2112 Channel Forecast Predicts a Good 2017

Channel partners are moderating performance expectations amid a shifting technology market, but still expect growth this year.

By Larry Walsh

Despite technology evolutions and disruptive business models, the channel remains healthy and will continue to grow through the next year, according to the results of the 2017 Channel Forecast by The 2112 Group.

The annual report published by 2112 finds the average partner grew revenue 16 percent in 2016, meeting the expectations set at the beginning of the calendar year. Partners reported steady increases in professional and automated services – cloud and managed services – and even saw a small increase in hardware sales.

For 2017, seven out of 10 partners expect growth of at least 6 percent, and the average anticipated growth for the year is in the range of 11 percent to 15 percent. If history is any indicator, partners will grow at or close to the rates they forecast.

[ctt tweet=”6 #ITchannel tech trends: cloud computing, mobility, Big Data, automation, cognitive computing, & IoT.” coverup=”UrXcU”]

Partners are growing, but their confidence is shifting. At the beginning of 2016, 93 percent of solution providers expected positive growth (6 percent or more) in the coming calendar year. In 2017, that number decreased to 72 percent. While a supermajority still believe growth is possible, the 2112 Channel Forecast shows a moderating of expectations, a result of the shifting technology market and pressure on partners to change their business models.

The channel is feeling the gravitational pull of six major technology trends – cloud computing, mobility, Big Data, automation, cognitive computing (AI), and the Internet of Things (IoT). While the end-user market is steadily increasing its consumption of these technology products and vehicles, most channel partners are increasing their efforts around and investments in conventional products and services.

All of these disruptive technologies remain dependent upon legacy platforms, opening short-term opportunities for partners. The long term, however, presents a larger problem for partners that are struggling to find sales and technical talent to fuel their businesses, as well as find their place among these transformative technologies.

The result of this pressure is a moderation of expectations among partners. The percentage of channel partners forecasting growth of more than 20 percent in 2017 fell by 15 points. And the volume of partners forecasting a loss or level performance increased by 9 points. This change is a reflection of shifting expectations amid new realities. As some partners invest in transformation or reap the rewards of investments they’ve already made, they’re adjusting expectations from losses and weak growth to positive growth. Conversely, other partners that aren’t making such adjustments are getting more conservative.

[ctt tweet=”Trends reveal evolving partners getting stronger – legacy partners  challenged.” coverup=”Fby2c”]

“Tougher, but not impossible” is probably the best way to describe the channel in 2017 and beyond. The trends revealed in the 2112 Channel Forecast show evolving partners getting stronger while legacy partners that remain focused on commoditized technologies are challenged. Over the next two to three years, 2112 expects these trends to reshape the channel landscape, marginalizing resellers and giving more value to service-focused organizations.

The bottom line: 2017 is shaping up as a good year for the channel, despite the challenges ahead.

2017-Forecast-Channel---Cover-for-hpThe full Channel Forecast report includes details on:

  • Acceptable Rates of Growth (key channel performance indicator)
  • Length of Sales Cycles
  • Partner Revenue Sources
  • Product Profitability
  • Partner Growth Investments
  • Technology Product Growth Potential
  • Perceptions of Vendors’ Attitudes Toward the Channel
  • Value of Channel Program Features
  • Expectations Beyond the Numbers

The full details of the 2112 Channel Forecast for 2017 are now available in the 2112 Library. You can download a complimentary executive summary (click here) or purchase the full report (click here). For a limited time, 2112 is offering summary briefings; to schedule a forecast review, e-mail Kathleen Martin.

Larry Walsh, The 2112 Group

Larry Walsh is the founder, CEO and chief analyst of The 2112 Group. Follow him on social media channels: Twitter, Facebook, LinkedIn.