Differentiating your channel business while transforming it
The reactive days of technology providers are behind us. The change was already afoot earlier in the decade as hardware became cheaper and thus shrunk margins for channel businesses. Big bang projects made way for nuanced deployments. Cloud began challenging the dominance of monolithic systems, and companies started shedding internal ownership of their tech for platforms and services.
Underpinning all of this is a narrative of differentiation through innovation. Organisations started adopting technologies to make them faster, more efficient and more aware - and gain an edge in the market.
If technology providers want to survive, they need to adopt a similar attitude, said Louise Taute, Comstor Director Southern Africa at Westcon-Comstor.
"Staying on top of what is happening in the market should be a top priority for salespeople, company owners and businesses. You should look into the future and the options that could sustain what you are doing today and what new you can add. The market is undergoing more change than ever before, so you cannot afford to not adapt. That's always been true for a competitive business but today it needs to be the leading consideration."
What should channel companies focus on to remain competitive?
"As an industry, we often talk about business value. But we are now really forced to make sure that we can put our money where our mouth is, as these technologies can deliver real business benefits."
Evolving a technology provider in the current conditions requires three areas of focus:
- Engage with new markets and emerging technologies.
- Use managed services or intellectual property to differentiate yourself.
- Save costs through efficiencies and platform services.
She also noted this new market can't be entered without taking some chances:
"Be willing to make a bet. You can't always nudge your way to a big change. You have to take some chances. A bet might turn out bad, but it's part of the process of innovation and feeling the pulse of the market."
Embracing the new type of customer
The necessity to transform has a lot to do with the new expectations of customers. Aside from the reasons mentioned above, customers are looking for one thing in particular: de-risking their adoption of emerging technology. This mood is demonstrated by the concept of being a technology partner who walks the talk with their customers. Instead of being reactive, channel providers must be proactive towards customer environments, push for innovation at every level, and listen to end-users.
Managed services embrace these values the best, said Taute. "If you're selling products, you are effectively competing with everyone. There is no real differentiation unless that is your IP. A once-off sale is also not a sustainable revenue stream, which is why you should look at providing services that fully and continually manage your customer's requirements."
These trends gravitate towards the cloud, and if you aren't leveraging the cloud, you are missing the biggest opportunities in the market. Enterprises have already embraced the cloud. The next wave, carrying medium enterprises and smaller businesses, is starting to surge. Beyond that, new cultures, such as remote working, require new skills and services.
"You are looking for trouble if you aren't using the cloud. That is where we find the technologies that are enabling remote working, and where the new skills of workforces are being spotted and refined. Don't just continue doing what you've always been doing - the market leaders of tomorrow are already aligning themselves with the new realities of their customers today."
The third factor is to manage costs, which fits nicely with another important factor when updating your business: the right channel partner matters. For example, a channel partner that provides a multi-vendor e-commerce platform - where you can easily combine different options for customers - that saves a terrific amount of time and money. Likewise, you can encourage recurring revenue by using features such as automatic licence renewals. So choose a technology distribution partner that has invested in those emerging technologies that streamline your channel business's requirements.
"Delivering customer lifetime value is really important. The customer is always going to ask, 'What have you done for me for the last 12 months?' So, offer the customer lifetime value in terms of managing them, something valuable all the way through the year before the renewal comes in."