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In late March I called a meeting of the XaaS Channel Optimization Advisory Board to find out how these TSIA members were coping with the lockdown and their new way of doing business with employees, partners, and customers. These technology vendors were, by and large, making significant investments in time, effort, and energy in their partner communities, making them feel cared for, invested in, and encouraged. 

However, when surveying the TSIA membership in July, 50% of the participants in that survey believed that vendors had not provided enough financial support to their partners during the COVID-19 crisis.

It is clear that vendors attempted to provide a lot of support to their partners. But with such unknowns surrounding the future and how this economic “black swan” will play out, vendors may have held back financial support until they could see clearly the path to the future.

At that Advisory Board meeting, the technology vendors discussed the following partner care initiatives to invest in their partner communities:

  • Personal emails from the CEO and other senior executives to all major partners.
  • SWAT teams aimed at solving the new daily issues arising with the partner community. 
  • Launching additional communications tools to drive more connection with partners. 
  • Focusing on partner continuity, including establishing program offices by time zone to help partners be connected and able to continue to work / support customers.
  • Brainstorming concepts around supplemental offerings, adjustment of terms, and enablement support.
  • Encouraging the completion of training and certification efforts.

As the Advisory Board members discussed these things they began to talk of the future. What will the future hold? How do they plan for the future? Can they plan? What will happen to the channel partners? How many will remain standing when the dust clears? If their company is “paying it forward” now, will that reap revenue and customer returns after the crisis is over?

COVID-19’s Impact on the Partner Channel

During a webinar that I held on April 1st, I asked the audience about their opinion of how COVID-19 would impact the partner channel, and it was clear that they were concerned. Nearly 60% of the audience said that partners who were not profitable prior to the crisis would go out of business.

Nearly 50% of the participants predicted a swell of acquisitions in the partner channel.and over 70% predicted that partners who were not already delivering “as a Service” customer value prior to the crisis would likely become irrelevant. And, over 68% of them believed that customers will only continue to buy from partners that deliver solutions which customers consider mission critical.

Figure 1. 

COVID-19 impact to partner channel poll results

The final question was around how their company was helping others to cope. From the data, one can see that over 75% of the companies were encouraging innovation and leveraging the company’s strengths to help others (customers, partners, employees). Additional ways to help included driving online engagement opportunities, focusing even more on customer, and partner success.

Figure 2. 

Company help poll results

In the TSIA XaaS Partner Trends Ecosystem survey which concluded in late April, we asked the question, “How are you using your channel partner differently in this time of COVID-19?” (see Figure 3)

Figure 3.

Partner Trends Ecosystem survey results

You can see from the data that the majority of companies (75%) were engaging in communications with their partners to both brainstorm with them and find out how the vendors could help the partners during the crisis. It is clear that driving more 2-way communication between partners and technology vendors has been one of the key focus areas of most vendor companies during this time.

New Challenges On the Horizon

In another Advisory Board meeting held in early May, when asked what the technology vendors were most concerned about at that time, the answers were fascinating. The discussions did not center around the “lock-down” or around the work-from-home transition as they had before, but were instead focused on new challenges that were visible on the horizon, such as: 

  • We are not prepared to predict what will be happening in the “new normal”; how will the customers behaviors be changed (short-term, longer-term)?
  • We are assessing which partners have really been the “super-stars” of this pandemic crisis and have really pulled out the stops in leading and driving value to the customers. We are assessing whether or not to revisit our spending priorities based on recent behaviors (or lack thereof).
  • XaaS acceleration is happening at a rapid rate. For those who had not started before the crisis, they are likely wishing they had done so. 
  • The rate of decision making has increased significantly, with less concern about making mistakes and more concerns about being too slow in execution. 
  • The longer-term effects on the global economy are still unknown. How this will impact customers and partners is yet to be determined. Some industries decimated which will have a ripple effect. 

What Does the Future Have in Store for Channel Relationships?

From a recent TSIA Rapid Research Response survey focused on the partner ecosystem, only 30% of the respondents said that they knew of partner companies that are either folding or being acquired. Additionally, the respondents were evenly split between whether or not technology vendors had provided enough financial support to partners during this COVID crisis.

The more interesting data centered around perspectives of the future. 

When asked the question, “Moving forward, do you believe technology vendors will pull more revenue into their direct channel?”, 40% of the respondents said “yes.” Also, when asked if they believed that customers will be more interested in Cloud and subscription-based offerings in the future, 90% said “yes,” which correlates to other TSIA surveys which include similar questions.

The final question surrounded the disruption factor of Cloud and subscription business models to the relationship between technology providers and their partners. You can see the responses below in Figure 4.

Figure 4.

Disruptors to business models poll results

Of the respondents, 90% feel that these business models will either be somewhat disruptive or very disruptive to the relationships between technology providers and their partners. This is consistent with my anecdotal findings from meeting with technology providers around the world.

The data that we collect at TSIA clearly shows that the COVID-19 crisis and subsequent lockdowns have caused a dramatic acceleration of use and investment in “as-a-Service” offerings by companies large and small. I have spoken to those serving the Financial Services industry recently and I am told that even the banking industry, who are typically insistent upon having only “on premises” technology solutions are now forced to the Cloud due to the fact that their offices are closed as a result of the pandemic.

Where Do We Go From Here? 

With the partner channel and the technology vendor community, the “rest of the story” will include partners that are truly changing their businesses to be self-sufficient from any individual vendor. They will be “super-integrators” and will be building the capabilities to help customers deal with the disparate environments of on-premise IT applications and Cloud platforms.

The partner of the future will embrace and evolve to meet the customer’s changing requirements and will become the customer’s true trusted advisor, helping them ascertain which vendor solutions will best deliver the outcomes and business results that the customers require in order to survive and thrive in the next generation economy.

TSIA is Here for You

We understand that our member companies, the technology industry, and the world at large have been impacted by COVID-19. Now, more than ever, we need to work together to get through these challenging times. TSIA is committed to providing visibility as quickly as possible into the changing industry trends and practices that come as a result of COVID-19. Visit our Rapid Research Response Initiative resource page for more information.

If you have any questions related to how COVID-19 is impacting your organization, we’re here to help.

 
 
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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.