What Is a Technology Advisor? Understanding the Role, Scope and Size of the TA Model

Technology advisors represent one of the fastest growing indirect sales channels for vendors and customers, but the world is still learning exactly what they do.

Late last year, popular cloud communications provider Zoom named Avant – a company representing thousands of technology advisors – its global partner of the year. Cybersecurity provider Fortinet named technology advisor Liquid Networx its American partner of the year for unified SASE. At the same time, numerous Fortune 500 companies have contracted massive deals through technology advisors in categories of network, cybersecurity, customer experience (CX) and other business tech.

Craig Schlagbaum, who has launched and led advisor programs at multiple companies in the telecommunications space, said the industry continues to grow in its technological capabilities.

Craig Schlagbaum

"These technology advisors now have skills far beyond just connectivity and voice services alone, and they are also selling cloud, security and SD-WAN, to name a few. Their percentage of involvement in these deals is significantly higher than it used to be 20 years ago, and some agents are now closing some of the largest end-user deals that have ever been sold in the industry, either direct or channel-driven," said Schlagbaum, who founded the consultancy Recurring Revenue Channels. "It demonstrates a ‘sea of change’ occurring in this part of the channel, and it's why it is so attractive to service providers.”

Tech advisors are playing an undisputable role in connecting IT and telecommunications vendors to business customers. But what is a technology advisor?

In the article ahead, learn about the nuts and bolts of the technology advisor model and the types of vendors and customers that work with them. You'll also learn about how these channel partners have evolved from telecom agents to supplier-neutral consultants.

Technology advisors describe themselves with many different words: consultant, solution provider, trusted advisor, broker and more.

These terms are customer-centric, meaning that they describe the value they bring to a business customer. But which characteristics do all members of the technology advisor sector hold in common?

That common denominator is how tech advisors source and sell technology from their vendor/supplier partners: the agent model. In the eyes of a supplier, tech advisors are independent sales agents. When they sell technology from a supplier, the supplier pays the agent as it would pay a salesperson: with a commission. In the same fashion, the provider bills the end user customer, with its name going on the invoice. This is different from a sale through a value-added reseller (VAR), in which the VAR technically buys the product from the supplier and rebills it in its own name. The revenue foundation of a technology advisor business is its commissions, which the provider pays on a monthly basis for the lifetime of the customer. The standard agreement between agent and provider specifies that the provider pays an "evergreen" stream of recurring commissions to the agent that brought it the customer. Commissions typically range from 12-22% of the monthly invoice.

Vendors have historically used "agents" to describe tech advisors, and tech advisors have often used "agents" as shorthand. However, they rarely use the term "agent" in front of their clients, as agent may imply that the partner exclusively represents a single supplier.

"It's not just, 'Hey, I'm an agent of this supplier, so I can sell you this solution.' It's more, 'I'm advising you on what the right solution is based on my experience and my knowledge and understanding of the market and the different players,'" Intelisys president Ken Mills said.

Intelisys' Ken Mills

Thus, many agents have standardized around the term "advisor" as a way to describe their business model to both vendors and customers. Some partners call themselves "trusted advisors" – a term championed by tech services distributor (more on that term later) Avant – instead of "technology advisors," and others simply refer to themselves by the acronym "TA."

Even so, sometimes advisors use household analogies to describe what they do. Real estate and insurance agents often prove the most effective metaphor.

"If I were talking to a random person at a barbecue that wasn't into technology or was looking for the easiest explanation, I would say, 'Think insurance brokers and swap the insurance plans with technology suppliers,'" Mills said. "That would be the easiest way to explain the go-to-market, where the advisor shops for the best technology solution for your needs much like an insurance broker shops for the best insurance plan for your needs. And then, based on your input, needs, expectations and long-term goals, you end up with the right technology solution based on that recommendation. And then you transact with that technology provider directly."

Media outlets like Channel Futures use "channel partner" as an umbrella term for companies that sell and service technologies from hardware and software manufacturers to businesses. This group of go-betweens includes but is not limited to value-added resellers (VARs), systems integrators (SIs), managed service providers (MSPs) and managed security service providers (MSSPs), consultants, independent software vendors (ISVs), and, of course, technology advisors (TAs). These companies vary widely in how they work with vendors, how they are compensated by vendors and customers, and the level of services they perform.

