The first day of Channel Focus North America with Channel Focus Latin America has concluded and it was a very full day of insightful presentations and workshops. Baptie &Company arranged some surprise entertainment during dinner this evening: a table-side magician. The magic act was an apropos choice to conclude the day given that many of the discussions revolved around business transformation which is shaping up to be a bit of “sleight of hand” for many in the channel. No one doubts that the channel and business models are changing. Channel vendors are hoping to transform their businesses and those of their partner ecosystems as effortlessly as the magician tonight transformed cards from one suit to another in front of our eyes. Both “tricks” – those of the magician and those of the channel – require practice and dedication to perfect. But unlike the magician carefully guarding his secrets, delegates at Channel Focus have been sharing information and insights to help the entire channel community grow.
Tomorrow is another full day of sharing and learning beginning with a breakfast keynote presentation on The State of the Channel. I’ll be shuffling through my deck of notes next week and while I may not pull a rabbit out of my hat, I hope to share some insights with you. Follow our hashtag #CFNA12 on Twitter for more updates from the conference.
I wish I had the magic bullet to “make revenue happen” but the title really isn’t as misleading as you might think. Transformation is rampant in the channel now as both vendors and partners try to adjust to the impact of cloud and services on the channel. As transactional, materials and goods-oriented business models give way to services-driven, recurring revenue models, the focus is shifting from business as usual to preparing the channel for this new way of life.
Vendors are addressing the issue in two areas – internal processes and external business model – and this requires that Vendors help their channel partners adjust as well. For the upcoming Channel Focus conference in San Diego, we are focusing on how to help vendors facilitate and support change for their partners. Two of the areas where we feel vendors can “make revenue happen” are in the areas of incentives and educating partners about cloud computing. Most importantly, the two aren’t mutually exclusive – each helps drive business transformation.
Cloud computing education and support covers a variety of areas, but vendors are key in helping their channel ecosystem make changes. Vendors can help partners with sales compensation, development of a wide variety of service offerings, marketing knowledge/tools and “financial re-engineering.” This last area requires serious commitment from vendors. Why? Because partners making the transition from a transactional to recurring revenue model will experience a gap in revenue/cash flow so vendors need to consider how commissions and contracts are structured to help partners through the transition period. This may mean providing incentives for subscription-based contract renewals, paying spiffs to sales teams for multiple year contracts, or providing other financial bridging compensation to select partners.
Vendors will need to look at their Partner base with a critical eye to determine which partners can successfully transform their business and be adept at the new business model – your Tier 1 partners just a few years down the road will most likely need different strengths and skills sets from current Tier 1 partners. In addition to (re)-profiling partners based upon business and technical skills required for the cloud computing model, vendors should integrate partner programs. This will enable them to analyze partner data across multiple programs and identify characteristics of successful partners.
Incentives are instrumental in motivating partners and driving the behavior changes that will help the channel transform. Incentives to drive transformation have to be targeted at more than closed deals and revenue targets because partners need to change behavior—and vendors should not just reward existing behavior and modes of business. A wide range of incentives – opportunity and deal registration, individual and team rewards, company level rebates, and MDF – can all be leveraged in ways to help partners transform their business and keep sales pipelines (theirs and the vendors) full. In a recent conversation with Tim Harmon at Forrester, we talked about deal registration and how critical it is to reward partners not just for closing deals, but for generating qualified leads. During this period of transformation, it is essential to ensure that all incentives help drive the wide range of behaviors that will benefit the channel in adapting to new business realities.
Channel Focus North America (with Channel Focus Latin America) is next week and hawkeye will be talking more about channel transformation and how incentives and cloud computing can help “make revenue happen.” I hope to see you there. If you can’t make the conference but are interested in transformation, check out our “Paths to the Cloud” webinar recording and presentation or some of our thought leadership on incentives.
Click here for our “Paths to the Cloud” webinar recording.
Click here for our thought leadership on Incentives.
Cloud computing adoption is continuing to see phenomenal growth. But the conversation has shifted gears in 2012 as businesses and their assessment of cloud computing reach a tipping point. The need for cloud computing is evident – and inevitable. But enterprise in particular is now pausing for a restorative catching of the breath as they begin to assess the appropriate use of cloud computing – what activities and data should best be stored in the cloud? What should be kept on premise? Who controls decisions about cloud computing in the organization? Rather than making a mad dash to jump on the Cloud bandwagon, decision makers are now circling the wagons and crafting formal IT plans that address the how, when, and what of cloud computing for their companies.
