The two main information technology channel challenges for 2016

Your product is a crucial part of your business model, but there are other building blocks that are just as important.

I cannot predict the future, so I’ll leave that to others.

But I can with a 100% certainty tell you what the two major challenges will be in 2016 for information technology companies that want to serve their customers through an independent channel of resellers.

Challenge number 1

In 2016 a vast number of information technology companies will consider moving from a direct to an indirect go-to-market approach. Giving up the control, the revenue and the gross margin that the direct go-to-market approach provides in exchange for the scalability option provided by the indirect go-to-market approach is a difficult journey that often leave companies completely ripped off.

An example of a successful direct to indirect go-to-market migration is the amazing turnaround of Secunia. In January 2016 I will realise a series of post describing this turnaround and I can assure you an exciting learning experience from a company that went from a direct to a two-tier indirect go-to-market approach in just two years. This exercise was undertaken to ensure renewed growth and profitability from an unfortunate situation of declining revenue and severe losses.

Stay tuned for the details.

Know what you are doing

Secunia hired a new CEO that brought solid experience with indirect channel building and management to the company. If you set out to build an indirect channel then knowing what you should do and expect will help you design a realistic strategy and help you read the early feed back and adjust swiftly.

If you don’t have this experience within your company I can recommend reading my 2015 Amazon #1 bestseller “Building Successful Partner Channels.”

Challenge number 2

In 2016 most information technology companies will continue believing that their channel partners will figure out for themselves what it takes to find, win, make, keep and grow happy customers on their behalf.

Reality will prove them all wrong.

Channel partners need substantial help and guidance before they have a solid business model in place that allow for repeatable and growing sales of any new product and they need ongoing support to maintain the focus and keep growing.

Learn from the most successful channel partnerdriven information technology company

Microsoft has released a very comprehensive web site titled “Smart Partner Marketing” aimed at helping their thousands of partners running better businesses. Microsoft is the undisputed global leader in building and managing an indirect channel ecosystem. Working with channel partners is a integrated part of the Microsoft DNA and their success is closely related to how many partners they have and to how these partners perform. You should therefore listen closely when someone like Microsoft invest in a web portal with content that is without any direct relationship to their products.

“Using a channel of independent companies to find, win, make, keep and grow happy customers on our behalf has a long tradition in the software industry. For some software companies the indirect channel has been a major contributor to global success, but for most software companies making it work remains a depressing and constant struggle.”

The quote above is opening five videos that I have recorded for the Microsoft Smart Partner Marketing web site and that will be released in January 2016. These five videos will give you the basic frameworks for building and managing a successful partner channel.

The one image worth remembering

You can learn a lot about building and managing channel partners from companies such as Secunia and Microsoft, but if you are looking for a simple image of “the big picture” that can help you release it in 2016 then this is it:

Always think “business model.”

Your product is a crucial part of your business model, but there are other building blocks that are just as important.

When you choose to use independent resellers (in a one- or two-tier setup) to find, win, make, keep and grow happy customers on your behalf then you introduce a third party business model into your own business model. Keep that in mind and use this framework to review your initiatives before you execute them and then use the framework again when you review the results and take corrective actions.

I wish you all the best for the new year and sincerely hope that the indirect channel will release  its’ scalability potential propelling you towards global market leadership.

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