There was a big show floor in Vegas, but several attendees commented that it was one and done. Those vendors won’t be back next year.
Forrester’s McBain: 70% of Partners Want Out. Of course they want out: they grew old! There is a sea of gray hair walking the show floor. The channel has aged. Many are approaching 20 years in business. A business that has changed on them (and not in a good way). It is a lot harder than it was 20 years ago.
McBain says that “There are 36% fewer IT channel firms now than there were in 2008.” Sure. Microsoft and Cisco did a 180 – that affected most of the channel. One-third of these partners decided that they didn’t want to sell Office365 and Webex, and went on to something else.
If partners aren’t examining the landscape, they should. It looks as if we will relive the early 2000’s again as Bankruptcy becomes popular again. Windstream and Fusion (Birch what is this your 3rd BK?) are just the start.
Every partner that has been in the business for 10 years has been screwed by at least one vendor. Some went BK or just stopped commissions. Some changed channel strategy and cut the channel program. Some changed the terms of the contract. After you have survived all this, and with all the consolidation, musical chairs, debt and uncertainty, retirement looks really good.
“The average profit margin now is 17%,” McBain said. “A quarter of MSPs around the world are losing money … if you’re the average MSP, you are averaging break-even margins.” Certainly hardware margins are down. There is price pressure on RMM services and backup. The pricing on bandwidth is down. The vendors are feeling the same pressure!
I look at the middle business of 50-150 employees and think: is this current model sustainable?
10 years ago they bought software (anti-virus, MS Office, CRM, etc.) and they owned it. Now they rent it with their data sitting elsewhere, getting hacked regularly. Everything is an as-a-service subscription. How much of that MRC can a business take?
There are businesses that have moved to cloud and gone back when tehy realized how expensive IAAS/PAAS is. On demand CPU and RAM usage is not cheap. The total cost of ownership of UCaaS versus a PBX is still upside down as well.
Vendor after vendor trying to get the attention of a partner who will sell their stuff. It becomes white noise after a while. Most are just reselling other vendors, adding no value to the equation.
There is certainly opportunity for a channel partner if they want to diversify their business and change the way they sell AND what they sell… but it is all smoke… most of the revenue in our space is coming from the same thing it did 5 years ago!!! Network is still the most popular service – just ask cable companies! How can it not be when software is eating the world — and you need constant connectivity to see your data?
And that is not changing any time soon!!
Analysts like to point out the unseen channel, like Accenture. Um, if the client is paying Accenture, do you think Accenture is helping them buy network or 5G or wi-fi or VoIP? NOPE! Accenture is there to do strategy or data migration to the cloud or cut the company over to TEAMS.
The real worry that no keynote speaker mentions is the impending VENDOR doom. They can’t all stay afloat. It is too competitive – and pricing is dropping. Debt is increasing. Sales will stall as partners retire or get out. So where does that leave a provider who counts on channel for 45-100% of sales?
Who is recruiting new partners into the channel? No one. The feeder system for the channel was CLECs, who are gone now.
It’s like the shows pick keynotes to scare the attendees to do the bidding of the sponsors. The vendors – the Duopoly and other service providers – buy the big booths, pay for ads, sponsor surveys, sponsor keynotes… in other words, keep Informa afloat. So get keynote speakers who will emphasize a shift to the new “strategic” services – like 5G (cough cough, cheaper bandwidth), SD-WAN (MPLS re-packaged for less), UCaaS, IoT, cloud whatever.
It is a pay for play world.
At the awards dinner, in a side discussion, I mentioned that several winners (not all!) came from the big sponsors, which is no coincidence. The only way that anyone could even be considered is if they had a relationship with Informa. What relationship? Customer or Sponsor.
This is the same model that Gartner, IHS, Forrester, et al have. You can’t get on their list unless they know you. They can only know you if you hire them. Pay to play.
This may be cynical, but to me it is depressing.
I haven’t listened to a keynote speech since the SMB VP of Cisco played videos and read his slides at ITEXPO years ago. That was it for me. Last keynote. I don’t need a lecture from someone who has actually not sold a service to an actual buyer in ten years, telling me what it is like in the marketplace. What I need to do with my business.
You know who I have to listen to? My clients.