Time for channel partners to ride the XaaS wave, says Deloitte

By Rob Starr

As revenue models continue to shift from transaction to subscription templates, original equipment manufacturers (OEMs) and channel partners struggle to find a new footing that makes sense to both. A new Deloitte study is providing some insight as to how they can stay viable.

If you’re either one of these players, the time to adjust is now. The Everything-as-a-Service (XaaS) snowball has already been pushed downhill by customer demand. OEMs are doing their part by tweaking sales models and customer operations.

Gartner reports 80 per cent of established vendors will offer subscription based models by 2020. Everyone entering technology markets will need to do the same.

But channel partners are held back by a lack of specialized talent and a general concern about the near-term financial implications of transforming their business models, indicated Deloitte’s study. And with more than 80 per cent of technology OEM revenues generated through channel partners, channel partners need to make adjustments or fall to the wayside. This symbiotic relationship is critical—especially where SMBs are concerned.

Only 30 per cent of SMBs have a dedicated IT staff and that means the rest rely on the channel partners to help them penetrate small to medium sized markets and certain geographic regions.

How technology OEMs guide channel partners into XaaS sets the table and effectively delivers a path forward.

What channel partners are selling is changing

Indirect channels need to move up the value chain. That’s one of the first steps to revamping the relationship between OEMs and channel partners in this XaaS climate. The very nature of what channel partners sell needs to be redefined. It’s a seismic shift and one that requires a customer centric mindset.

The traditional role of selling OEM hardware and software along with services like ongoing maintenance and support, like reselling routers and switches takes on a different perspective. Customized cloud-based software solutions will take their place. New features to address include workforce mobility, conferencing, security and network monitoring. The new channel partner will need to cut a broader swath using a relationship-based approach.

Who they are selling to is changing as well.

The old model saw channel partners hawking their wares to corporate IT executives. When channel partners did try and sell to someone with an IT background, it was often something like data center servers.

The new target market is LOB executives. Channel partners need to work with these individuals and drill deeper into their strategic tech strategies. No more just selling a switch and being done with it.

A roadmap

The report presents some fresh solutions to age-old challenges like the constant need for skilled employees. It’s clear about the need for specialized talent to help build the bridge XaaS will move across.

The report stresses the need for, among other things, dedicated teams that are familiar with analytical capabilities.

How OEMS can help

There are some clear tips for how OEMs can help steer the process. Engaging channel partners through the whole client buying process immerses them in some of the necessary touch points. Looking for team players that have data and analytical experience is critical.

Broadening these channel partners’ portfolio of services is another way these OEMs can help move the process along. Focusing on new target markets means considering a geographic approach too.

The relationship between channel partners and technology OEMs is riding the wave of transaction to subscription model change. Harnessing these new touchpoints and adopting these ideas will help them stay on top of this latest digital crest.

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For over 25 years, CDN has been the voice of the IT channel community in Canada. Today through our digital magazine, e-mail newsletter, video reports, events and social media platforms, we provide channel partners with the information they need to grow their business.

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