Channel Partners

FAL 2016

For 25 years, Channel Partners has been a resource for indirect sales channels, such as agents, VARs and dealers, that provide network-based communications and computing services, associated CPE and applications, and managed and professional services

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FEATURE TOP CHANNEL CHIEFS ON Evolutionary Imperatives TOP CHANNEL BY DAN SHAPERO D BY DAN SHAPERO 6 CHANNEL PARTNERS FALL 2016 It started with a simple question posed to supplier channel chiefs: "What evolutionary adaptations must your partners make to thrive selling digital services?" Being the hard-nosed realists they are, a few shot back: "Define digital services. What exactly do you mean by 'digital transformation,' anyway? Sounds suspiciously like spin." Fair enough. Short answer, it's about bringing to bear modern technology and processes to achieve business goals in a way that wasn't possible even a few years ago. For partners, the service opportunity is helping customers imagine what's possible with cloud, IoT, mobility and a range of new connectivity options — and then making it reality. ConnectWise CEO Arnie Bellini tossed back the question "What isn't becoming digital?" Everything is up for grabs, says Bellini. "Anything 'atomless' is an opportunity for the channel," he says. "What MSPs once managed on-premises is now evaporating to the cloud. Consider staple services for most MSPs — virus protection, spam filtering, backup and disaster recovery — all served up with zero carbon." He points out that even physical surveillance is now managed by digital services, with minimal hardware. "Digital services are the collection of critical services that enable the second wave of digital transformation happening now in every commercial firm and government agency, regardless of size," says Janet Schijns, vice president of global channels at Verizon Enterprise Solutions, who lists four technologies that will help the channel win business: SDN: Dynamic and flexible by design, software-defined networks enable innovations and ensure performance ANALYTICS: Intelligent data is what matters now. This is the next evolution of cloud and extends far beyond simple applications into areas like machine intelligence (IoT). COLLABORATION: In this next wave, collaboration is main stage. From the shop floor to throughout the supply chain, customers need to be ready to engage their customers in the contact method of their choice. SECURITY: Attackers continue to innovate, and digital services provide a great opportunity to use tech tools to stop breaches. The big risk is to those who don't embrace digital, says Schijns. For many partners, this is a lot to absorb. Considering the impact on business processes, sales cycles and technical skill requirements, surviving this digital revolu- tion takes a plan. The channel chiefs' advice broke down into five main points that together provide a road map: turn to the cloud, leverage the MSP business model, stay current with skills, and embrace millennials and channel convergence. ➊ HITCH YOUR WAGON TO CLOUD NINE "There has never been a more oppor- tune time to seize cloud opportunity," says Gavriella Schuster, corporate vice president of Microsoft's worldwide partner group. Schuster says the channel is just scratching the surface in terms of potential and cites a recent IDC study showing that partners with more than 50 percent of their revenue coming from the the cloud grow twice as fast. If you do cloud the cloud grow twice as fast. If you do grow the cloud grow twice as fast. If you do twice the cloud grow twice as fast. If you do as the cloud grow twice as fast. If you do fast. the cloud grow twice as fast. If you do If the cloud grow twice as fast. If you do you the cloud grow twice as fast. If you do do the cloud grow twice as fast. If you do the math, these partners will realize 1.5 times more gross profit and almost twice as much recurring revenue. However, selling cloud services alone isn't enough to make up the deficit of revenue from premises-based sales, says Dave Sobel, senior director of community and field marketing at LOGICnow. "The biggest evolutionary adaptation that partners need to focus on is the difference in economics in delivering cloud-based services," says Sobel. While margins can be maintained on cloud services when compared with traditional on-premises solutions, the raw revenue reduction occurring with lower cost often requires that solution providers have twice as many customers to simply maintain revenue. Using digital services as a door opener is a good start. But to gain real momentum with digital services, partners should plan to attach at least three to five times revenue from their own services for every dollar of cloud services sold. "By combining services, cross-selling and better pipeline management, the delivery of digital services can result in improved revenue growth at rates that exceed traditional solutions," says Sobel. Donna Wenk, senior vice president at Broadview Networks, responsible for channel sales, says that if you have yet to move to cloud, you might need to get creative. "The hosted IP telephony and UC services market continues to move from early adopters to the

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