Differences from VARs

VARs and TAs differ in a multiple areas, including compensation, customer invoicing, upfront versus recurring revenue, and distribution.

Many of the world's largest IT vendors have leveraged VARs over the years for sales. As the name suggests, VARs literally buy the technology product before selling it to the end user customer.

“[The vendor] will sell their product to a distributor who then sells it to a downstream IT partner, who either creates their own service or rebills/resells the product to the end user on their paper or as part of a managed service they bill the end user monthly," Schlagbaum said.

VARs as a result are making margin from resale, where as TAs are earning pure topline revenue from their commissions. Moreover, the majority of the VAR revenue typically occurs at the time of sale, as they usually selling physical hardware to the client. This dynamic varies more as VARs sell software subscriptions. The agents may earn an upfront sales SPIFF from the vendor, but the majority of their revenue will arrive in the following months.

Moreover, VARs are invoicing/billing the end user, while TAs leave that to the vendor.

It's worth noting that some VAR organizations have adopted an agent route to market for some of their technology line card.

Differences from MSPs

Schlagbaum said he thinks of MSPs as an outsourced IT department for their customers. The majority of their revenue stems from a monthly service fee. Their revenue may also include sales of technology, but their IT services and support.

Tech advisors function more in the actual procurement of technology.

"They provide their clients with advice and counsel on their strategic decisions about the investments they've made in IT to help them grow their business, and they often find ways to save significant costs for their clients as well," Schlagbaum said. "Otherwise, the client must vet all those offerings and choices independently, which can be time-consuming and costly. Why not use an agent instead? But agents, or technology advisors, are typically not going to offer the solution of, 'I'm going be your IT department or your outsourced CIO.' That's more of what MSPs do. It’s just two different value propositions.”

Courtesy: Artem Samokhvalov/Shutterstock

Schlagbaum said the concept of not "owning" the technology is one of the reasons the terrestrial connectivity space has drawn tech advisors over the years. In the case of a multisystem operator (MSO), also known as a cable company, or an incumbent local exchange carrier (ILEC), also known as a telco, these vendors must install the technology themselves, whether in the ground or air, and ultimately manage the related network.

“The MSOs and the carriers may use those channels to sell, but a carrier or an MSO owns and operates a network. As an MSP, you can’t control any of that. You can rebill it, but you cannot modify or alter it because it's not your network to operate, and most MSPs do not like that lack of control," Schlagbaum said. "A telecom aggregator (not to be confused with an IT MSP) might be able to put their edge device, like managed routers, on it. It's not your network, so you don’t control it. MSPs typically want to bill everything on their paper to the end user directly without an intermediary. Agents are the exact opposite. It does not make it a favorable or unfavorable channel model, but it’s just different.”

Many vendors that adopt an agent sales route do so because end customers have asked for it. Schlagbaum said that demand has led to his companies launching programs.

“The most important lesson I learned in my business school classes years ago about marketing channels is that you must meet the customer where they wish to buy. So, customer preference in the route to market is vital to maximize [the customer experience] and your share opportunity," he said.

Moreover, some suppliers find that their goals match nicely with the advisor model. Schlagbaum said tech advisors usually appeal to vendors that want to directly bill the end user.

"They're not transferring the title of a good or service in this model. The supplier/vendor or service provider is billing the end user directly on their paper and using the partner as an agent (also known as a technology advisor or trusted advisor) to help drive sales for them and gain more market share. VARs and MSPs tend to want to bill the end user themselves directly. Increasingly, the agent model makes more sense for specific use cases, and some traditional IT partners act as both resellers and agents combined for their clients," he said.

Moreover, the monthly compensation in the agent model incentivizes tech advisors to source an "opex" solution for their end users.

"If you are focused on recurring revenue, this channel is 100% aligned to your goal. It is 100% focused on recurring revenue," Mills said.

Schlagbaum added that some service providers have seen advisors as good for client retention. Whereas a sales representative is typically incentivized to move on to the next sale, the advisors' monthly commissions motivate them to stay connected with the customer.

