Channel Faces Challenges--Do the Vendors Get it?
In the past, the channel sold "boxes," and now they must reposition themselves to sell services and solutions.
The communications and collaborations landscape has changed considerably in recent years. We've seen Microsoft, IBM and Google enter the voice and unified communications market, and Huawei has now followed suit. Cisco revolutionized the marketplace and has become the market leader. And the traditional PBX vendors are transitioning into software vendors who also provide data networking and some collaboration tools.
Of course there were also casualties along the way. Nortel's and Ericsson's enterprise systems businesses were forced into mergers by traumas the companies faced in the service provider sides of their operations. Avaya, Siemens, Mitel and Alcatel-Lucent have gone through significant re-structuring due to challenges of revenue generation and channel attrition in a decade of slow growth for voice communications.
Against this backdrop stand the channel vendors. There used to be separate channels for phone systems, computer systems and data networks. Today, the channel vendors have to be adept in all these disciplines, as well as general business application solutions.
But just as the major vendors have faced challenges transitioning their businesses to the new realities of unified communications, the channel vendors have the added burden of working with and through the system vendors whose products they carry. And the reality is that the UC channel needs to change how they do business at almost every level.
In the past, the channel sold "boxes," and now they must reposition themselves to sell services and solutions. In most cases this will require the channel to re-train or turn over their entire sales force. It is rare to find a successful box salesperson that can be transformed into a consultative salesperson.
Another major challenge is the channel's financial model. In the past, when they sold a system they received large one-time payment. In today’s cloud-based world, channel partners receive smaller payments, which are spread over time. In the long run, as the channel partner builds a base of customers paying on a monthly or quarterly basis, this may prove to be an even more attractive business model.
However, let's be clear: The transition will be painful for many and devastating for others. As vendors start offering cloud solutions, they need to develop programs, such as up-front payments for multi-year cloud contracts, to help their channel partners move from the old to the new financial model.
In talking to system vendors about this issue, I've been surprised to find just how many are clueless about the hurdles their channel partners are facing. That's why UCStrategies has decided to do a study to help vendors understand how best to support their channel partners. You can find more information about the study in a podcast posted on UCStrategies.com.
Ironically, in today's environment, the channel partners actually may have the upper hand. In the past, most channel partners were loyal to one primary vendor, but this is changing, as customer demands and the complexity of UC require multi-vendor solutions. It is likely that the channel partner will have one or more vendors that will provide programs to help them evolve. A system vendor that does not provide appropriate support may be traded out for one that does.
The simple reality is that our industry needs successful channel partners. I hope you'll participate in the study and let me know of other ways the channel can be strengthened.