the providers that you are used to working with in the channel and could dictate how the channel functions overall in the future,” he said.

Tip: Don’t Forget Bandwidth

With all that’s new in technology, remember that increased bandwidth is needed for almost all of it, Reynolds said. There will always be a place for the IT consultant and the perfect inroad is augmenting the network, he added.

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Tip: Go Vertical

Customer demand for a technology provider with vertical industry skills and applications knowledge is on the rise, Carolyn April said. Nearly two-thirds of channel firms say they embarked on a vertical specialty to satisfy customer demand and as a competitive differentiator.

“Embracing a niche specialty in retail, health care, or other sector will deliver a proven competitive advantage,” she said. “But again, the challenge lies in having the right skills and training. And it’s important to distinguish ‘real’ vertical applications specialization from the more horizontal type of infrastructure sales to customers that just happen to be in the same industry.”

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Tip: More and Better Partnering

Consider taking an ecosystem approach to filling skills and employment gaps, April said. A classical infrastructure channel firm, for example, might want to bring application-specific expertise to the table as a differentiator. But retraining existing staff or finding the right new people proves difficult and/or too costly.

“Yet there are a mushrooming number of applications-focused players in the market today, especially in the SaaS space, that lack infrastructure expertise around devices, security, networking and the like,” she said. “It’s a match! Partner up and you have strength in numbers when you go to market. Just be sure to formalize these partnerships so that parties are accountable and that the relationships don’t just fizzle out after one opportunistic deal.”

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Challenge: Digital Transformation for Everyone

Optimized Channel’s Michelle Ruyle

In 2019, customers will be more “digitally determined” than ever before, said Michelle Ruyle, Optimized Channel’s CEO and founder. That means channel partners need to make sure they have products and services in their portfolio to help customers with their digital transformation.

“IDC says by 2023 nearly every enterprise will act like a digital native,” she said. “This means reinventing IT around a distributed cloud infrastructure, public-cloud software stacks, agile and cloud-native app development and deployment, AI as the new user interface, and new, pervasive approaches to security and trust at scale.”

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Challenge: Shrinking Managed Services Margins

Forrester’s Jay McBain

Managed-services margins shrunk to 17 percent in 2018; 96 percent of business aren’t scaling past 10 people and 70 percent of owners reported that they want an exit, said Jay McBain, principal analyst of global channels at Forrester and editorial advisory board member. For the first time in 20 years, the industry growth rate going forward slipped to single digits.

Tip: Expanded Marketing and Sales

Partners must expand their marketing and sales to new line-of-business buyers who make up 65 percent of tech spending, and capture the downstream revenue opportunities that digital transformation and cloud are generating, McBain said.

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Tip: Target Emerging Tech

Start to look for early opportunities in emerging technology, McBain said.

“Huge numbers of partners are joining the robotic process automation (RPA) industry and taking advantage of automation in a low-code/no-code environment that drives tremendous value [and profit],” he said. “Partners are looking into AppDev opportunities around IoT because every implementation is somewhat unique and it gives them a chance to lock in their IP and build a brand.”

Tip: Pursue All of a Customer’s Business

In years past, your customer had multiple swim lanes for technology, Josh Lupresto said. They might go to their MSP for IT support, a PBX vendor for the phone system, their VAR for servers and storage infrastructure, and their agent for the network, he said.

“Someone is ultimately going to own that account,” he said. “Companies are starting to stray away from wanting five-plus relationships. They are going to want one, maybe two. I believe it’s the partner that can understand the opportunity, become the expert generalist, and leverage the expertise of the master agents to speak intelligently about each of those different technologies.”

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Challenge: Adapt to Industry M&A

Telarus’s Patrick Oborn

“When we see things like AT&T buying AlienVault to bolster their log management play and IBM coming to the channel with a full security and cloud offering, we recognize and adapt to those changes,” said Patrick Oborn, Telarus’ co-founder and vice president of partner experience. “No longer is it always safe to stay in a certain swim lane because you may find competition coming from new areas you weren’t competing against before. The competitive landscape has caused us to evolve.”

Tip: Be the Expert

Partners have to be the source of unbiased experts, Oborn said. Once you figure out a solution, you still must vet out who the appropriate vendors might be, he said.

“Experts are becoming more and more expensive and very few companies can afford to have them on staff,” he said. “Leveraging an expert on demand has to be the way to do business. Give those experts a shot and let them help you grow your business.”

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Challenge: Hybrid Future

Rubrik’s Arvind Nithrakashyap

When it comes to an on-premises or public cloud strategy, enterprises will not choose one or the other, said Arvind Nithrakashyap, Rubrik’s chief technology officer and co-founder. A hybrid cloud environment allows for more flexibility so data can be easily moved from the premises to the cloud, depending on need. Major cloud players will continue to introduce and advance hybrid solutions aimed at providing enterprises with a seamless experience across on-premises, public or multicloud environment.

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Challenge: Offering IoT-related Security Services

Armis’ Joe Lea

Recent reports show IoT managed security services will increase five-fold by 2021, said Joe Lea, Armis’ vice president of product. Services will start in more traditional manufacturing, transportation, and oil and gas industries, then move to other IoT use cases and markets, such as health care, finance and the very broad digital office. But layering on IoT security is an obvious offering, given the rising need and questions by every business looking to secure themselves.

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Challenge: Ecosystems Will Replace Vertical Suppliers

Juniper Networks’ Mike Bushong

For decades, the networking space has been dominated by large, vertically integrated stacks, said Michael Bushong, Juniper Networks‘ vice president of enterprise and cloud marketing. With the rise of cloud and multicloud forcing multivendor integration from an operations perspective, it would seem that the vertical approach to the market will begin to give way to an ecosystem strategy.

“Importantly, that ecosystem will bring suppliers together that span all of compute, storage, networking and even applications,” he said. “Where the past was led by a well-known set of incumbents, suppliers like Nutanix with their hybrid and multicloud solutions and RedHat (now part of IBM) with their orchestration solutions, will take on more prominent roles. This will chip away at the incumbent routes to market, which will begin a one-way move toward a more diverse solutions environment.”

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Challenge: Campus Becomes Hot Again

A few years ago, data center was all the rage, while more recently SD-WAN has revitalized the branch. In 2019, expect campus networking to be in vogue again, Bushong said.

“Driven by some of the same technologies (SDN, SD-WAN, intent-based networking and so on), the campus will go through a similar transformation,” he said. “Vendors have retooled their portfolios in preparation, and most market forecasts showed campus shifting from slow decline to slight growth this year. That trend should continue.”

Challenge: SD-WAN Yields to SD-Enterprise

It’s not that SD-WAN will become less important in 2019, but as the industry starts applying the principles of SD-WAN more broadly, SD-WAN will start its evolution to SD-Enterprise, Bushong said. Cloud management and intelligent routing across the WAN can be transformative for more than the subset of products currently in market. As campus moves this direction, it seems inevitable that the concept will broaden.