"The worst thing you could ever do as a service provider is lose your billing customer base with higher-than-normal churn rates. That is referred to as a 'leaky bucket,' where you had the customer billing, but then they cancel the services or move to other providers. It takes so many more net-new customer sales to offset a leaky bucket or churned annual recurring revenue that you can't easily make up for with new sales if you experience high churn. It’s the most significant concern most service providers usually have, and agents can certainly mitigate some of that concern by keeping the customers sticky," Schlagbaum said.

A 2009 Channel Futures article titled, "What Products Can Agents Sell?" reflected on how agents had evolved from selling long-distance calling services into myriad voice and data services. The portfolio significant widened over the decades as more and more telecommunications providers opened up their lines of business to an agent model.

"Agent" is often shorthand for "telecom agent," and the sales model often is regarded as inseparable from the telecom space. However, IT software and service providers who have entered the fray started selling through advisors. Pivoting into software-based UCaaS was a natural evolution for advisors, who had sold different iterations of voice and communications offerings over the years. But their arena spans wider than connectivity and communications.

Channel Futures' most recent survey of tech advisors found that cloud infrastructure and cybersecurity are growing faster than any other part of their portfolios. CCaaS offerings, which some advisors sell, have expanded into customer experience (CX) offerings that go far beyond a call center. Even MSPs have enlisted advisors to sell their services.

Denver-based IQ Wired has made this evolution, adopting CX, cybersecurity, compliance and cloud optimization in addition to connectivity and communications services.

IQ Wired's Kelly Forsyth

“We started as a traditional telco agent. Feeds and speeds. Get into a little voice, then get into UCaaS — that kind of fun stuff. In the last eight to nine years, the environment has changed with what businesses and organizations use and require for their technology," IQ Wired president Kelly Forsyth told Channel Futures. "And in meeting the needs of our clients, we've had to evolve. At this point at IQ Wired, 72% of what we're selling and procuring for our clients is what you would consider evolved technology. It is not your traditional legacy telco anymore.”

For many advisors, connectivity and cloud communications remain very viable product lines to emphasize. C4 Communications possesses the capability to sell non-telecom offerings and often does so, but 75% of its sales are from telecom. President Colombo DiSalvatore said this is due to how C4 uses MSPs as its referral engine. For customers where C4 is teaming with an MSP, it leaves security and Microsoft licensing to the MSP.

C4's Colombo DiSalvatore

"We do sell security and Microsoft licensing. Our largest account is all infrastructure as a service (IaaS). But we don't go to market with our MSP partners talking about those things. It's on our website. We lead with connectivity and cloud communications," DiSalvatore said.

There also exists advisors who don't sell any telecom, or focus on a single niche category, like backup and disaster recovery or data center colocation.

It's also important to note that advisors tend to reject the word "product" when describing what they sell. They downplay "widgets" and focus more on the broader set of solutions they are helping customers put together.

“We're not going to sell you dedicated Internet service; we're going to sell you a solution. We're going to solve your problem of not being able to connect to your cloud applications," DiSalvatore said. "So we're going to sell you DIA, cable modem and SD-WAN from Bigleaf, which is more of a solution, for accessing your cloud applications with redundancy and reliability. Rather than selling one service here and one service there, our solution consultants really do take a consultative approach, look at the big picture and put a solution together. That solution could be from three suppliers. It could be Crown Castle dedicated internet, Comcast backup and Bigleaf SD-WAN.”

Visit the website of a technology advisor, and you'll likely find the phrase "vendor-agnostic" or "supplier-neutral." You'll also probably find a long list of suppliers with which the advisor holds agreements. While some firms in the technology advisor channel do sport exclusive partnerships with vendors, those are the outliers.

"In this world, I'm not beholden to a manufacturer," Mills said. "I have the ability to advise the customer on what the best solution is across any different suppliers based on what the specific needs are."

But visit the website of a VAR or MSP, and that list of vendors will likely be much smaller. This is due in part to the fact that the professional and managed services these partners provide require them to earn certifications and/or specializations with their vendor partners, and that is a cost- and time-intensive process. Technology advisors are increasingly adding vendor certifications, but they retain their nimbleness to source a wide variety of suppliers.

