2024 Technology Advisor Predictions: The Evolution of Professionalization
Technology advisor (TA) firms will play a bigger role for their customers and suppliers in 2024.
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You don't need a prediction to tell you that data will be the constant rallying cry of the channel in 2024. Everyone is talking about it. Business customers are increasingly demanding data to inform their purchasing decisions and partners are making similar demands of their distributors and suppliers to strengthen their sales. But the tech advisors themselves must decide how and where they will input and organize their own proprietary data.
Much of that data comes from partners' technology service distributor (TSD) partners, who hold agreements with their suppliers and dispense their commissions. Over the past decade, TSDs have built digital platforms for sales enablement and operations and many partners use these platforms on a daily basis.
Partners are figuring out how they will thread those platforms and the data therein to their own systems.
"We are starting to hear more TAs talking about CRM," said Rise Technology Advisors co-founder Eric Ludwig. "Many smaller, older agencies did not adopt a data strategy and I’m hearing them struggling to keep tabs on their contracts, revenues and overall financial and client visibility. The TSDs are looking to offer a 'lite' type of service offering which could appeal to some of the smaller firms. Most TAs use more than one TSD and prefer to keep their own data in-house rather than through a third party. Assuming it’s included in a service offering, this could gain traction in 2024."
While a "trough of disillusionment" might occur for some purchasers of generative AI solutions, tech advisors and distributors say they are bullish on generative AI as a component of contact center and customer experience (CX) platforms.
"It's not brand new. It's not like ChatGPT or Grok or Microsoft Copilot where people are still figuring out exactly what to use it for. There's a proven use case in CX for AI," said Paul Constantine, who leads supplier relations at ScanSource's Intelisys. "And as AI technology gets better and improves, that use case gets better and improves. Yes, there is a trough of disillusionment whenever a new technology comes to market, but I really feel that in the CX space, AI already has a proven use case and can get through that trough in much better shape."
Ludwig said he anticipates adoption of solutions with generative AI accelerating in 2024 after a year of "hype and tire kicking."
"I see 2024 as the time firms start fully adopting and implementing AI as a way to create inertia (either acceleration of cost savings, product adoption or sunset of legacy technology). Many offerings are really about automation vs. AI, but taken together, the impact on IoT, security, CX and infrastructure cannot be denied. Investment likely will be limited to deployments driving efficiency with a quick return," Ludwig said. "Expect a massive push by firms running on-premises systems like CX to move to cloud in order to automate functions like sentiment, workforce management, quality management and others."
Adam Rennert, head of CX and strategy at InflowCX (an Amplix company) described what his firm is calling "Phase 2 CCaaS."
"It will be a larger investment area for companies in 2024 focused on leveraging AI and automation into the call center as well as optimizing CCaaS existing deployments to drive efficiency and reduce costs," said Rennert, who also pointed to self-service, agent assist features and data extraction features that will drive adoption.
Moreover, Intelisys Vice President of Partner Experience and Enablement Kristy Thomas said, the generative AI trend is leading to uplift for adjacent technologies.
"At the same time our cloud spends and our cloud opportunities in the channel are increasing," Thomas told Channel Futures. "The whole reason AI is available from an adoption perspective is because we finally have the compute power to be able to leverage it."
Channel Futures is additionally watching for consolidation in the contact center software space. Zoom and Five9 officials stressed that they are not coming together, but other providers may merge. In particular, niche providers may find a home with vendors that aspire to make provide a holistic platform. For example, Nice bought LiveVox for $350 million to bolster its outbound capabilities.
"We believe smaller CCaaS players in the market will struggle against the established players, the new large players and CRM providers edging into the space leading to additional consolidation and migration away from those platforms," Rennert told Channel Futures.
Technology advisors (agents) are increasingly branding themselves as consultants when speaking to clients. Their distributor partners are encouraging them to take market share from the big five consultancies in the enterprise space. The opportunity certainly abounds, as tech advisors can leverage their compensation (commission) model to offer more affordable services to businesses. However, the shift to calling themselves consultants will include significant changes in personnel and practices.
On the personnel side, partners who want to be consultants are hiring consultants. Bluewave recently brought on Cognizant alum Kevin Cartwright to lead its solution advisory services. Moreover, look for the more formalized technology-specific practice areas at these large agencies.
