ASK CHANNELNOMICS: What’s the Difference Between Channels,
Ecosystems, and Alliances?

At Channelnomics, we field questions about best practices, partner strategies, and channel programs every day. In this series, called “Ask Channelnomics,” we answer some of the questions we receive most from vendors.

Question: Hey Channelnomics, should I still be using the world “channel”? I hear “ecosystems” used more frequently nowadays and was wondering if they’ll subsume “channels.”

Answer: If you want to grow your business with partners, the answer is absolutely yes. Continue to use the word “channel” and, moreover, invest in programs that support this invaluable route to market. Here’s some background that provides deeper insight.

Every few years, a new business idea sweeps through the technology industry like a storm with the power to alter the landscape. Six Sigma did, and the same for just-in-time inventory, agile software development, and the open-office concept. Some ideas had more of an impact than others.

Ecosystems are the latest idea to take root in terms of go-to-market strategies. There’s good reason for this. The rise of online marketplaces, Everything-as-a-Service delivery models, and software subscriptions have made it possible for technology companies and sales professionals to see their routes to market in a new light, but that shouldn’t blind people from seeing things with greater clarity.

Sales channels and partner ecosystems are both important elements of a company’s go-to-market strategy, but they serve different purposes and involve different types of relationships. The same is true of alliances, which are often conflated with ecosystems.

A sales channel is a specific route to market that a vendor leverages to sell its products or services to end customers. Its primary focus is sales, distribution, delivery, and support in various forms. In a sales channel, relationships are often managed by intermediaries — distributors, technology services brokerages (TSB), and online marketplaces — that a manufacturer or service provider enlists to help distribute or sell its offerings.

A partner ecosystem, on the other hand, is a broader network of companies, individuals, and organizations that collectively create, market, sell, and provision products, services, and specific solutions. Ecosystems can include corporate alliances with global systems integrators (GSIs), ISVs, and management consultancies. Influencers that don’t sell products are generally considered ecosystem partners.

As their business models evolve, VARs, consultants, and MSPs can be both channel partners and ecosystem partners depending on a number of factors, including what they do for a specific vendor, how they’re managed, and how they expect to be compensated.

To be clear, there’s a lot of confusion over the future of channels and ecosystems. The former feels old, while the latter feels new and exciting. Many channel business leaders, for example, have amended their professional titles to incorporate the word “ecosystem.”

Channelnomics understands this thinking, but it’s important to note that ecosystems and alliances still need reseller channels to execute sales. Keeping the distinct functions of alliance partners and channel partners clear is key to optimizing your overall go-to-market strategy.

For more on this topic, see Channelnomics CEO Larry Walsh’s take on channels, ecosystems, and alliances in the recentIn the Margins” video.

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