4 takeaways on state of it channel
TRANSCRIPT
Carolyn AprilSr. Director, Industry AnalysisCompTIA
4 Key Takeaways on IT Channel Today
Copyright (c) 2014 CompTIA Properties, LLC. All Rights Reserved. | CompTIA.org
The Big Picture in Channel Change
Low degree Moderate degree
High degree
17%
59%
24%24%
55%
22%
2012 2014
Self Assessment Business Transformation
CompTIA MPS Trustmark Value Proposition1. Validation of MPS expertise to customers
2. Mechanism to evaluate internal MPS
operations / follow best practices
3. Differentiator
Low degree Moderate degree
High degree
15%
72%
13%
20%
49%
31%
15%
48%
37%
Small channel firm
Medium channel firm
Large channel firm
Current State of Transformation by Size
Source: CompTIA 4th Annual State of Channel: Base: n=350 IT channel firms
How Far Along the Path to Business Transformation?
Primary Catalysts for Channel Business Transformation
Defensive move against obsolescence
Margins on product sales declining
Vendors pushing us to change
New financial models are more lucrative
Desire to move to a recurring revenue model
Customer demand for different services and IT delivery models
Cloud computing pushing us in new directions
23%
23%
27%
32%
35%
36%
41%
In 2010, just 37% of channel firms sold cloud solutions; today, nearly all do in some form.
Source: CompTIA 4th Annual State of Channel: Base: n=350 IT channel firms
Top Challenges Experienced with Business Transformation
1. Cash flow and other financing challenges
2. Customer education
3. Balancing existing business operational needs with new business
4. Hiring skilled staff to accommodate new lines of business
5. Need for new kinds of technical training
6. Need for sales and marketing training and repositioning
7. Need to learn new financial metrics and accounting schemes
8. Lack of business transformation roadmap
Note: rank order listings are useful for summary purposes, but should NOT be interpreted quantitatively. For example, the first-ranked item is not necessarily 8 times more important than the eighth-ranked item.
Source: CompTIA 4th Annual State of Channel: Base: n=350 IT channel firms
Copyright (c) 2014 CompTIA Properties, LLC. All Rights Reserved. | CompTIA.org
Takeaway #1Cloud is forcing fundamental
change – but take stock before moving too fast.
Cloud Computing and Channel Today
Year-over-Year Cloud Traction Positive for Channel
Cloud vs. Established Products/Services Revenue Growth
Estab-lished
growing faster
Growing at same rate
Cloud growing
faster
26%22%
50%
19% 21%
58%
Cloud vs. Established Products/Services Profit Margins
Established higher
Roughly the same
Cloud higher
21%
30%
49%
11%
24%
64%
Source: CompTIA’s 5th Annual Trends in Cloud Computing | Base: 400 channel firms with cloud offerings
Challenges Deemed “Very Significant” by Channel on Rise
Optimizing markering and sales messaging for cloud
Developing cloud expertise (technical and sales)
Deciding which vendors to work with
Cash flow/financial considerations
Initial costs (infrastructure etc.)
Balancing needs of legacy business and cloud sales
Determining appropriate business model
49%
50%
43%
46%
44%
44%
45%
54%
56%
52%
52%
56%
57%
59%
Source: CompTIA’s 5th Annual Trends in Cloud Computing | Base: 400 channel firms with cloud offerings
20132014
Steps Taken to Mitigate Cloud Transition Challenges
1. Invested in technical, sales and business training
2. Transitioned just a portion of business to cloud; scale later
3. Used third-party data center provided rather than build own NOC
4. Accessed vendor-provided training
5. Hired new sales reps to sell cloud services
6. Partnered with other solution providers to combine skill sets
7. Pursued additional credit/capital
Note: rank order listings are useful for summary purposes, but should NOT be interpreted quantitatively. For example, the first-ranked item is not necessarily 7 times more important than the seventh-ranked item.
Source: CompTIA’s 5th Annual Trends in Cloud Computing | Base: 400 channel firms with cloud offerings
Roughly half of respondents turned to a third-party data center provider for cloud in 2014, up from 31% last year.
Copyright (c) 2014 CompTIA Properties, LLC. All Rights Reserved. | CompTIA.org
Takeaway #2Make sure to understand the
implications of business model change.
Sales & Marketing Changing Times
29% 48%
21%3%
Highly effectiveModerately effectiveHit or missIneffective
Self-assessment of sales & marketing effectiveness of channel
Source: CompTIA 4th Annual State of Channel: Base: n=350 IT channel firms
MSPs are far more critical of
the channel’s sales and marketing
acumen than solution providers. Just 6% of them deemed
channel efforts ‘highly effective’ vs. 31% of solution providers
who responded favorably. Twice as
many MSPs characterized these
operations as ‘hit or miss.’
