The Death of the Sourcing Partner? Agents Weigh Business Models

Technology advisory firms large and small are seeking to move beyond procurement and into more strategic roles with their customers.

The traditional telecom broker channel is basking in the glow of its success. Private equity is flowing into the space. Well-known IT vendors such as Cisco are accommodating a commission-based model for the first time. Subagents are doing battle with the largest consulting firms in the world for enterprise customers — and they’re winning.

But many agents tell Channel Futures that now is not the time for the industry to rest on its laurels. The commissions agents used to build books of business are shrinking. Even UCaaS commissions, which helped lift partners through the COVID-19 pandemic, are dropping. Agencies are scrambling to build practices and teams around profitable technologies like contact center and cybersecurity, but not all of them possess the necessary resources and expertise. Vendors, by many accounts, continue to perform poorly on customer support, forcing partners to make operational investments. Some agents even report that channel conflict is worsening.

Marketplaces

All the while, the gradual rise of marketplaces that give customers direct access to technology puts the role of brokers role into question. Even if marketplaces don’t reach the adoption levels analysts have heralded, the question must still be asked: Will partners survive if they don’t move beyond the procurement level?

For many partners, the answer is no.

“There’s so much information available to the average CIO nowadays that just being a sourcing partner is dying,” said David Wright, CEO of New York-based Disruptive Innovations.

Agents are embracing a myriad of new business models that they believe will retain and expand their customer base. New private equity-backed players and organically grown heavyweights are making major investments in SaaS platforms, back office support and services. At the same time, smaller firms are evolving their practices to provide more business value to their customers and make their relationships stickier.

“No one-size-fits-all here,” said Peter Radizeski, president of Rad-Info. “Some will add expertise in IT. Some partners will offer managed services. [Others] will verticalize. And some will ride it out as is.”

These are their stories.

Scroll through the images above to read about how agents are evolving for the future.