Q4 Tech Advisor Survey Points to Widening TSD Market
Partners shared how often they're leveraging tech services distributors (TSDs) and in which areas.
![TSD market TSD market](https://eu-images.contentstack.com/v3/assets/blt10e444bce2d36aa8/blt5c99efc622f8b4c3/65b3f5b1f57db6040a46cb7e/2_-_Stock_Market.jpg?width=700&auto=webp&quality=80&disable=upscale)
Phongphan/Shutterstock
Demographic questions at the beginning of the survey showed that many of these companies are quite small. Fifty-nine percent of respondents employed 14 or fewer people. Seventeen percent employed 15-49.
In addition, 39% of respondents reported that earn less than $1 million in revenue annually. Another 22% sat in the $1 million-$2.5 million range. Another 11% were between $2.5 million and $5 million.
As previous quarterly surveys have consistently shown, technology advisors are growing in personnel. Forty-two percent said their headcount grew in Q4. On the other hand, 48% stayed put, and 9% lost people.
Thirty-two percent said they found hiring easier than in the year-ago quarter.
TAs overwhelmingly chose lead generation as their most pressing ask for their suppliers. Sixty-five percent said the most important thing their vendor partners can help them with is lead generation.
Market development funds (MDF) came in second at 44%. Third was enhanced training, with 32% saying it is a top-three priority.
For a deeper discussion about agents' demands for lead generation, read Channel Futures' Q2 survey report.
Channel Futures added a new question this quarter about how partners are leveraging their technology services distributor (TSD) partners. TAs were asked to measure how often they were using TSD resources in 10 different categories. For each category, they would select if they used the TSD on a daily, weekly, monthly or intermittent basis over the last six months.
Partners indicated that they were most frequently turning to their TSD for quoting and pricing. Fifty-three percent of TAs were using their TSD for quoting/pricing on a daily or weekly basis. Only 14% did not use a TSD for quoting and pricing in the last six months.
And keep in mind that not all partners are doing deals every week. Avant chief strategy officer Alex Danyluk told Channel Futures that most TAs do one or zero deals per month.
The next most popular activity was back-office functions, which include commissions delivery. As might be expected, 37% of TAs used their TSD monthly for this function, as vendors deliver their commissions on a monthly basis.
The third and fourth most frequent areas were vendor research and vetting, and education and training.
Customer-facing sales engagement slotted in at sixth, but here it's interesting to walk the data backward. Only one in three (34%) partners said they did not use their TSD to engage with their client in the sales process over the last six months. That implies that two in three (66%) used TSDs in the engagements with end users.
Another third (33%) leveraged marketing resources (including event support) daily, weekly or monthly.
Activities like financing and legal support – presumably more one-off types of events – trailed in ninth and 10th.
The data challenges the idea that TSDs are function only as a commissions clearinghouse. While commissions delivery is a key element for partners when they think about their TSDs, partners indicated that they are using their TSDs for sales and marketing support as well.
![Avant's Drew Lydecker Avant's Drew Lydecker](https://eu-images.contentstack.com/v3/assets/blt10e444bce2d36aa8/bltc1b33c183403a929/652f8f4d4c44ad34a7627ad4/Lydecker-Drew_Avant-Communications.jpg?width=700&auto=webp&quality=80&disable=upscale)
Avant's Drew Lydecker
"Trusted advisors are like a box of chocolates – they come in all different shapes, sizes and flavors. At Avant we try to meet them wherever they are, whether they are looking for pricing requests, education on product and solution offerings, or supporting closing deals,” Avant president Drew Lydecker told Channel Futures.
Channel Futures asked partners about which TSDs they're doing business with, and how that compares to a year prior.
Avant saw the largest number in partners who said they increased bookings with the Chicago-based TSD, at 42%. Next were Telarus and Intelisys at 25%, and then Sandler Partners (19%).
It's important to note that Channel Futures will need to keep expanding its sample size to make this question as accurate as possible. Ninety partners answered this question, but some TSDs promoted the survey to their partners more than others did.
What's perhaps most interesting is where TAs say they are decreasing business. Fourteen percent said they did fewer bookings with AppDirect in Q4 2023 than in Q4 2022.
Note that for Avant, Intelisys, Telarus and Sandler Partners, each saw more increases than decreases. That's a positive sign that new logos are coming into the channel, rather than the TSDs share-shifting between the same group of partners.
Other companies were on the list, including broadline distributors Ingram Micro and TD Synnex, but very few partners said they were using them.
Company | Increased | Remained the Same | Decreased | Don't Use |
---|---|---|---|---|
Avant | 42% | 21% | 6% | 31% |
Telarus | 25% | 30% | 7% | 39% |
Intelisys | 25% | 25% | 7% | 43% |
Sandler Partners | 19% | 19% | 4% | 59% |
ScanSource | 11% | 14% | 6% | 69% |
AppDirect | 10% | 29% | 14% | 47% |
Pax8 | 9% | 15% | 4% | 73% |
Bridgepointe Technologies | 8% | 11% | 2% | 79% |
CX Effect | 7% | 15% | 2% | 76% |
When it came to sales of different technology services, partners saw growth across the board. CCaaS was the highest in terms of partners who saw a significant revenue increase (18%), but cybersecurity actually had the largest number of partners with a moderate increase (39%).