Sales & Marketing Skills Still Lag Technical Expertise
Impact of the Adoption of New Business Models, Such as Managed Services and Cloud Services, on Sales Structure
No impact
Simplifying the complexity dramatically
Simplifying the complexity somewhat
Increasing the complexity somewhat
Increasing the complexity dramatically
12%
6%
28%
27%
20%
Source: CompTIA 4th Annual State of Channel: Base: n=350 IT channel firms
1. Routine visits/interactions with existing customers to upsell
2. Marketing/business development to identify/attract leads
3. Sales proposals presented to customers
4. Outside sales rep face-to-face visits with potential new customers
5. Use of social media to attract new customers
6. Contractual terms discussed for services, including SLAs
7. Inside sales cold-calling of qualified leads
8. Purchasing outside database/customer list
Note: rank order listings are useful for summary purposes, but should NOT be interpreted quantitatively. For example, the first-ranked item is not necessarily 8 times more important than the ninth-ranked item.
Source: CompTIA 4th Annual State of Channel: Base: n=350 IT channel firms
Main Sales Activities Taken by Channel Firms
Rating Various Activities as Part of Sales Model Transition
Creating incentives to drive sales to new business areas
Performing demand generation/lead generation for new customers
Effectively rebranding/messaging as a services provider
Learning to sell to non-IT and line-of-business end customer buyers
Adjusting to different sales cycle durations
Realigning sales compensation models for reps
Hiring new sales staff to accommodate new lines of business
Retraining existing sales reps to engage in services-based selling vs. product/project sales
10%
12%
12%
18%
17%
18%
15%
10%
49%
46%
47%
38%
48%
45%
50%
49%
41%
42%
41%
44%
36%
38%
35%
41%
Major factor Minor factor Not a factor
Source: CompTIA 4th Annual State of Channel: Base: n=350 IT channel firms
Actions Taken to Sell to Non-IT LOB Executive
Source: CompTIA 4th Annual State of Channel: Base: n=350 IT channel firms
Incentives for staff to further engage with business execs
Maintain dual approach for business and IT execs to meet both needs
Hire new sales reps with experience in vertical industries
Focus less on HW/SW specs and more on total solutions
Redesign marketing collateral with more of an end-user focus
Use of social media to target non-IT executives
Sales training to enable reps to sell to non-IT executives
19%
23%
25%
32%
34%
36%
40%
49% of solution providers plan this step vs. 28% of MSPs
Copyright (c) 2014 CompTIA Properties, LLC. All Rights Reserved. | CompTIA.org
Takeaway #3Learning to sell consultatively
with a business solution or gain in mind is paramount.
Marketing: The Channel’s New Frontier
Staffing Activity for Channel Firm Sales & Marketing
Added new sales reps
Hired reps outside the IT industry
Eliminated sales reps based on business model change
Added new marketing reps
26%
34%
39%
28%
51%
44%
36%
48%
23%
22%
25%
24%
Major activity Minor activity No activity
Source: CompTIA 4th Annual State of Channel: Base: n=350 IT channel firms
Social Media Usage and Marketing Plans for Future
42% Use of social media
34% Increased use of white labeling
32% Webinars, blogs, etc.
23% Hire of marketing professionals20% No longer leading with vendor brand
or vendor certification skills to attract customers
19% None of the above
Planned Changes in Marketing Strategy
Source: CompTIA 4th Annual State of Channel: Base: n=96 IT channel firms which are using social media
Plans to Increase/Decrease Social Media Usage
35%
38%
25%2%
Increase its usage significantly
Increase usage somewhat
Maintain same usage
NET Decrease
Copyright (c) 2014 CompTIA Properties, LLC. All Rights Reserved. | CompTIA.org
Takeaway #4Cloud and other industry changes make YOUR brand the premium to
lead with.
In Conclusion: Steps to Think About
Point #1: Re-train and/or hire sales reps to sell consultatively and to focus on services and business outcomes for the customer.
Point #2: Learn to sell to the non-IT line of business buyer, who increasingly has a seat at the table in making technology purchases.
Point #3: Retool internal sales processes, sales team structures and compensation plans/incentives to fit a recurring revenue model.
Point #4: Up you game around marketing and self-branding, including the use of social media to acquire new business.
Point #5: Don’t ignore the cloud, but be smart and know your business operations today to plan for tomorrow
Source: CompTIA
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Source: CompTIA Market Research
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