CompTIA State of the Channel: Partners Navigate Cloud Confusion, Vendor Choices

Partners have mixed opinions about whether cloud computing has improved their relationship with end users and vendors.

CompTIA’s annual State of the Channel survey offers an in-depth look at the changing growth areas, business models and concerns that solution providers are encountering in 2016 in the upcoming years.

The study found that optimism for the channel is essentially unchanged from last year, with 63 percent of respondents saying they are hopeful for the industry. But the overall sentiment of positivity and confidence comes alongside angst that surrounds cloud computing and vendor-partner relationships.

Let’s take a look.

‘Cloud Confusion’

The number that should jump out at readers is 37 percent: the amount of channel firms that say the cloud’s impact has been “extremely positive.” Two years ago, that number was 63 percent. Why the 26-point drop in cloud satisfaction?{ad}

Carolyn April, senior director of industry analysis for CompTIA, told Channel Partners that this by no means represents a rejection of the technology. It is, if anything, a “reality check” or a “refinement,” after so many companies dove headfirst into cloud, she said.

“They are taking a step back. They’re not rejecting cloud, but they are rethinking how they engage,” April said.

Opinions on the cloud are very mixed, as 39 percent of respondents chose the technology as the biggest reason for optimism in the channel, while 30 percent say …

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… it is the leading reason for pessimism. The study also noted that 60 percent of channel companies said the cloud strengthened their relationship with clients; that number was 71 percent two years ago.

April said the fear of end users bypassing their solution providers comes with the territory of selling SaaS.

“I think the fact that customers can more easily procure some of the solutions they need through the cloud entirely on their own is one reason for some apprehension and fear among channel companies, and one reason they feel that the relationship with the end customer is weakened,” she said.

But channel companies can provide services like customization and security that the client can’t do on its own, she said.

“You can get a basic SaaS application easily, quick to provision on your own, but as many end customers are finding out, the devil is in the details,” she said.{ad}

Vendors

Numbers from the State of the Channel survey indicate pain points between partners and vendors.

While approximately 40 percent of respondents said they were very satisfied with their vendors (the same percentage as last year), 15 percent expressed …

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… dissatisfaction, up from 7 percent in 2015.

April said the cloud-based world has also changed the relationship between partners and their vendors. She said that although vendor relationships have historically fluctuated as long as the channel has been around, cloud technology is highlighting deficiencies and giving partners more choice.

“The arena of vendors for the channel to consider working with is growing, and at the same time, the traditional players they’ve been working with are not changing fast enough in the cloud-based world,” she said.

Aside from technological concerns, many partners are finding less value in vendor benefits. About two-thirds of partners said that traditional benefits, such as sales SPIFFs, discounts, technical training and market-development funds are less helpful than they used to be.{ad}

“Those items have fallen in importance and relevance to today’s channel partners. They’re much more reliant on their own sales and marketing efforts and their own efforts in general to generate the majority of their own income,” April said.  “We’re really at a crossroads between the old-guard vendors losing a bit of their luster in the eyes of their channel partners and this amazing landscape of all these .newer vendors that are rounded in the cloud — that partners have a chance to take a look at.”

Other Concerns

The study found that some partners are concerned about vendors switching to direct sales. Vendor conflict landed at No. 2 for reasons to be pessimistic about the future of the channel.

The top concern was …

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… new competition that’s getting in on indirect services. For example, April said telecom providers are adding IT and cloud to their portfolios, and digital marketing agencies are helping SaaS providers.

“The channel as defined in the past is not how it should be defined today. A traditional solution provider, VAR, MSP — they are now seeing many different types of companies that weren’t in the coral before that you could definitely classify as a channel company.”

Another source of worry is the lack of millennials in the channel. The third biggest reason for pessimism was that the younger generation does not seem to be filling the void that the “aging” channel is leaving. Respondents also noted that complex IT technologies are causing skill gaps.{ad}

April said in an interview with Channel Partners last month that channel companies need to recruit the next generation if they want to see their businesses successfully evolve in the years ahead. She also said that partners will need to approach SaaS applications as less of a reseller and in more of a holistic role.

“Yes, they can resell SaaS applications, and there are plenty of folks doing that, but I think the more critical area where they’ll be able to make the most money and be most sticky with the customer is to be an adviser around the types of cloud applications that are out there, the types of cloud solutions that are available, and help vet those solutions,” she said.