Annual 2112 Channel Chief Outlook finds vendor confidence in the channel waning amid transformation and economic challenges
In public, channel chiefs are typically an optimistic bunch. Their job is to promote the channel’s strength as a viable, productive route to market. In private, however, channel chiefs have mounting misgivings about the channel’s ability to execute and deliver growth amid transformation pressures and economic headwinds.
The Lowdown: According to the report released by The 2112 Group, parent company to Channelnomics, 94 percent of channel chiefs believe sales through and with partners will grow in 2019. While impressive, the growth expectation is weakening, as 15 percent less respondents expect high growth (sales increases greater than 15 percent) than in the previous year.
The Details: Channel chiefs see a number of challenges impacting partner sales performance, including a failure among partners to transform to new business models, adopt new and advanced products, and meet sales performance goals.
Vendors are investing in sales and technical training to enable partners for success, but they’re also looking for new market-ready partners to recruit into their programs. The indication is that vendors are willing to invest in existing partners, but are hedging their bets by seeking new partners that can fulfill their needs.
What vendors aren’t doing is investing in partner compensation. The number of vendors increasing product and service margins to stimulate partner sales decreased 58 percent year over year, according to the 2112 Channel Chief Outlook report.
The Impact: From the perspective of channel chiefs, 2019 indirect sales will increase, as resellers, managed service providers, and integrators are a significant piece of the vendor community’s route to market. However, channel chiefs are increasingly less interested in helping partners transform and more invested in partners that have already embraced next-generation technologies and business models.
Background: The 2112 Channel Chief Outlook report for 2019 is the second annual installment of the benchmark research series and complements the annual 2112 Channel Forecast report, which looks at annual technology sales expectations from the partner perspective. Both reports are available through 2112’s Research Library.
The full Channel Chief Outlook report contains details on channel chief challenges, investment in channel performance, margins and compensation trends, partner recruitment strategies and programs, and threats to the channel.
The Buzz: “What’s different in this year’s Channel Chief Outlook report is the shift in confidence and the growing perception that many partners have missed the evolution opportunity,” 2112 wrote in the report. “Channel chiefs and managers are known for their public optimism, which often leads to an overstating of positive outlooks reflected in the data. Privately, and in the margins of this study, channel chiefs reveal their need to move forward with service-based sales and technology-delivery models. They’re increasingly less interested in trying to bring partners forward with them. Instead, they’re focusing on the partners that provide them with the best opportunity for success.”