Published: September 25th, 2018

Customer buying habits are changing and born-in-the-cloud firms are cozying up to business leaders who are looking for full-service solutions with a fast ROI, but that doesn’t mean that traditional Canadian channel resellers are dead, according to David MacDonald.

They do, however, have to keep up with the changing landscape, or they will disappear, indicated the retired president and CEO of Softchoice and CDN Channel Innovation Awards judge.

“The idea of selling hardware or software on premises is going to be a declining business, and will likely see a substantial decline in the next 10 years,” MacDonald told CDN. “But a lot of the bigger channel players are reluctant to give up the revenue streams that come with selling a lot of servers and storage on premises.”

The innovative spark that helped some smaller firms – relatively speaking – such as Sierra Systems and Tidal Migrations scoop up diamond awards at this year’s CIA event is absent from the top channel players in the country, said MacDonald. Compugen was the only top 5 company from CDN’s Top 100 Solution Providers that earned a diamond award at the inaugural awards event.

“If I had some of the channel leaders in front of me … I would ask them what practices are they putting in place to take advantage of cloud technology to create differentiating solutions for customers?”

MacDonald praised the innovative chops on display from CIA award winners that demonstrated an ability to build unique solutions on top of public cloud services such as AWS and Azure. Business templates built on generalist skills that differ very little from customer to customer might get you by for now, but it’s the repeatable experiences around specific business outcomes that help customers become distinguished which will shape the channel partner of the future, said MacDonald.

“If channel players aren’t building out a portfolio of capabilities, they will fall behind,” he said. “Some of them are doing a much better job than others.”

David Crane, another CIA judge and former business reporter, said it’s important to track the growth rate of up-and-coming technology firms and their ability to sustain their business in Canada.

“I think the danger we see in Canada is that we develop a lot of seed corn for large international companies that come in and buy them. We have to find a way to be more than just a producer of seed corn,” he said.

It begins and ends with cloud

Cloud expansion and innovation has become a key ingredient for a successful channel business, even if it doesn’t immediately lead to major revenue spikes, according to IDC Canada’s latest State of the Channel report. This point goes hand-in-hand with partner-to-partner (P2P) initiatives, which will account for at least 30 per cent of revenue generated among leading cloud partners by 2020. Additionally, cloud distributors will touch more than half of indirect sales by 2020, up from 45 per cent today.

Steve White, vice-president of worldwide channels and alliances research for IDC. Photo by Paul Darrow.

“A few years ago, as cloud got bigger there was a certain complexity around that in terms of customer choices, and it’s just got worse now,” said Steve White, vice-president of worldwide channels and alliances research for IDC, while presenting the IDC findings to a room full of executives representing some of Canada’s biggest technology vendors and their channel business Sept. 19. “I think this creates an opportunity for you and your partners to be able to help people along that road-map.”

Back to basics

Channel players are performing more activities than ever before. It’s added value to their business, but it’s also left customers and other partnering companies scratching their heads as they review the evergrowing list of technology partners, hoping to determine who they should turn to and why. Salespeople on the front lines are going through a significant adjustment phase as they try to distinguish their products and services from the competition.

Tracey Hutchison, director of partner sales at Cisco, said it’s something his department is dealing with right now.

“We can go up to a customer and say ‘we’ve built the fastest servers in the world’ but who cares? Every vendor is going to tell them that,” he said.

Potential customers want to know exactly how a product or service is going to improve their business, and in today’s era of vendor overload, they care very little about specific features and specs, added Jim Barnet, director of sales and marketing at Fivel Canada. Sitting next to business leaders and planning, researching and recommending technology products to achieve a specific business outcome is where success is found.

“It could be gerbils in the closet or hamsters on a wheel, it doesn’t matter to me. As long as it improves my business objectives,” said Barnet, citing what he thinks is most customers’ train of thought.