The future of the channel

The regional IT sector has entered 2012 with a sense of caution as effects of the global recession of three years ago continue to linger on.

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By  Manda Banda Published  February 19, 2012

For the past two months, this column has addressed issues and trends relevant to resellers operating in today's IT ecosystem in the region.

Because we spend a lot of time tackling and covering issues that affect resellers, I want to depart from the channel partner view and share a current topic of discussion among vendors, specifically channel leaders and strategy executives.

For the past two years, the same discussion has surfaced: namely, which partner types, as defined by business model, will survive in the long run?

Think about the challenges that the men and women who manage partner programmes at their vendor companies face on a daily basis. With a limited budget every year, each executive pins their hopes by investing money in partner programmes or account management activities that achieve resale or ‘influence' revenue impact.

With the resale and ‘influence' channel in a state of transition and disruption in the Middle East, determining where to place bets is critical to achieve vendor ROI for any channel managers, directors or channel account managers for that matter. The IT ecosystem disruption that I am referring to comes from the changing IT customer buying behaviours as the region's CIOs and IT managers respond to budget pressure and rapid technology advances, making mobility, remote management of IT assets and cloud computing top of mind in pursuit of that sought after lower TCO.

In my many interactions with channel decision makers at vendor organisations in the Middle East, I have come to understand that from their perspective, channel transformation is crucial going forward. Many have argued that they cannot continue to do business the way it was done 10 years ago, hence the need for change. But who should transform and how should they go about achieving this metamorphosis? Although there are no easy answers to this depending on how you look at the channel today, those who transform in this disrupted and competitive ecosystem will survive and prosper.

Let me start by addressing one of the most controversial partner types or business models - distributors. I have attended meetings where the vendor opinion regarding the future role of distribution runs the gamut from less than critical to extremely critical. But why is this so? I do believe that it stems from the belief by many vendors that with public cloud, the traditional pick, pack, ship and line of credit are no longer critical functions supporting this newer way of IT services delivery. I see this most often with traditional IT vendors and new entrants especially in the telecoms sector.

However, if the vendor is involved in say providing infrastructure-as-a-service (IaaS), then the opposite is true. Distribution in that case becomes an essential platform for them to recruit solution providers and managed services providers (MSPs) who can resell their offerings or tap into them for the benefit of the end-user.

Aptec Distribution's move into the MSP and cloud computing initiatives through its Datacenter Partner Alliance Program is a great example of how distribution can transform and play a critical role. When you factor in private cloud growth, which often looks like a standard resale transaction into the customer data centre, and the fact that customer data centre IT spend, according to analyst reports, is thought to be more than 45 to 50% of customer IT spend in 2012, distributors aren't going to demise from the market.

ISVs are another group that will not only survive, but thrive. This group has been quick to transition and spawn a market for other complementary ISVs.

So, which partner types, as defined by business model, will survive in the long-run in the region's channel? Let me know.

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