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Partner models are changing and your XaaS/SaaS business needs to be ready to respond. Find out how the technology industry is shifting its approach to partner segmentation and what this means for you and your business.
Traditionally, partner models have been segmented by partner types. There is growing evidence, however, that partner models are moving toward segmentation by partner motions instead. There is less of a need to focus on traditional “routes” and “types” in the technology industry, and now more of a need to focus on partner gives and gets, due to “all things as-a-Service.”
We need understanding around how partners want to engage with vendors, specifically how they want to make money, and what will best complement your as-a-Service offering. Your goal should be to create a fly-wheel effect around your XaaS offering or platform.
In a poll taken during one of my sessions at TSIA Interact, I asked companies if they are in the process of re-segmenting partners. 82% of companies said they are either doing so now or plan to do so in 2021.
In the past, vendors rarely re-segmented partners. There appears to be a growing impetus to revisit our traditional segmentation, and I believe this is a very good thing. The partners are evolving. As they acquire, build, and/or partner to develop new capabilities around XaaS, they are becoming multi-talented entities in order to best meet the XaaS future.
When I speak with vendors, they tell me it is difficult to build programs because so much in the ecosystem and in the tech industry at large is in motion. I have been sensing that, but now they are seeing it too and are struggling with how and where to invest. When you know that there is so much in play, and so much “share grab,” and you don’t know when it’s going to settle down, how can you invest wisely?
The next question that I asked was, “Have you decided to add new partner types to your ecosystem?” You can see from this same audience that 94% of the companies are either doing so now or plan to do so in 2021.
Again, this is unprecedented.I have not seen such a huge shift in the partner channel ecosystem before. Typically, partner types that companies choose are fairly stable and the tech vendor’s investment focus is on driving activity productively through existing partners.
This shift is due to the XaaS tidal wave. The industry is now recognizing that there are new partner types and new partner “life forms” on the cutting edge of customer buying trends which need to be added to the vendors’ partner ecosystems.
We used to build our organizations around partner types, so we only added numbers to the existing partner types or increased our partner growth by adding partners to cover emerging geographies or by vertical focus, etc. Seeing that over 90% of the market is adding new partner types during the 2020-2021 calendar years is really fascinating.
The next question in the series is, “What partner types are you recruiting?” You can see from the graph below that 60% of the companies surveyed said they are recruiting managed service providers, while nearly 50% of them are recruiting resellers and systems integrators.
Depending on where companies are in their maturity to XaaS, the recruiting trends may be different. Companies that are newer to the XaaS evolution are more focused on the “L” in LAER (Land – Adopt – Expand – Renew). They are aggressively driving wallet share and want to find resellers who can sell consumption subscription offers on the cloud and have that sales motion and compensation expectations in the XaaS world down pat.
It appears that companies that are more entrenched in the XaaS evolution are more focused on the “A – E – R” of LAER. They are seen driving more recruitment of independent software vendors who can drive consumption over time as solutions consume XaaS platforms and users extend their use of platforms and consumption offerings.
The survey data below shows that companies recruiting in XaaS are primarily recruiting systems integrators, managed service providers, and independent software vendors. This data contains a solid mix of companies that are more mature in XaaS as well as those who are just beginning their journeys.
How many technology vendors can a fairly sizable independent software vendor handle? How many companies can they manage to stay abreast of and keep their APIs tested regularly on the new releases of the vendors’ platforms? How much time, effort, and energy will they be willing to invest in new program changes, new metric requirements, and new enablement requirements?
There is a limit. It will be interesting to watch this space as the partners choose which horses to ride and make their investments more sparingly in order to drive the most amount of revenue and profit for their own firm while providing the highest level of customer value.
If you are in the early stages of building your partner ecosystem for your XaaS offerings, you should do the following:
To learn more about this topic, read my “COVID-19 Trends Impacting Partner Communities” blog.
Post Date: November 24, 2020
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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