The 2024 outlook holds promise, but stubbornly high interest rates weigh down tech market.
By T.C. Doyle
During the Dec. 19 Channelnomics Community Call, CEO Larry Walsh said growth in the IT sector is likely to outpace growth in the general economy but will continue to be impeded by interest rates and other factors before picking up in 2025.
Other mitigating factors that will challenge channel professionals:
- CIOs continue to defer new IT investments.
- Businesses are experiencing change fatigue.
- More resources are being invested in consolidation and optimization to maximize returns.
- There’s general uncertainty due to the war in Ukraine, fighting in Gaza, and upcoming U.S. presidential election.
Walsh also noted that AI, one of the most talked-about technology innovations of 2023, is actually dampening IT spending as customers struggle to formulate their strategies for putting the technology to use. While AI will impact operations throughout the industry, it’s not likely to drive new sales.
Channelnomics expects channel budgets to drop in 2024 as part of corporate cost-cutting. We also expect top-tier partner growth to suffer by the same trends holding back the general economy. The channel will continue to transform into an influence and experience medium. And we predict that vendors will increase their dependency on partners for cost-containment and productivity.
To help channel professionals better understand their opportunities and challenges, Walsh recommended that leaders keep things simple.
“Clarify program requirements and benefits,” he said. “Identify market opportunities, provide guidance for partner development, removing unnecessary policies, and streamlining processes. Also, employ automation and redirect resources as needed.”
In addition, Walsh advised channel professionals to focus on the total economic value of their business, not exclusively on margins. They should prioritize initial-sales value, attached-sales value, post-sales value, and customer lifetime value for better outcomes in 2024.
Channelnomics also took this opportunity to introduce Amy Henderson, our new vice president of client relations. In her new role, Henderson will oversee all sales and client relationships.
WHAT’S NEW AT CHANNELNOMICS
Several new content deliverables await CiQ subscribers:
PRIMERS:
The Difference Between Sell-To and Sell-Thru
Channelnomics examines the differences between two commonly embraced go-to-market business models — sell-to and sell-thru, delving into the mechanics of each, their alignment with different partner types, their benefits and drawbacks, and various factors that vendors must consider when choosing which model most effectively aligns with channel and corporate goals.
Strategic KPIs for Channel Professionals
Industry analyst firm Gartner says global IT spending in 2023 will top $4.8 trillion — an increase of 5.1% over 2022. To ensure that they compete effectively for their share of this bounty, technology vendors pay close attention to key performance indicators (KPIs) that play a crucial role in assessing the effectiveness of channel partner programs and go-to-market (GTM) strategies. In this primer, Channelnomics sets out some specific indicators worth monitoring.
ANALYST NOTES:
2023: A CiQ Year in Review
Channelnomics produced a lot of great content for subscribers in 2023. We covered the rapidly changing economy, offered insights on implementing partner program best practices, and examined the finer points of partner business models and trends. Here’s a recap.
Getting ‘Just Right’ In The Channel ‘Goldilocks Zone’
Products invariably undergo a commoditization cycle, evolving from complex, high-value propositions to simpler, ubiquitous commodities. The allure for channel partners is to find products that are easy enough for them to deploy yet complex enough to preclude direct customer installation — hence the industry adage “where there’s mystery, there’s margin.” The channel Goldilocks Zone is a conceptual tool that can spark strategic insight and guide decision-making for vendors.
Interest Rates Hang Over Tech Sector
Wall Street has recently reclaimed its leading position in the financial world, but the tech sector continues to labor under the pressure of high interest rates and debt service.
WHAT’S COMING SOON
Be sure to check out our website for new content in the coming weeks and months.
REPORTS:
The State of AI in the Channel
Channelnomics is working with Dell to define and assess how AI is influencing channel sales, partner programs, and channel engagements.
Channel Forecast 2024
As we do every year, Channelnomics will poll leading channel chiefs and partner influencers on the trends and technologies that impact them most. If you’re wondering what’s foremost on the minds of channel partners and your peers — be it marketplaces, AI, new business models, or changing customer buying habits — be sure to get your hands on our 2024 Channel Forecast report.
Join us next month for an insightful discussion on marketplaces. Watch for an invite to our Jan. 18 event at 2 p.m. ET/11 a.m. PT.
Channelnomics Community Calls are open to any channel professional and practitioner. 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 Maddie Frank at mfrank@channelnomics.com.