In some ways, the major vendors – Lumen, Comcast, AT&T and Spectrum – created the current TSB problem. The TSBs are now too big. They cost millions in MDF. But the vendors wanted to work with just a handful of brokers. Those brokers morphed into what we have today. Now powered by private equity investment and all that entails.
Upstack was going to be a selling agency with a software app to make procuring telecom and cloud easy for businesses. Then they started signing up vendors, like the new “next-gen” agreement with Lumen. (What is next-gen about this agreement?) Upstack is buying partners and now signing direct agreements — and still whistling about the software that is going to amaze buyers.
Upstack doesn’t explain how the partners fit into that software play. They haven’t built out that software yet. We haven’t seen any major vendor allow public display of pricing yet. When I used to blog about AT&T specials, AT&T Legal would track me down and say take it down. Maybe it is different 10+ years later.
My biggest issue with Upstack is commissions. Since they acquired GCN, it has been a nightmare. No on-boarding. Do I have a Channel Manager to help with quotes, orders, commissions? Not that I know of. How do I request quotes? No idea. Commissions? They haven’t gotten them right all year. My personal experience is a laissez faire attitude towards commission questions. Not been a good partner experience (PX).
While the TSBs take on debt and PE money – and try to figure out the mouse trap – vendors are looking elsewhere for growth. More vendors, including Cisco, 8×8 and Masergy, are turning to additional distribution routes to widen their partner bases. Vendors are weighing the pros and cons of joining a marketplace, because they don’t know what partner type works best for them now (or will in the future).
GoTo is a typical vendor looking at the channel. Five years ago, 5% of bookings were coming in from Partners. They were a direct first company. In 2021, 35% of bookings were from Partners. GoTo is aiming for 50% in 2 more years. That is what many vendors are hoping for to get to 50% of sales through an indirect sales avenue – marketplace, ISV, selling partner, affiliate, referral, they don’t care. Just sell my shit!!!! That’s what it all boils down to. Just sell my shit!
Vendors are playing a guessing game on where sales will come from. The big bet was always direct, but in the last three or so years, less companies are making that bet.
Several people have asked me if the solopreneur selling Agent is dead. I don’t think so. Telecom is the one decision that every business puts off for as long as possible. The very thought of dealing with changes, migrations and ports gives many people hives. The smart folks work with a partner – even a solopreneur.
Don’t forget that all kinds of partners are busy with M&A. MSPs and Agencies are busy with selling their company more than selling vendors’ services. It takes months to sell and to on-board/merge and then get down to business. This isn’t growing the pie either. It just moves some of the pie.
There isn’t any growth in the pie. There are less selling partners today than there was two years ago. There will be less two years from now. That is most sectors: MSPs, Agencies, VARs, inter-connects. M&A and retirement are shrinking those numbers.
Without TSBs recruiting new selling partners, all of this M&A means little. The feet on the street are where the sales are. The brokers and Distributors have to recruit new partners, unless they think that the online marketplace will actually replace humans.
There is $650 Million betting on a new mouse trap. A way to capture more business sales of software and telecom. Now if a marketplace did work, why did Amazon stop selling Comcast in just 6 months of trying? Why hasn’t Chime misplaced Zoom? Why did Tech Data or Ingram turn their online portal to direct selling? So many reasons for all of this. Complicated reasons.
Look at CD, which is like a value added distributor plus. CDW is a $20B company with a catalogue, ecommerce, a huge government sales force, an MSP, professional services department and a telecom agency. Why hasn’t CDW gone direct with a marketplace for cloud, data center and networking? Probably because they know that humans are required in the sales of these services.
It boils down to what Buyer is going to procure directly through a marketplace something as complicated as cyber-security, SASE, or SD-WAN? Aryaka just put a SKU up on AppSmart. Aryaka sells SD-WAN, but it is a flavor of SD-WAN akin to Network as a Service. How would a Buyer know that they wanted Aryaka instead of Cato or Verizon? I don’t know. I wonder how it will play out. I wonder how partners will work with marketplaces. I have a feeling that this all comes tumbling down and partners get screwed and have to start over.