Channel winners will be those who create partner ecosystem founded on advocacy, not traditional IT solutions.
The channel is in a historic market inflection as it evolves into “the ecosystem.” Multiple converging developments are driving this inflection, from transient supply-chain woes to a permanent, generational shift in buyers and companies demanding different kinds of value be delivered in new ways. The pandemic accelerated the inflection. Now it’s being driven faster and deeper as the SaaS software industry enters the dreaded Valley of Uncertainty.
That’s the good news: We are in a crisis . . . of opportunity.
Four years ago, 76% of global business leaders told Accenture their then-current business model would be unrecognizable in five years. The pandemic and its aftermath made 2018’s prophecy come true early. The channel business model of 2018 is certainly unrecognizable.
The visual metaphor of “channels” — inflexible, geometric lines connecting a company to a few other companies that resell its products — has been replaced by a sprawling, brawling, open-air souk where companies combine opportunistically with ecosystem partners to imbue each other’s products and services with greater business value, creating stronger solutions, consistent value and deeper satisfaction for customers, and more revenue for themselves.
As long ago as his channel predictions for 2021 (written in 2020), the former Forrester analyst Jay McBain (now of Canalys) reported such market giants as Microsoft/Azure, Google Cloud, and Salesforce were luring ecosystem partners by stressing the potential additive value – $4.65 to $9 – available to partners for every $1 of cloud project spend. Ecosystem partners would realize this revenue by wrapping additional hardware, software and services around those central cloud dollars.
With the inflection’s evolution from channel to ecosystem accelerating, the core question becomes: with so many companies seeking partnerships to build optimal ecosystems, how should a smart organization choose winning partners?
Somewhat counterintuitively in this free-wheeling, open-air marketplace, strategic discipline plays a central role.
Here are seven rules to evaluate partners for a software-as-a-service (SaaS) company:
As we enter uncertain times, I encourage my team — and every team in the marketplace — to take advantage of this crisis of opportunity and go on the offensive. Disrupt yourself radically, all at once. Rip off the Band-Aid. What better time than now for a bold new direction?
Bob Layton is chief channel officer at eSentire. His 20-plus years of channel experience includes stints at Digital Defense, Centre Technologies and Alert Logic. You may follow him on LinkedIn or @eSentire on Twitter.
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