Likewise, the Channel is also taking a little breather – most probably to lace up our proverbial shoelaces to be ready for the serious marathon race about to ensue. HP’s announcement Tuesday about their reorganization combining the Personal Systems Group (PSG) and Imagining and Printing Group (IPG) is a perfect example of how manufacturers are positioning to consolidate resources and leverage opportunities farther up the stack. Vyomesh Joshi – who is now leaving HP – talked to Partners just last month about the need to move up the stack from hardware to supplies, to services, to solutions. This mirrors movement within the Cloud computing stack as well.
Forrester’s Holger Kisker presented information on Cloud trends and predictions earlier this month in which he discussed the movement within Cloud computing offerings as well. Commoditization is already beginning within cloud computing and we’ll see movement over the next 10-15 years as opportunities for higher margin try to stay ahead of the commodization curve. Forrester predicts the trajectory as moving from Iaas to PaaS to SaaS and finally to Business Processes-as-a-Service as the opportunities move up the stack.
For those of us working in the technology Channel, this means yet another paradigm shift. Vendors and Partners alike are seeking stable ground in the ever shifting sands. Channel revenues are shifting from transactional sales to a recurring revenue model. That means that Vendors need to not only make programmatic adjustments, but they also need to reassess the value of existing partners and target recruitment, coverage and capacity issues; the characteristics of a successful partner today may not pass the Darwinian test as the channel continues to evolve in as short a time as just a year or two from now. Vendors need to consider investing in key partners to help them transition their business – and partners likewise need to commit to vendors willing to make an investment.
Claudio Ayub and William Gilsing from our Channel Strategy team will be presenting a webinar on March 29th on cloud computing and suggestions for crafting a new cloud services channel engagement model. If you and your channel are struggling with these issues, we hope you’ll join us for the webinar.
Join us for the webinar
The calendars have been turned to 2012 and with the holidays behind us, it’s time to roll up our sleeves for a new year. I’m sure we are all looking forward to a prosperous year.
Turning the calendar also means it is time for the annual round of predictions for the industry to surface. I’m working with members of our executive team right now as we polish our own Channel predictions for the year. As part of our upcoming webinar, we survey the landscape setting the stage for the Channel in 2012. These are the six elements that we feel will ground trends within the Channel this year:
- Economic recovery
- Mobile technology
- Social
- Cloud
- Data, and
- Consumerization
Watching the economic indicators and stock market on a daily basis is enough to give anyone vertigo these days. The reality is that economic recovery for the next year is uncertain although the last few weeks have been more encouraging than the rollercoaster of November and most of December. Forrester is predicting slow, but overall positive growth with Eastern Europe, the Middle East, Africa and Latin America showing the highest growth rates and Western and Central Europe lagging the most. The channel impact will mean that most companies will plan for slow growth with longer sales cycles and budgets that may be contingent.
In 1949, Popular Mechanics indulged in a bit of prediction and hazarded a guess that “computers in the future may have only 1,000 vacuum tubes and perhaps only weigh 1.5 tons.” What a shock the proliferation of mobile devices – many handheld – would have been! While mobile technology is affecting how we play, more profoundly, it affects how (and where) we work. Gartner estimates that smartphones will outnumber desktops and laptops – combined – in a mere two years (2014). The three verticals most heavily influenced by mobile technology right now are sales, healthcare, and education. And it’s the “sales” member of that trio that may be of interest for vendors in the Channel looking for innovative ways to work with their Channel. Your Partner sales teams are often engaging with customers where they can get the most traction – on site. And that means there are increased opportunities for partner engagement and communication using mobile technology.
One of my favorite bits of trivia making the rounds over the last few months concerns Facebook: if Facebook was a country, it would be the 3rd largest country in the world with a population somewhere around 500 million (China at 1.35 billion and India at 1.2 billion lead the way). The Channel has moved well beyond the question of “if” around Social and now vendors are more interested in “how” – to use Social. McKinsey reports businesses that maximize Social strategies enjoy a 24% higher revenue growth than less social businesses. Within the Channel, Social means that engagement shifts from thinking less about “Partners” and more about “individuals” – less about faceless, generic groups of companies selling your product, and more about the specific characteristics that make the persons on your Partners’ teams an important part of your extended sales efforts.