For example, Prelude Solutions chief commercial officer Bob Healey said his firm has sourced 67 different suppliers to clients in its eight years. Depending on the types of technologies partners play in, that number may be higher our lower.

Forsyth said the line card of offerings is constantly shifting as technology and vendors change.

"We have trainings weekly on a multitude of technologies, providers and concepts," Forsyth told Channel Futures. "We have to keep our people up to date. If we were talking about who was good a year ago versus now on certain products, we'd be so wrong. There's been so much evolution, and we have to stay on top of that. We wouldn't be doing our jobs correctly if we weren't looking at everybody and everything that is going on; we would not be agnostic.”

For DiSalvatore and C4, the focus is more on technology-agnosticism. In the case of UCaaS, C4 identifies different categories of providers.

“We try to have the market leaders in our portfolio like RingCentral and Zoom. And then we want to have more of a traditional Broadsoft play. We want to bring the different types of technologies when it comes to UCaaS to the market, but we don't need to bring five different Broadsoft players into the mix," DiSalvatore told Channel Futures. "We don't need to know all those providers, because what's the difference to an end-user client? There's a difference between doing a Teams phone system and Broadsoft. That's the comparison we want to give our clients.”

Technology advisors may provide services around the implementation and management of technology, but managed and professional services are not core to their identity — or at least their revenue.

In the advisor/agent sales model, the vendor provides managed services for the offering that the advisor sourced. The advisor may function as an escalation point for the customer should an outage or problem occur, but responsibility largely remains on the shoulders of the supplier.

“Because I don't need to repair these services, I can be more nimble, and I can have more provider partners in my portfolio," DiSalvatore said.

As a result, most TAs don't employ "techs" that an MSP would employ. Many TAs, however, assign project managers and account managers who remain a point of contact for the client after the sale.

Schlagbaum said MSPs essentially function as the "outsourced IT department" of their clients, and technology advisors generally do not adopt that identity. They're offering two different, equally important value propositions, Schlagbaum said.

“[Advisors] provide their clients with advice and counsel on their strategic decisions about the investments they've made in IT to help them grow their business, and they often find ways to save significant costs for their clients as well," Schlagbaum said. "Otherwise, the client must vet all those offerings and choices independently, which can be time-consuming and costly. Why not use an agent instead? But agents or technology advisors are typically not going to offer the solution of, 'I'm going be your IT department or your outsourced CIO.'"

There are, of course, MSPs that possess an advisory wing of their business, but these are just as rare as advisors who possess a managed services wing: quite rare.

While managed services are rare for a pure TA, professional services are becoming more common. Many UCaaS and CCaaS providers have acknowledged that a services gap exists in the deployment of their platforms, and many are incenting partners to fill that gap.

C4 decided to fill that gap with its new Assurance support program. The company's services include the management and inventory of contracts through a portal, as well as cloud voice administration. The latter means that C4 personnel are actually managing day-to-day changes inside their customers' UCaaS platforms.

“A lot of times you had the NEC dealer that sold your premise-based system, and when you moved to the cloud, you lost that guy that used to come out and type a million digits into the phone to reprogram it. You can do it all through these nice gooey interfaces. But a lot of times the office manager or even an IT manager isn't in there enough to be dangerous. Our team is in there every day making changes to RingCentral's call flows or Nextiva's to a call flows or adding users," DiSalvatore said.

Other agencies have added services around UCaaS platforms. For some companies, these services come with a fee and add a revenue stream. Other firms, like Advantage Communications Group, offer life-cycle management services for free with the caveat that customers use Advantage for all technology sourcing.

Many TAs frame their consulting as a service. Charging for consulting was rare in the space up until the last decade, but two trends have made it more common.

First, the complexity of technology is causing businesses to approach TAs as consultants rather than brokers. In other words, customers in the past may have been more likely to approach the advisor knowing what they wanted, and the advisor collected quotes from various vendors. This motion still exists and works well for many advisors, but other customers approach TAs with more broad questions about technology road maps. The consultations may not lead to the actual sale of a technology, and many TAs are realigning their compensation to support such scenarios and justify working upward of a year on projects for potentially no sales commissions.

