The last few years have been transformative for businesses. During the abrupt shift in operations to work from home during the global pandemic, companies that comprise the channel stepped up to be trusted partners to customers facing overwhelming IT challenges. Then the chaotic business environment that resulted from that disruption came with its own set of complications, including supply chain delays and skilled labor shortages, which have been challenging (to say the least) for everyone, channel companies and businesses alike.
Next year will not be without its issues, but a variety of factors will drive transformation, growth, and new opportunities for channel companies. Here are four key trends that will shape the channel in 2023:
1. The rise of professional services. As companies large and small struggle to find skilled IT and security professionals, and compete in bidding wars to hire talent in the face of a widening skills gap, professional services organizations that can design, deploy, and manage security, cloud, and back-end infrastructure operations for their clients will have new business opportunities. This includes the professional services arms of MSSPs and VARs that can fill the knowledge gap left by COVID-19-related labor shortages. As a result, the professional services organizations able to provide the 24/7/365 support required to successfully secure corporate and customer data will be in great demand in 2023.
2. Emergence of marketplace-as-a-channel. Marketplaces are a recent phenomenon, and their growth and popularity will become even more important in 2023 as companies look to expand their channel revenue streams. The major marketplaces, including AWS and ServiceNow, provide organizations with a “one stop shop” for applications. However, this does require API-level integration services to make the marketplace model a success. Development agencies that can partner with companies to create and execute their marketplace channel strategy will likely experience growth and maturity in 2023.
3. Security threats will grow more sophisticated. The increasing number of security threats creating havoc in the business community will continue to multiply in 2023. As a result, companies will double down on their investment in security protections and channel partnerships. According to PwC’s 2022 Global Digital Trust Insights Survey, two-thirds of executives said that cybercrime is the biggest threat they’ll face in 2023. Given this, it’s no surprise the survey found that 69% increased their cyber budgets in 2022 and 65% of respondents plan to spend more on security in 2023.
As long as there’s an unrelenting assault on business, government, healthcare organizations, and critical infrastructure by nation states and bad actors, there will be plenty of opportunities for service providers adept at using AI and machine learning to protect customer environments from ransomware, bot attacks, breaches, and new vulnerabilities—before they can wreak havoc on company profits and reputation.
4. Mergers and acquisitions will change the channel dynamic. Mergers and acquisitions by technology vendors and large service providers of smaller, regional channel companies in 2022 continued to shake up the industry. Larger technology solution brokers acquired midtier consultancies and smaller regional service providers, along with their established customer bases and skilled talent and expertise in cloud infrastructure, digital transformation, security, telecom, and more. This will shift market dynamics, forcing smaller MSPs and VARs to adapt by “upskilling” their teams with certifications in areas such as security, compliance, and network management to level the playing field and successfully compete with the larger advanced solutions groups that can provide a “one stop shop” for clientele.
While venture capital investment has cooled a bit due to the state of our (shaky) economy, $58 billion in investments were made in Q2 of 2022, with a good portion of these funds going to support the growth and expansion of channel programs and outreach. The tailwinds of mergers and acquisitions, and the infusion of capital, will continue to transform the channel market and shape how services are delivered next year.
Adaptation Is Key
As 2022 comes to a close, the future looks bright for the service providers, VARs, and professional services organizations that adapt to the forces transforming the IT channel. While winning business may grow more complicated and competitive in 2023, the channel companies best equipped to meet the needs of their customers, which are facing their own challenges from an operational, economic, and technological perspective, will be able to not just survive, but thrive.
KIRK HORTON is vice president of channel and partners at Netacea, a cybersecurity company focused on bot detection and management.