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XaaS Channel Optimization

Building a Sustainable Digital Partner Channel

Achieving Success in the New Digitally-Enabled Ecosystem

4 min read
By Anne McClelland
We can all agree that a lot has changed in the last two years. We work from home and struggle to “schedule time” to stretch our legs and get some exercise. We don’t know what’s in style to wear for our Zoom meetings because we haven’t been shopping in a store to know what style is in. Our work/life balance now consists of making sure we have a scheduled time for dinner with the family and carving out time where we won’t be at our computers.

But what about our customers? Many of them attempted to go back to the office, only to find themselves back in their home offices due to new COVID variants. Our customer prospects in the tech industry are in flux, and getting their attention, especially through traditional means, is really hard. This means if you’re going to re-fill the funnel for you and your partners, you’re going to have to do it digitally.

It’s blatantly obvious from the data TSIA analyzes that those who have cloud and consumption-based offers are going to “win big” and those who do not will struggle. Who will be the “Haves and the Have Nots” of the Digitally Enabled Partner ecosystem?

Up-to-date Traits to Succeed in Tech

Thomas Lah and JB Wood co-presented “The Haves and the Have Nots of the Technology Industry” at the May 2021 TSIA Interact conference. As the industry is always changing, so must our approach and best practices in order to be a “have” and succeed. Additionally, they addressed how to avoid being a “have not” and miss out on growth and revenue opportunities. In their presentation, they outlined attributes of each group:
The Haves of the Technology Industry
  • Growing top line revenue at 10% or greater.
  • Have a revenue multiplier of greater than or equal to 4X (i.e., a market cap that is at least 4 times their annual revenue).
The Have Nots of the Technology Industry
  • Struggling to grow top line revenue.
  • Have a market cap that is not much more than annual revenue or lower.
These are good markers for all sectors of businesses to consider, especially those working with partner channels. But identifying whether your customer is a “have” or “have not” is only the first step. The question becomes: who on the technology provider side of the house will provide the tools for their partners to be successful, and who will not? What are the attributes of those who will and those who will not?

Filling the Prospect Pipeline in a Digital Landscape

A main factor contributing to partner channel success is ensuring pipeline flow. One of our TSIA members said that in the first year of COVID there was a solid enough pipeline that they could make it a “decent” year in 2020 and first part of 2021. And while we have seen some “up ticks” in business in 2021, much is uncertain and end of year earnings for many companies have yet to be announced. The need for tech companies to fill their pipelines with new, qualified opportunities is becoming an emergency predicament for both vendors and partners to deliver revenue growth and potentially to just survive in 2022.
 
Product and Service Revenue Chart
Service vs. Product Spending and Revenue Chart

Those sales and services that are enabled by their technology provider partners to engage new prospects in the digital landscape will be the ones that survive the expected turbulence of the next few years.  Creating an increased influx of qualified opportunities into the pipeline has always been important, but translating that to a digital ecosystem is now crucial  as economies and geo-political machinations ride the waves yet to come.

Adopting a Consumption Model

We all know that technology customer buying patterns are changing. Business executives expect the experience to be much like how it is when they’re buying consumer technology, which means a consumption model. They expect to have what we call a “low friction land” experience, making it easy for them to try, buy, and expand if they like the solution, and an easy “out” if they don’t  get what they expected.

Whether it be “Device-as-a-Service”, “Software-as-a-Service”, “Contact Center-as-a-Service”, “Managed Print-as-a-Service” or “Industrial Data-as-a-Service,” there are many different ways to deliver technology as a service and meet the expectations of buyers at the same time.

The key to being successful with “as-a-Service” is determining the go-to-market model that best meets customers’ needs, with the rising trend being the consumption model. It is  important to engage your ecosystem in ways that give partners the opportunity to make money in and surrounding your XaaS offerings. This needs to be built in by the technology provider from the very beginning. If not, it becomes an inhibitor to success later on when they try to “bolt on” the partners to the pre-existing XaaS offerings or suite of offerings.

Examples of Digital Success for Partner Channels

To help us better understand what success in the digital landscape looks like, here are n examples of technology providers who are driving business outcomes for their customers. We see them facilitating a flywheel effect of partners surrounding their XaaS offerings that give partners  ways to drive revenue and profit for their company. They do this l while encouraging the consumption and adoption of the tech vendor’s platform, and are doing so digitally.
  • Salesforce: They are well known for their AppExchange, which is the instantiation of their partner ecosystem presented as a marketplace which is searchable by industry solutions or horizontal business solutions. It is projected that approximately 70% of Salesforce CRM customers use another application on the AppExchange. Also, in case a customer needs help with implementation, they are doing an excellent job of featuring their certified consulting partners too. Customers win because the applications on the AppExchange are high-quality (validated by Salesforce) and go through security compliance checks.  It’s not only easy to purchase complementary app’s to your Salesforce platform through the AppExchange, but you are also getting high quality to boot.
  • Microsoft AppSource and Azure Marketplace: Microsoft has thousands of partners from its traditional partnering model that are transitioning over to support the growing list of Microsoft cloud offerings. In addition to that partner ecosystem, Microsoft has had a heavy emphasis on onboarding ISVs including very small, innovative start-ups into its AppSource and Azure communities to drive more application content based on Microsoft’s platform. This gives customers the opportunity to try and buy many different types of applications that integrate into Microsoft’s cloud offerings. For small partner companies leveraging Microsoft’s breadth of partner perks and program opportunities, they can receive many benefits and world-class visibility to Microsoft’s loyal customer base.

Takeaways

The key that we see with engagement between partners and technology providers such as Microsoft and Salesforce is the power of digitally-enabled partnering around cloud offerings:
  • Partners get the reach no matter where the customers are located.
  • Partners have the ability to sell digitally (so important now that we are in this COVID era).
  • Partners have the ability to offer low-friction land options fueled by a big brand presence.
  • The more partners onboarded into the digital marketplace, the more application and content choices for customers which drives platform consumption.
  • Partners can engage in a symbiotic ecosystem that is providing excellent opportunities for customer (aka prospect) visibility.
If your company is working on your digitally-enabled partner strategy and funding its execution, you will be well positioned to be one of the “haves” of the technology industry. Your company will be prepared for both selling cloud consumption offerings and driving the “adopt – expand – renew” lifecycle of XaaS customer engagement with your customers with and through partners.
 

 October 5, 2021

Anne M. McClelland

About Author Anne M. McClelland

Anne M. McClelland is the vice president of XaaS channel optimization research for TSIA. In this role, she works with closely with member companies to deliver research and advisory programs that help them optimize their channels to drive incremental revenue at scale for XaaS offerings. Throughout her career as a global partner and channels executive, Anne has built new partner organizations from the ground up, driven revenue from new partner communities, and launched programs and tools to support these partner efforts.

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