2112’s New Reports Show Concern About Channel

The 2019 editions of the Channel Chief Outlook and Channel Forecast reports find the channel will grow this year, but confidence is waning as partner capability concerns mount.

By Larry Walsh

No amount of sugar is going to sweeten this message: The channel is troubled, despite a relatively rosy outlook for the year.

The annual dual reports – the Channel Chief Outlook (the vendor perspective) and Channel Forecast (the partner perspective) – essentially come to the same conclusion. While the channel is relatively healthy and continues to increase output, the lack of transformation, limited partner sales capacity, and disruption at the hands of shifting business models and advanced technologies are plaguing it.

Channel chiefs and partners are aligned in their outlook for 2019. In the Channel Chief Outlook report, nearly all vendor channel leaders expect their sales through and with partners will increase this year, with 58 percent expecting increases greater than 15 percent year over year. In the Channel Forecast report, the average channel partner projects gross revenue increasing 11 to 15 percent.

The growth isn’t the story though. A closer look at the numbers shows a distinct decline in growth expectations. Vendors are losing confidence in their existing partners’ ability to perform or deliver the revenue they need. Partners are facing greater growth challenges, as economic uncertainty, technology transformation, and shifting go-to-market models hobble their performance.

A few things come clear in the two reports.

  • Vendors are gravitating toward partners that have transformed or are transforming their businesses for advanced technologies, business models, and customer expectations.
  • Vendors see more value coming from partners delivering managed and professional services, despite those models declining in value.
  • Partners are attempting to adopt new skills and product capabilities, but not fast enough to meet vendor and market demand.
  • Partners and vendors expect more disruptions in 2019 and beyond as the industry continues to evolve its business models and routes to market.

Despite the challenges, the channel will continue to grow. Partners are and will remain a vital part of vendors’ go-to-market strategy. And new technologies and business models will create new opportunities.

The respective reports go into much greater detail on the issues and trends most pressing to channel chiefs and partners alike.

In the Channel Chief Outlook report, you’ll find detailed analysis of:

  • Channel Performance Outlook & Confidence
  • Channel Chief Top Challenges
  • Investments for Channel Growth & Success
  • Margins, Incentives & Partner Compensation
  • Measuring Partner Value
  • Partner Recruitment, Retention & Release
  • Top Producers of Indirect Revenue
  • Imminent & Emerging Channel Threats

In the Channel Forecast report, you’ll find information on:

  • Partner Growth Expectations for 2019
  • Acceptable Rates of Growth
  • Sales Cycle Trends
  • Partner Revenue Mix
  • Partner Profitability Trends
  • Partner Growth Investments
  • Value of Channel Programs
  • Partner Perceptions of Vendors
  • Best Elements of Channel Programs

The 2019 editions of the 2112 Channel Chief Outlook and Channel Forecast are now available in the 2112 Research Library. 2112’s channel experts are available to review and interpret the report results with you and your teams. Contact info@the2112group.com to schedule a complimentary briefing.

Larry Walsh, The 2112 GroupLarry Walsh is the CEO of The 2112 Group, a business strategy and research firm servicing the IT channel community. He’s also the publisher of Channelnomics, the leading source of channel news and trend analysis. Follow Larry on Twitter at @lmwalsh2112 and subscribe to his podcast, Pod2112, on iTunes, Google Play, and other leading podcast sources. You can always e-mail Larry directly at lmwalsh@the2112group.com.