- February 28, 2023
- Posted by: T.C. Doyle
- Category: Blogs
New study offers insights on budgeting trends, investment priorities, revenue expectations, product and service sales mixes, partner profitability.
By T.C. Doyle
February’s Channelnomics Community Call focused on the 2023 Channel Forecast report, which offers channel professionals deep insights on budgeting trends, investment priorities, revenue expectations, product and service sales mixes, and partner profitability.
As noted during the call, this year’s report combines the best of our previous Channel Chief Outlook and Channel Forecast studies, providing readers with a unique 360-degree perspective of the IT channel. During the call, Channelnomics Vice President of Strategic Content T.C. Doyle interviewed report author and Channelnomics Chief Research Officer Chris Gonsalves on the key takeaways from the report.
“The channel remains well-positioned to navigate this rocky road ahead, but only with a disciplined approach to conserving resources and optimizing operations to further the cause of improved efficiency, increased capacity, and expanded capability for all parties,” said Gonsalves.
After tabulating results and analyzing the takeaways, Channelnomics concludes that vendors and partners alike are entering a post-pandemic economy that’s very different from the one that preceded it. While optimism remains high and opportunities abound, vendors and channel partners are adopting a “conserve and optimize” mindset, with vendors focusing reduced channel budgets on a smaller cadre of high-performing partners and partners reinvesting less while struggling with rising costs and fears of a recession.
Going into the study for this year’s report, Channelnomics was particularly keen to understand how vendor budgets that support channel go-to-market activities have changed over the past year or so. Channelnomics found that 39% of vendors plan to increase their channel budgets this year, down from the 78% that budgeted increases just one year ago. Whereas just 16% of vendors planned no change to their budgets in 2022, 45% of vendors plan to hold their budgets steady this year, while the percentage of vendor organizations that said they’ll reduce their budgets nearly tripled year over year (to 16% in 2023 from 6% in 2022).
The findings are notable given the fact that vendors expect the share of their sales through channels to increase and their direct sales to decline from 2022. Doyle and Gonsalves agree that’s for two reasons. First, vendors are conserving resources and shifting their focus from recruiting the maximum number of partners possible to investing in a smaller cadre that have the greatest potential to drive new growth. Second, vendors are optimizing channel automation technology stacks so they can better serve their engaged partners.
Meanwhile, partners have change on their minds, too, as evidenced by their planned investments in technological capabilities and sales capacities.
You can download the 2023 Channel Forecast report at channelnomics.com or, if you’re a subscriber to Channelnomics IQ, formerly known as Brainstorm, you can find a copy here.
After discussing the report, Doyle and Gonsalves spotlighted new and upcoming content for Channelnomics IQ subscribers.
NEW IN CHANNELNOMICS IQ:
- Ask Channelnomics: Each month, Channelnomics answers a pressing question on the minds of channel chiefs and professionals. This month, Larry Walsh tackles, “What’s an emerging market?” There are many ways to look at the issue, but Walsh says the key to understanding emerging markets is knowing your TAM, revenue productivity, and growth potential.
- How Partners Make Money, Part 1: In this Channelnomics primer, we take a closer look at vendors’ incentives and how they influence partner behavior.
- Changing Channels: In two new Channelnomics podcasts, Walsh discusses cloud economics with Oracle’s Ross Brown and challenging complacency with Palo Alto Networks’ Karl Soderlund. You can find both here.
COMING SOON:
- Ask Channelnomics: What are the best practices for rewarding partners when it comes to SaaS renewals? In this upcoming edition, T.C. Doyle identifies why changing terms on SaaS renewals can alienate partners if care, fairness, and understanding aren’t applied.
- How Partners Make Money, Part 2: In this follow-up primer, Channelnomics examines how partners generate revenue and profits from the sale of services they themselves create.
Don’t miss the next Channelnomics Community Call on March 21, when we’ll discuss our take on channel ecosystems. Our community calls, which take place on the third Tuesday of each month (except in December), are now open to any channel professional and practitioner. Meanwhile, if you’re a Channelnomics IQ subscriber looking to request your monthly one-on-one call or schedule your annual channel program review, send an e-mail to Laura Maziejka at info@channelnomics.com.