IT and Business Insights for SMB Solution Providers

Channel Transformation Drives Partnerships and Specialization

IT service providers who embrace new technologies and business models will not only survive, but thrive. By David Weeks

THE IT CHANNEL is undergoing a major transformation, driven by a host of emerging technologies: the Internet of Things (IoT), artificial intelligence (AI), augmented reality (AR), virtual reality (VR), edge computing, and blockchain. These new technologies require skills and experience the typical provider may lack, however. In many cases, IT service companies may need to consider partnering, specializing, or both to take advantage of emerging opportunities.

It’s an old channel conundrum: You must provide services around new technology if you want to succeed and stay competitive, but the resources simply aren’t available yet.

What makes things different today is there is more than one technology to absorb. AI, IoT, blockchain, and VR are hurdling down the line simultaneously; providers can either embrace them or get left in the dust. Some, like AI, IoT, and edge computing, work together to create business outcomes, meaning you can’t adopt one and ignore another. That’s why specialization and partnerships are a good idea.

Specialization on the Rise

Specialization is far from a novel concept for IT service providers, but the need for it is about to become more acute. Many IoT applications will be purpose-built for specific industries and organizations, and a generalist approach simply won’t do.

Providers handling IoT deployments and related applications housed at the edge will need the tools, skills, and know-how to implement, monitor, manage, and update these applications. This means a vertical market approach is about to become more popular.

According to CompTIA’s 7th State of the Channel report, nearly two-thirds of channel firms have “embarked on a vertical specialty to satisfy customer demand and as a competitive differentiator. Embracing a niche specialty in retail, healthcare, or other sector will deliver a proven competitive advantage.”

Along with focusing on vertical markets, providers will also have the opportunity to specialize in certain technologies. While some technologies are interconnected, as already noted, there will still be options to target a particular area, such as AR or AI, for specific business functions. The area of focus depends on each provider’s existing skills and access to new resources to get up to speed on the technology.

New Partnership Types

As with specialization, partnerships have long provided the means for channel companies to service customers with needs outside their area of expertise—or geographic reach. Tapping a well-chosen partner to provide complementary technology or services makes a lot of sense.

In the transformed future channel, new types of partnerships will become common. IT providers won’t just be partnering with each other anymore, but with other types of companies. “The most prevalent new face in the ecosystem belongs to cloud-based ISVs and their SaaS-focused reseller/referral partners. Six in 10 channel firms report encountering this type of company in today’s competitive landscape,” says CompTIA.

While different, those types of partners fit within the model of delivering complementary technologies, but nontraditional partnerships will remain necessary. CompTIA says 46% of respondents in the State of the Channel study are seeing partnering opportunities—and competition—from digital marketing agencies. “And roughly two in 10 channel firms are now competing with nontechnology companies altogether, specifically accounting and law firms that influence or resell software pertaining to their respective professions.”

You might end up working with car dealers that need help explaining applications in connected vehicles to their customers. You might provide expertise to construction companies, real estate agencies, or architects involved in smart building projects. In other words, partnership opportunities may be virtually endless.

Fight Obsolescence

While change is scary, the channel’s transformation promises to deliver a slew of new opportunities for providers that figure out how to adapt. Those who meet customer demand for new technology and services are more likely to find competitive differentiators, enjoy new sources of revenue, and—more importantly—fight obsolescence. And for many of them, this will involve partnering and specialization.

DAVID WEEKS is director of sales, MSP, at SolarWinds MSP.

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