Danyluk said 68% of end users are turning to technology advisors for purchasing security products, evidenced by Avant's recent State of Disruption report.
“Avant is also seeing very strong growth in security services, with 62% year-over-year revenue growth as security quickly becomes a core part of the trusted advisor’s portfolio,” Danyluk said.
![Avant's Alex Danyluk Avant's Alex Danyluk](https://eu-images.contentstack.com/v3/assets/blt10e444bce2d36aa8/bltdd05d06de8f6bf01/6525d96a606c0c30d96b8f05/Danyluk-Alex_Avant.jpg?width=700&auto=webp&quality=80&disable=upscale)
Avant's Alex Danyluk
Despite stories of price compression, connectivity and UCaaS still did very well for partners in Q4, despite a few partners reporting decreases (6% for connectivity and 10% for UCaaS).
Avant CEO Ian Kieninger noted that while price compression is occurring among UCaaS vendors, Avant still saw 31% year-over-year unit sales growth in the category.
Kieninger added that net new sales for CCaaS grew 36%.
“... and we're seeing growth opportunities accelerating even faster in 2024, driven by the macroeconomic impact of more digital-savvy customer demographic changes and the advent of new disruptive AI capabilities," Kieninger told Channel Futures. "AI delivers unprecedented innovation in front-end customer experiences and supports agent assistance, training, call center analytics and more."
The numbers suggest, moreover, that telecom-esque services are here to stay for partners.
"I don’t think there will be a big gap next year for these different types of services, because although TAs see IT services picking up steam, there aren’t stunning decreases for telecom services, which means increased sells aren’t mutually exclusive and can co-exist," Omdia's Adams said.
While all technology advisors/agents make revenue on the vendor solutions and services they sell to their clients, they also are increasingly earning revenue from in-house services they provide.
Forty-two percent of partners said they expect their revenue from consulting or professional services to increase by 20% or more in the coming year. While there is still a debate among partners about whether they should charge clients for their pre- and post-sale services, a significant number have decided that they will charge in at least some cases.
3XC Telecom owner Dustin Schiff said the statistics line up with what he expects to see in the market.
"The ongoing debate among partners regarding whether to charge for consulting/services has gained significant traction. I've engaged in conversations with fellow technology advisors about this matter, and the prevailing consensus suggests that TAs are inclined to charge for certain services to some extent in the future," Schiff told Channel Futures.
While all technology advisors/agents make revenue on the vendor solutions and services they sell to their clients, they also are increasingly earning revenue from in-house services they provide.
Forty-two percent of partners said they expect their revenue from consulting or professional services to increase by 20% or more in the coming year. While there is still a debate among partners about whether they should charge clients for their pre- and post-sale services, a significant number have decided that they will charge in at least some cases.
3XC Telecom owner Dustin Schiff said the statistics line up with what he expects to see in the market.
"The ongoing debate among partners regarding whether to charge for consulting/services has gained significant traction. I've engaged in conversations with fellow technology advisors about this matter, and the prevailing consensus suggests that TAs are inclined to charge for certain services to some extent in the future," Schiff told Channel Futures.
Data from Channel Futures' latest survey of technology advisors (agents) hint that share-shift may not be taking place among technology services distributors.
Avant, Intelisys, Telarus and Sandler Partners all saw partner bookings increase more than they decreased in the last quarter of 2024, evidence that the TSD market is expanding its proverbial pie chart.
State of the TSD Market
Channel Futures each quarter asks partners – alongside several other questions – if they've been putting more, less or the same amount business with various TSDs. The Q4 data shows increases across the board. Forty-two percent of partners said they increased bookings with Avant, and 25% said they increased with Intelisys and Telarus, respectively.
Those increases did not come with a corresponding decrease from a different TSD. In other words, increases for one TSD didn't come at the expense of another.
Partners also shared how they are most commonly leveraging TSD support. Quoting and pricing, commissions delivery and vendor research/vetting were the top three areas.
"The TSDs that can best help TAs sell the solutions that will drive the high projected growth will be most coveted," said Devan Adams, principal analyst of channel for Omdia, Channel Futures' sister research company. "It is imperative for a TSD to do its homework now, if they haven’t started already, to dive deeper into both the revenue/profit drivers and activities (like quoting and vendor-vetting) TAs need most from TSDs to support their 2024 growth aspirations."
Optimism for Partners
A challenging macroeconomic environment isn't worrying agents about the health of their business and the industry.
Twenty-eight percent of respondents gave the channel an "excellent" rating for how it is performing.
Thirty-nine percent said their customers were more willing to spend money on technology than they were a year prior.
Today, how well do you believe the channel industry and U.S. economy are performing? | Excellent | Good | Average | Poor | Terrible |
---|---|---|---|---|---|
Channel | 28% | 44% | 25% | 2% | 1% |
U.S. Economy | 6% | 34% | 34% | 16% | 9% |
Channel Futures also asked partners about their needs from vendors, how their tech sales portfolios are faring and their thoughts on fee-based revenue.
Go through the seven images above to see key takeaways.
Then, check out the Q3 TA survey.
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