The State of XaaS Channel Partnerships 2024

The State of XaaS Channel Partnerships 2024

If you’re seeking to understand channel partnerships’ pivotal role in driving ARR growth, you're in the right place. Welcome to “The State of XaaS Channel Partnerships 2024” report, an industry update on the new normal for vendors and partners in subscription-based XaaS (technology as a service). 

This report is for technology vendors striving to maximize their return on investment in partner enablement and incentives. It’s crafted for visionary leaders, ambitious sales executives, and innovative marketers trying to drive XaaS success through strategic partnerships.

Dive into our insights and discover why many vendors are often disappointed with the results of their investments in partner ecosystems. More importantly, learn what is working—successful strategies vendors implement to leverage partners for ARR growth.

Ready to learn the new normal for vendors and partners in the world of XaaS? Sign up for our TSIA portal today and gain exclusive access to “The State of XaaS Channel Partnerships 2024.” Embark on this journey with us and redefine the future of your partnerships in the XaaS landscape.

This blog will explore:

Smart Tip

Staying ahead in XaaS and channel partnerships means understanding XaaS from your partner’s point of view. Vendors often expect partners to make three significant shifts to their business model, and understanding a partner’s perspective will inform strategic decisions and how you optimize your channel investments.

Embracing the New Normal: The Parallel Transformation of Vendors and Partners 

This past year, the world collectively exhaled as the pandemic ended and society officially entered a “new normal.” Just as the pandemic caused drastic changes worldwide, the technology industry has experienced unprecedented disruption due to XaaS (technology as a service).

Remember the time before XaaS? Technology vendors and their partners reaped the benefits of a transaction-based revenue model, thriving on hardware sales and perpetual software licenses. This model was straightforward, profitable, and well-understood. However, XaaS challenged longstanding practices, signaling a move toward subscription-based offerings that promise more flexibility and scalability.

As such, a new normal is on the horizon for technology vendors and their partners—a new normal for financial incentive models, partner enablement practices, and XaaS offers that drive partner profitability. As you move forward, the lessons learned from adapting to these trends will undoubtedly shape the future of technology sales and partnership models.

This new normal promises an exciting opportunity for growth and innovation. Your journey through the transformation that XaaS brings is about evolving business models, forging different partnerships, and unlocking new avenues for success.

Navigating the Shift: Overcoming XaaS Challenges in Partner Ecosystems

As the digital landscape evolves toward XaaS, so does the approach to selling technology solutions. Various challenges have emerged as we pivot to this new model, particularly regarding channel partnerships. Understanding these hurdles—and how they directly affect you—is crucial in navigating the path forward.

The Partner Performance Gap

According to TSIA’s research, revenue drops 40 points when selling XaaS through partners compared to traditional transactional sales. This significant dip highlights the need for more alignment between vendors and partners. For you, this means recognizing the need for a strategy that bridges this gap and ensuring your offerings align with your partners’ capabilities and motivations.

This challenge is rooted in what TSIA calls the “Partner Parallax”—when technology vendors fail to see XaaS from a partner’s point of view. Vendors envision a seamless integration of the LAER (land, adopt, expand, and renew) model, expecting partners to generate new revenue streams effortlessly. Conversely, partners often see XaaS with the skepticism of decreased revenue, increased costs, and increased risks. If you’re facing resistance or lackluster performance from your partners, it’s time to consider whether your expectations genuinely align with their realities.

Training and Enablement Missteps

Efforts to empower partners with adoption playbooks are a step in the right direction. Yet, TSIA’s findings reveal a hard truth: These well-intentioned tools are often ineffective and do not move the critical recurring revenue metrics. This means vendors invest in resources that partners don’t value or use. The takeaway for you is straightforward: Training and enablement strategies need a fresh, data-backed approach focused on actual partner needs and outcomes.

Reimagining Financial Incentives

Incentives are powerful motivators, but only if aligned with desired outcomes. While discounts might seem attractive, they can inadvertently undermine the very goals you’re aiming to achieve. Moreover, the absence of incentives for crucial post-sales activities (e.g., customer success) underscores a significant oversight. For your strategy, this means reevaluating incentives to ensure they foster behaviors that support the entire customer life cycle, ultimately enhancing net retention rates.

Creating Partner-Friendly Offers

A fundamental truth is at the heart of the challenge: XaaS threatens partner profitability. Despite various attempts to redesign partner programs or introduce new incentives, success remains elusive if partners don’t see how to make money with a vendor’s XaaS offer. This calls for a paradigm shift in how XaaS offers are designed and marketed to the channel, putting partner profitability at the forefront.

As you forge ahead, remember that the journey to XaaS success is collaborative. It demands a deep understanding of your partners’ perspectives, tailored support strategies, and a commitment to aligning incentives with long-term goals. Addressing these challenges head-on will pave the way for a thriving, mutually beneficial partnership ecosystem.

Turning Challenges into Opportunities: Your Next Steps

The path to success with XaaS and partners is both complex and rewarding. From bridging the partner performance gap to reimagining incentive models that genuinely motivate, the journey toward a thriving XaaS ecosystem is paved with insight, innovation, and strategic alignment.

But what if you could unlock even more insights and strategies to navigate these challenges and turn them into your competitive advantage? Imagine having a comprehensive roadmap that precisely addresses each hurdle, backed by data, real-world examples, and actionable recommendations.

The good news? Such a resource exists.

Access the full report, available exclusively on the TSIA portal, to further explore the world of XaaS channel partnerships. “The State of XaaS Channel Partnerships 2024” highlights a new direction for success for vendors and partners; it’s designed for leaders who refuse to settle for the status quo.

By reading the full report, you’ll gain unparalleled insights into:

  • Strategies to align your offerings with partner capabilities and drive mutual growth.
  • Innovative approaches to partner training and enablement that resonate with and empower your channel partners.
  • Refined incentive models that align with long-term success for both vendors and partners.
  • Keys to designing partner-friendly XaaS offers that boost profitability and encourage adoption.

Don’t let the challenges of today’s XaaS landscape hold you back. Arm yourself with the knowledge, strategies, and best practices to transform these obstacles into stepping stones for growth and innovation.

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