On the practice side, partners who want to consult well need to fundamentally rethink their approach to selling. Diane Smith, who has been doing technology consulting for decades as CEO of ChoiceTel, said recommending a bad vendor or solution to a customer can have drastic consequences.
"If agents really want to transform into a consultant, then you have to forget about your sales commission for a minute and think like a consultant," she told Channel Futures. "You have to put yourself into the shoes of your customer. If it were you making the decision for your company, and your job was on the line, how would you look at it differently?"
Partners reported a copper crisis earlier this year. Customers were seeing exponential price increases on plain old telephone service (POTS) and time division multiplexing (TDM) lines. While the FCC never ordered ILECs to shut off copper services, the gradual retirement is indeed occurring.
Tim Hanley, senior vice president of channel sales at MetTel, works with customers and partners that are conducting POTS aggregation and POTS replacement. He said he expects POTS transformation services to accelerate in 2024 with businesses no longer willing to look away from their telecom invoices.
"I've seen trends over the past year where even though customers have felt the pain, they've absorbed the financial pain just because they have other pressing things. There's other stuff going on," Hanley told Channel Futures. "I think you're at that point of them saying, 'Financially, we can't keep absorbing this. We have to make the transition.'"
It's a tale as old as time: A supplier that traditionally leaned on tech advisors as their main channel route to market starts diversifying. They may hire a decorated channel sales leader with a resale background who vows to do more with resellers and integrators. 8x8 is the most recent example.
Channel Futures predicts that agents will show their indispensability in driving net-new customer logos for suppliers.
Paul Constantine has over the years seen many providers in the Intelisys portfolio add or reemphasize a resale route to market. But when it comes to UCaaS and CCaaS sales, Constantine said agents have stood the test of time as a preferred channel model.
"We've seen a lot of suppliers go after VARs. We've seen some reception to that. But it is not even close to the success that we've seen with the agent channel. So it probably is a small niche of the go-to-market strategies of these companies. And I'm not sure right now if I feel like it's going to be anything more than just a niche," Constantine told Channel Futures.
Kristy Thomas, who leads partner experience and enablement at Intelisys, offered a couple of reasons why technology advisors have that staying power in the cloud communications space.
The first is the complexity of the solutions enterprise customers are buying and the resources VARs need to achieve that complexity.
"From a VAR perspective, they just don't have the core competency to be able to resell something like that and that level of complexity. Because it takes a very big investment to build that core competency and the talent," Thomas said.
At the same time, VARs need to evolve their competencies as vendors evolve their solutions. And while agents also need to keep up with complexity and technological change, the vendor-aligned nature of the agency model gives them a boost.
"In the agency model you rely on the resources — the best bench to bring forward in that engagement," she said.
While agents should consider the professional services and certifications they can earn to compete with VARs (see the next prediction), their business model gives them the resiliency to stay relevant with vendors in 2024.
Channel Futures predicted at the beginning of 2023 that more technology advisors would earn certifications with UCaaS vendors, due to a combination of customer pain points and vendor incentives. While some partners did get certified, there wasn't enough activity to really register as a 2023 trend. Most partners dismissed the idea of certifications because they didn't see any threat to customer or vendor relationships.
However, Channel Futures and other industry observers anticipate the agent channel will grow in its certifications, value-added services and formalized codes of conduct in 2024. That industry evolution will occur because multiple forces inside and outside of the channel are demanding it. Vendor incentives have for decades shaped behavior in this once-cottage industry, with no trade association standing the test of time to help agents operate it. Now many more players are shaping behavior.
First, pressure continues to come from vendors for agents to perform more services after the sale. Some partners found that they could save their clients exorbitant deployment fees by getting certifications. That trend of vendors charging customers for deployment shows no sign of shrinking as vendors make cuts to their workforces.
“The vendors want more active participation from us in customer engagement, satisfaction, support and renewals," Avant CEO Ian Kieninger said in a keynote this fall. "If you think you can sell it and forget it and in three years it’s just going to be there for renewals guaranteed, I think you need to approach it differently."
An 8x8 channel leader recently opined about the additional services value-added resellers provide for their customers. Cloud communications providers like 8x8 are looking to expand their work with VARs. Moreover, VARs are seeking to drive more recurring revenue and cloud services and sometimes will choose to do that in an agency model.
In other words, agents will be fighting with VARs for vendor and customer mindshare more than ever.
