I covered much of this earlier in my post “Is the Channel Dying“. But yesterday at Cloud Communications Alliance event, I have never heard someone spout so much incorrect information. As someone said, it is opinion, but it is wrong.
The Channel is many business models. If you treat MSPs like Agents or like ISVs, you will miss the boat.
The Channel does not supply Demand. It fulfills demand. The demand is created by the vendors.
The channel for the most part supplies SMB. Not SME. Not Enterprise. For most of my 25+ years in the Channel as a VAR, Agent and Consultant, Mid-Market and Enterprise were mainly protected accounts – by AT&T, Verizon, Lumen, Cisco, Microsoft, Dell, Xerox, etc.
The MSP will win. This might have been the only thing she said that was true, but even that is subject to how much PE and M&A enter that space. There are 62K MSPs. Go look at the CompTIA data. 85% of them do under $5M in revenue and service the small business!!! OH! And they bill monthly. What do you think Datto, Kaseya and ConnectWise systems do? They bill monthly for RMM.
I got to hear Janet say the Agent was dying again. One day she may be correct. So far she is wrong.
Are we aging out? Yes. Is the recurring commission model dying? No.
Will Agents become influencers? I don’t see too many successful affiliate programs, so doubtful. People have zero memory of the Linkshare-CJ days, so we will probably repeat those mistakes soon.
Telarus, Avant. TD Synnex, Ingram Micro, CDW and D&H are not the same. At all.
Ingram Micro, Scansource and TD Synnex are VADs. They are in the warehouse game. They are true distributors of software licenses and hardware. Ingram and TD have divisions that are brokerages and cloud marketplaces. Neither of those divisions approach what they make on the VAD side yet, despite years of trying. For TD, Advanced Solutions encompasses cloud and brokerage — or their recurring business.
Scansource is more like Ingram than like Telarus. Scansource may do $300M in commissions on telecom recurring services, but they do $3B in moving hardware and licenses. TD Synnex moves $14B per quarter. TD does $8B in the US.
“TD SYNNEX’s 23,000 co-workers are dedicated to uniting compelling IT products, services and solutions from 2,500+ best-in-class technology vendors. Our edge-to-cloud portfolio is anchored in some of the highest-growth technology segments including cloud, cybersecurity, big data/analytics, AI, IoT, mobility and everything as a service.” That’s the brokerage and cloud marketplace – the recurring EaaS. TD and Ingram bill VARs and MSPs (and other partner types). They do not bill the end user. Neither does Scansource, because the brokerage does not bill for services either! The vendors bill the end users and pay a commission to the brokerage.
CDW and D&H sell direct. That is the difference. Period. They were like Sears and Service Merchandise – they had catalog sales.
Scansource did screw up the NewCo announcement. I wrote about that HERE. All of the brokerages have bought bases in one way or another. Do the TSBs have a problem? Yes.
700 vendors have entered the channel in the last 5 years. Even if they gave $1000 to each TSB, that would still be a lot of money. TD has more than 2500 vendors to pay for the privilege of distro.
Will commissions get cut? Already have. 8×8 and Dialpad lowered commissions on new sales two years ago. There were probably others.
Will AT&T and Verizon shutter their channel? They have waffled on the channel, but they have not closed it. The channel is a significant piece of the SMB pie. There are a lot of intricacies of the channel at a giant. Some years they co-sell. Some years they don’t. Is there abuse of that? Yes. Does the abuse outweigh the good? No. I only know of a handful of agencies that have been shut off from VZ and AT&T.
She forgot to mention Bluewave and Upstack. But Bluewave, Upstack and Bridgepointe are a different vehicle from Telarus and Avant. They are rolling up agencies for a direct play. Telarus and Avant are still largely brokerages.
The TSB only has 2 revenue streams – MDF from vendors and commissions from sales (which they pay out at from 50-95% to partners). They are looking for other revenue streams to pay back the loans from PE.
While they all look alike, they are all vehicles – but some are sedans, some SUVs and some crossovers.
Marketplaces. TD, AppDirect, Ingram and Pax8. Pax8 is a pure play. They are at $1B in ARR. How much do you think they get to keep of that? You get pennies from the vendor that you share with VARs, MSPs and other partner types. The marketplaces have to pay for developers, billing and security.
Microsoft talked about wanting Agents to sell Phone licenses. This is as screwy as everything I heard during the session at CCA24. If you do not understand the Channel – its vehicles, the partners, the business models – then please go sell direct.
If you think an unpaid sales force shouldn’t get recurring commissions as long as the customer is paying you, then have a different partner agreement (and see how that works).
If I heard one more person talk about partners sitting on yachts, I would have screamed. Most partners who sold their business are back selling. Most did not get yacht money. Even Ian and Drew aren’t sitting on a yacht. When you make these comments, it shows contempt for the people you are hoping will “partner” with you and represent your company and services to the market. If you feel this way, go sell direct.
On SPIFFs: No one is forcing you to pay SPIFFs. If you think you have a unique service offering or bundle or widget, by all means take it to the market with a different payment plan to the channel and see how that works.
When people don’t understand the channel, and they believe the stuff that was being thrown out yesterday, THAT is why your partner program is lagging.
If your Partner Program isn’t producing the results you expect, let’s talk. I have helped a number of Partner Programs improve, grow, and re-strategize.
You can find me on twitter/X @radinfo or on LinkedIn call me at 813-963-5884 to discuss this with me.