In 2001 Tom Siebel was talking about Salesforce.com and suggested “there’s no way that company exists in a year.” Another example of a crystal ball that probably needed a refurbishing. Cloud computing is driving a paradigm shift that is seen by many to be as pervasive as the introduction of the Internet. Estimates on growth vary, but all are aggressive with the global cloud computing market predicted to be somewhere around $150-160 billion by 2013 and as much as $240 billion by 2020 (Forrester, Gartner, Merrill Lynch). The Cloud is driving a huge shift in the Channel as Partners and Vendors alike are working to adapt to a recurring revenue model of business.
The proliferation of data raises a whole host of issues for the industry from security to MDM. Bill Gates had no idea that storage conversations would graduate so quickly to terabytes, petabytes, and zettabytes in 1981 when he said “640k ought to be enough for anybody.” Forrester estimates the growth of data at 800% in just the last five years and IBM believes that business email is growing 25-30% annually (no trouble believing that prediction!). One of the key issues with all this data is that it provides no insight if it is unorganized. Channel Management teams struggle to evaluate the success of their individual programs, communications, campaigns, etc. because they often have too much data and too little insight into what it really means. 2012 should see a greater commitment to analytics in the Channel and integration of programs to yield a “single source of truth” to facilitate program adjustments and maximize Channel investments.
Technology innovation used to flow from the enterprise to the consumer market. That has reversed dramatically in the last few years as the consumer market has become the wellspring for innovation. Today 45% of employees feel their personal computing devices and applications are better than what their IT departments provide. Contrast that with the much smaller 27% of executives who have a clear strategic vision for employee adoption of consumer technologies (Accenture). Employees also expect the same user experience in business that they enjoy using their own technology – from the shopping cart and reviews characteristic of an online experience like Amazon, to the “any time, any where” availability of information. The impact of consumerization on the Channel is Partners are often looking for a similar easy-to-use experience when interacting with Vendors that they get when they use technology in their private lives.
What trends do you see populating this Channel “landscape”? You can join me and our executive team on the 11th by clicking here to find out which trends we’ll be watching this next year.
The trees are changing color here in Seattle and that means….you thought I was going to say Fall is in the air right? Well, yes, but it also means that we are all thinking about 2012 and not just those Doomsday predictions. It’s time to plan budgets and strategies for the Channel.
We talk a lot about being data driven here at hawkeye and truly believe it needs to be a part of everything we do with our customers in the Channel. For companies seeking to maximize their large investment in incentives provided to partners, access to data and the ability to analyze that data is essential. For example, one of the things we suggest to our clients is that it is not enough to just track metrics with a rebate program – a best-in-class rebate platform should be able to provide modeling to determine your financial exposure.
Next week our Chief Channel Strategist Claudio Ayub will be presenting a webinar on Channel Incentive Programs for a Sluggish Economy. Incentive programs are always of huge interest to Partners but the challenge for Vendors is to maximize the investment: who do you incentivize? Which is better – company level incentives or team/individual incentives? Claudio will look at a variety of incentives programs with advice on how to target the appropriate program to the right partners.
We’re partnering with the Baptie Community for this webinar and look forward to a lively Q&A session after Claudio’s presentation – we hope you’ll join us. Click here to register.
Next week (July 27th) is the capstone broadcast for hawkeye’s webinar series on the Data-Driven Organization. As the organizer for our webinars, I thought it would be fun to try something new this time so we’re taking questions during registration and the entire webinar is being built around submitted questions and registrants’ areas of interest. The original plan was to have two experts available to field questions. I’ve been receiving so many interesting (and diverse!) queries this week that I’ve reached out to a couple other subject matter experts and now have a panel of four SMEs for the webinar.
If you have a question you need answered this is really a great chance to get four experts focused on your issue. The panelists are Greg Osenga, Dave Hafermann, Deb Broderson, and Vaughn Aust and collectively they have a wealth of experience in the channel including analytics, ROI, data integrity, CRM/PRM, MDF, and rewards/incentives.
And, yes, I know this sounds like a shameless plug for our webinar (big blog no-no), but really, I just want to be sure I have lots of questions to keep this panel really busy for an hour! If you have a question you want to get answered, just register here or if you’ve already registered and thought of something else, feel free to drop me an email at tdelphia@hawkeyeww.com.
