Doing some planning for 2025 and thinking about what is likely to happen next year.
Let’s talk Cloud Comms first. There is a disconnect between “Enterprise” and 99% of the market. 99% of businesses are small businesses in the US. There are only 30K businesses that are Enterprise. What Enterprise wants – and has the manpower to manifest – is vastly different from what the majority of businesses want, need and can deliver on.
80% of dollar revenue growth will be in small business, which means many providers will need to re-tool their messaging for that space. UC+CC plus omni-channel plus CX plus engagement and integration are just terms that the providers use – that buyers aren’t shopping for in the SMB space, even if we re-define that space as 300 employees and lower.
There is constant talk about AI and an Agent for everyone. There has to be cloud stored data from the business for that widget to work! Many businesses do not even have a CRM! There POS is Paypal! Do you see the disconnect?
Small businesses need to move to Stripe or a platform for the business that handles billing, CRM and other simple functions. Then the phone system can integrate with that to provide REAL outcomes. Partners will do well to start helping small business with a move to the cloud in all things: the digital transformation we have been talking about.
The payoff for small business will be one pane of glass and EX! The employee having a better experience will help small business with its retention problem.
Telcos of all stripes have a SWITCH problem. Alianza buying Metaswitch didn’t mean that Metaswitch isn’t going away. It meant that Alianza would find a way to make the migration from Metaswitch to Alianza’s PaaS easier. Metaswitch is still going away.
The 700 or so telcos that use Metaswicth for copper are in trouble and no cloud platform will solve that!
With the cost of Broadworks ever increasing, margin erosion will be discussed often in 2025. The cost to run softswitches will continue to increase and margins will shrink.
Softswitch replacement will be a trend in 2026, but telcos will need to consider what softswitch or PaaS that they will be migrating to since the migration takes months if not years!
BIG MERGERS! Verizon buying Frontier. Windstream getting back together with Uniti. We will see a lot of ISP M&A as broadband works better in scale. There is $60+B in government money that will go to fiber in the ground followed by at least $20B in private equity. M&A will occur just because.
I think Starlink will try to get some of the BEAD money that the NTIA cut them out of. Amazon’s satellites will compete for those dollars as well. WISPs may be able to leverage this for some more wins.
SIDE NOTE: will all the low orbit satellites and drones no wonder everyone is seeing objects in the sky!
Now that Ingram is public again, I don’t think a VAD will go private in the next couple of years. Platinum Equity didn’t make a big enough buck buying and IPO-ing Ingram. I do think TD and Ingram could make a push with their own TSBs in 2025 as there is a growing concern about the PE-backed TSBs.
At least one PE backed agency was shopped in 2024. One PE-backed TSB was also shopped. Then its debt got pushed back from 2025 to 2026 at 13.2% interest. How long do you think these PE backed brokerages can retain talent AND pay back interest?
Rumor is that PE will take a bigger role at TSBs and try to roll back benefits like Evergreen that partners count on. When you only have commissions and MDF, partners are going to get screwed.
Other ways that TSBs could make money: events; education (if they charge for it); and charging for their software.
There are enough regional brokerages (even though they are also PE backed) that any push by the big guys can result in a bonus for regionals. This will put vendors in a bind, because a large chunk of their revenues come in via the TSBs, so what happens when that machine breaks! I just don’t see how the PE companies exit the TSBs without a haircut. There is something like $650M in PE investment in TSBs!
Channel Partner M&A was strong in 2024. MSP were bought at a rate of about 3 per week. Bridgepointe and Bluewave acquired quite a few agencies this year. I can see MSP M&A continuing because there were over 60K of them, but there aren’t many trusted advisor agencies left to acquire.
CHANNEL MANAGERS! This will be a tough year for CMs. Recruiting new partners was hard in 2024 because working through the TSBs is challenging and takes creativity, time and effort. No one likes that. So current partners will be the way to go. Keeping them selling for you will be the primary concern. Helping them with Lead Gen could go a long way towards sales and partner retention.
Conversations will be vital in 2025. How do partners want to connect? What do they want to hear about? Ask them!
Outcome stories will get the most mileage!
I think that events will have a good year but this will be peak. After 2025, attendance at shows will decline for a variety of reasons: competition/too many shows; ROI on the shows ($350 per night hotels make a show unappealing!); retiring partners mixed with M&A; and the take-aways. There needs to be a big take-away that can be converted into sales for shows to be labeled successful.
Vendors want more and more traffic, which just isn’t possible with the number of shows. [Vendors don’t help themselves either at shows because the booths and messaging sucks!] It would help if vendors had a concrete goal for a show and things like a Target Customer and a Partner Profile, but they don’t and that gets in the way of recruiting.
That’s my thoughts as 2024 comes to a close.
Look for a new ebook from me on channel management in 2025!