The Channel Will Look Different

In just a couple of years the channel will look very different. This week the partner M&A activity ramped up with 2 agencies cashing out. NXTSYS and M2 did deals with AppSmart and Upstack, respectively. This will continue since many partner businesses have been at it for 15 years or longer. Quite a few have been at it for 25 to 30 years.

The channel isn’t the same as it was. The vendors are different – consolidated (Lumen), bankrupt (Wind, FTR, Fusion), can’t make up their mind what they are (AT&T and VZ). The buyers are changing. The way people buy and what they buy are changing. That’s a lot of shifting underneath some shoes that have been doing this a long time.

AppSmart, Upstack and others offer a way to ease into retirement (sort of). JD Wentworth style if you will.

It was easier to start an agency pre-2005. The commissions were better because the invoices were higher. Network and voice pricing has dropped every year since. All the replacement products, like SD-WAN, actually turn your big commission check (for MPLS) into a smaller check – perhaps the customer is happier. Perhaps. Jury is still out on if a 4G and broadband pipe can replace DIA.

Even UCaaS pricing is collapsing. Zoom phone has had a hand in that.

The next wave of partners will not be full time salespeople. They will be much more like referral partners who want to get paid to refer services that are ancillary to what they are doing on a project. MSPs that have not gotten into UC yet, probably won’t. TEM and CPA firms will help lower bills and help choose the next network vendor, but vendors won’t get much say in that — and they won’t be able to do the end of month check in. You know, when they call to ask, “Got anything for me?”

The next wave of partners can’t really make a living off selling $1000 deals. It takes too many deals – and it requires just too much work to get the deal installed and billing. A couple deals of mine recently have taken over 500 emails! So if they can’t make a living selling cable and 5G (*cough*) while UCaaS is fast approaching sub-$15 per seat, what will they do? Other things. Consulting, project management, software dev, API integration, and so on. That will be the “real” job. The selling services as a partner will be a side hustle — like it has been for all those AEs and channel managers all these years!!! (you know who I am talking to!)

As master agencies and VADs merge – Tech Data/Synnex, AppSmart+Co – do you think the service gets better for the partner? There has NEVER been a merger in telecom that worked out as expected. Never. There are hardly any real synergies except for the redundant people you fire. The combined entity has to figure out how to merge unmergeable systems. Everything under these circus tents is thought to be like Cirque du Soleil but is really Keystone Cops. That’s no fun for employees, partners or customers. And it is coming to a head at a few places.

Lots of reasons to exit the channel. There is a ton of opportunity but to really take advantage of it, a partner would have to add new skills. For example, CyberSec certifications, Microsoft courses, maybe learning to code, and sales training.

Who will pay for that?

And rent/housing, gas, food, health insurance rates are all rising. W2’s look better and better. It will be interesting to see what the channel looks like in a couple of years. It won’t look like it did pre-pandemic.

PS This may not be a factor at all because one master agency claims to have 9000 partners.

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