Second, regulators and investors from outside the industry are taking a good, hard, third-party look into the world of the channel.
"Smart money," as some folks call it, has invested in different agencies and TSDs, and as a result, forced partners to open their books of business to scrutiny. Private equity investors want to know exactly what they're buying and are vetting out sellers they can't trust. Laissez-faire leadership styles that encourage unscrupulous sales behavior will come to light.
The FCC hit the channel with a ban on earning rural healthcare commission. That deeply harmful decision stemmed in part from negative stereotypes the FCC regulators had developed about agents over the years, as well as lobbying from the Society of Communications Technology Consultants. But despite a deeply prejudicial decision by regulators that don't seem to understand the agent channel, the FCC and other federal bodies have sent a clear warning: bad apples in the agent space should very worried indeed. The light may very well shine in places where some don't want it to shine.
Third, partners themselves want to lift up the industry. The Technology Channel Sales Professionals (TCSP) emerged to represent the channel to the FCC and is looking inward at ways to drive professionalization inside the channel. The Technology Advisor Alliance has created a partner-only sounding board that is giving partners a more transparent view of supplier and distributors. Moreover, the largest technology services distributors (TSDs) seem open to collaborating more with each other to make the industry more visible and successful.
A generation of agent leaders sold their businesses in the last few years. Some moved to high-level roles at private equity-funded partner organizations or ambassador roles, while others made a direct step into retirement. It appeared that some of these Gen Xers and Baby Boomers were riding off into the sunset, but you aren't getting rid of some of them that easily.
In many cases of acquisitions non-compete agreements last two to three years. For some partners who sold their books of businesses in 2020 and 2021, the earnout is over. Yes, many of them will prefer to move out of full-time work and take time enjoy the fruits of their labor.
But for others, the urge to build a business is addictive. So is the craving for independence.
Watch for partners who sold their first businesses to form their own small agencies or even elect to join an established albeit boutique firm.
Almost all industry insiders remark that the technology advisor community is still in the "first inning" of consolidation. Channel Futures hazards a guess that the second inning will kick off in 2024 with one of the private equity firms flipping their investment.
One could argue that a minor version of this happened already when Soterra Capital sold a handful of agencies to Columbia Capital's Bluewave Technology Group. In addition, PE firms sold CX services companies PPT Solutions and InflowCX to Charlesbank-backed Bridgepointe and Gemspring-backed Amplix, respectively.
However, PE firms that have invested into TAs and TSDs are watching to see the first truly large M&A event. Could this happen in 2024?
Almost all industry insiders remark that the technology advisor community is still in the "first inning" of consolidation. Channel Futures hazards a guess that the second inning will kick off in 2024 with one of the private equity firms flipping their investment.
One could argue that a minor version of this happened already when Soterra Capital sold a handful of agencies to Columbia Capital's Bluewave Technology Group. In addition, PE firms sold CX services companies PPT Solutions and InflowCX to Charlesbank-backed Bridgepointe and Gemspring-backed Amplix, respectively.
However, PE firms that have invested into TAs and TSDs are watching to see the first truly large M&A event. Could this happen in 2024?
Tech advisors (TAs), colloquially known as agents for their commission-based channel partner model, stayed the course through a challenging macroeconomic year. Despite financial tightening at many of their vendor partners, TAs expanded their headcounts and reported confidence in the health of their industry in 2023.
Moreover, the industry saw a series of new entrants into the space, replacing a generation of advisors who had sold their businesses in recent years. The carrier-to-agent pipeline is no longer the exclusive pathway into the channel. IT leaders from the customer side and direct sales leaders from a variety of IT vendors have joined or started agencies — a powerful validation of the model's influence.
Channel Futures forecasts an evolution of technology advisors in 2024 as increased transparency and oversight enters the space. Our seventh of eight predictions anticipates that TAs will undergo a process of increased professionalization. Some of this professionalization will occur of their own accord and some of it will come from outside prodding.
Leading up to 2023, Channel Futures predicted increased channel conflict, MDF rationalization and partner certifications, among other forecasts. Some of those predictions came true, others flopped and still others have yet to be realized.
Channel Futures asked sources at the partner, distributor and supplier levels of the TA channel about what they think is coming down the pipe in 2024.
Scroll through the eight images above to see predictions about the coming year.
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