Second, advisors that have moved up-market say their customers expect a consulting fee. The charges are dwarfed by Big 5 consultancies' prices, consulting fees can function as a "sign of partnership" in the eyes of the client, 3DG Partners' Doug Cardozo said.

Other advisors, particularly those operate in SMB and lower midmarket, may see an advantage in cost-free consulting. However, they are increasingly formulating statements of work to clarify the pre-sales activity they will perform for the customer.

It is very difficult to describe technology advisors without mentioning the technology services distributors (TSDs) that support them. TSDs, or tech services brokerages, formerly went by the name master agent. They hold a contract with the supplier that their "subagents" can leverage. When the subagent sells a certain vendor's offering, the vendor sends the monthly commission to the TSD, which then passes on the vast majority to the TA. TSDs pass between 70% and 95% of that commission through to the advisor. Generally, tech advisors and TSDs agree on a commission split at the beginning of our relationship, but this equation can fluctuate from deal to deal. In addition, some TSDs take a larger share if the advisor uses its resources – such as a sales engineer – during the customer engagement.

Courtesy: one photo/Shutterstock

Some TSDs started as agencies that sold to customers but then decided to bring on subagents. Many of them have decided to stop direct sales to end users and focus solely on enabling their tech advisor partners.

The tumultuous nature of the telecom vendor landscape helped spur the creation of large, national TSDs. Chapter 11 bankruptcy allows a company to cancel its stream of agent commissions, and various carriers have done so to devastating effect. Windstream is well-known for cutting a large chunk of its agent base in 2019. Many partners that didn't manage a large enough sales base for Windstream didn't make the cut. That was a lesson for many tech advisors — that TSDs provide safety in numbers. In addition, in the last decade leaders of vendor channel programs have sought to consolidate the number of agreements they hold with partners and have worked to "roll bases" into others.

As tech advisors dip into non-telecom technologies, TSDs lead the expansion into new vendors. Many of them hold agreements with upward of 300 vendors, having performed technical vetting and contract negotiation on behalf of TAs.

Signing direct contracts with suppliers can prove very painful for TAs, Schlagbaum said.

“These contracts you must sign could be many pages long, and they can be onerous. If you miss their required commitments, you might be subject to commission clawbacks or reductions and other more significant challenges with legal requirements. So, only the most experienced and more prominent agents typically consider direct-to-provider agreements for that reason outside of TSDs," he said.

While TSDs function first and foremost as a source of financial and legal protection, they provide education, training, research, sales enablement and marketing resources to tech advisors.

Schlagbaum and other industry insiders estimate that about 10,000 active tech advisors exist today. One of the largest TSDs noted that it saw 4,800 advisors make a technology sale in 2023.

The total number of firms that have sold in an agent model is much higher — probably closer to Canalys' estimate of 30,000. But many of these companies – including MSPs and VARs – are doing one-off deals and might not publicize their agent sales.

Revenue and TAM

Publicly available numbers on the monetary size of the tech advisor channel are hard to find.

ScanSource-owned Intelisys drives $2.67 billion in vendor billings on an annualized basis. This is how much money suppliers are invoicing to end-user customers based on deals sold by Intelisys tech advisors. Intelisys is the only TSD that officially publishes this number due to being part of a publicly traded company. However, Channel Futures estimates that adding in vendor billings from the other national TSDs puts the total number between $6 billion and $8 billion annually. This does not include revenue TAs are driving through their own contracts with vendors.

ScanSource CEO Mike Baur said earlier this year that he sees a $200 billion-$400 billion in total addressable market for vendor billings that could flow through TSDs and TAs.

Schlagbaum said the internet service provider (ISP) still conducts a majority of its revenue through direct sales, but that number has been shifting.

“The amount of annual revenue that's direct is still higher than that which is indirect channel, and my guess is it is still 20-30% channel and 70-80% direct across all service providers in total in this space, because the larger public players have thousands of direct reps employed by them and they have had 30-plus years to build their revenue bases," he said.

However, many smaller, niche providers are flowing 100% of their sales through the channel, he said.

"And the net-new sales today are far more indirect-led than they have ever been. The best models allow for both where the partners and direct reps of the provider to work together as one in front of the customer," Schlagbaum said. "That is a true win-win for the service provider and the end user alike."