New technologies, customer demands for vertical industry specialization and expanding competition are driving rapid changes in the tech ecosystem, according to a new report released by CompTIA, the leading trade association for the global technology industry.
In large part, customer demand is the primary driver of these changes (and others), according to the CompTIA report “7th State of the Channel: Trends in the Technology Ecosystem.”
“More and more customers are getting ahead of the curve and proactively seeking out new technology solutions to help their business,” said Carolyn April, senior director for industry analysis at CompTIA. “They still rely on their technology providers for guidance and insight, and not every customer is this proactive, but a growing number of end users are comfortable doing their own due diligence and research on new and emerging technologies.”
April noted that for 72 percent of channel companies, customer demand is their primary reason for offering emerging technologies. Customer demand is also driving vertical industry specialization by channel partners (62 percent).
Yet even as they are being led by their customers, rather than leading them, may IT solution provider appear to be reinvigorated about their business prospects. Three-fourths of companies are optimistic about the channel’s future, compared to 63 percent in a 2016 CompTIA survey.
“The opportunities presented by cloud computing are cited as the number one reason to feel good about the channel’s future,” April explained. “For years, the cloud was a lightning rod for the channel, with some firms loving it and others hating it. These firms have finally accepted the cloud as the fundamental enabling infrastructure for IT and have decided to use the cloud to their advantage.”
Opportunities with Emerging Tech
Emerging technologies – the Internet of Things (IoT), robotics, drones, 3D printers, and artificial and virtual reality, to name a few – represent a revenue opportunity for the channel, at least according to 75 percent of channel partners surveyed for the CompTIA study.
IoT software (cited by 48 percent of companies), IoT hardware (47 percent), artificial intelligence (42 percent), virtual reality (37 percent), and blockchain (34 percent) are some of the emerging solutions channel companies are experimenting with or currently offering.
Heading the list of emerging tech challenges are the need for technical training (58 percent), the cost of entry into the market (45 percent) and difficulty hiring staff with the right skills (43 percent).
Today’s Competitor, Tomorrow’s Partner?
The competitive field for traditional channel partners has grown with the emergence of a whole new segment of players. The most prevalent new faces are cloud-based independent software vendors (ISVs) and their software-as-a-service reseller and referral partners. Digital marketing agencies and companies from the professional services industry, such as law firms and accounting firms, are also in the mix.
“Whether or not these newer folks identify as channel or not, they are essentially performing the same function as many traditional channel partners,” April remarked.
But as new competitors multiply, so do opportunities for new business partnerships.
“The complexity and range of things that are going on in technology today makes it almost impossible for one outfit to be able do to it all,” she said. “The importance of partnering across different types of solution providers is going to become even more important.”
Vertical Market Focus
Vertical industry specialization is an increasingly popular pursuit for channel firms. All channel respondents in the study reported having at least some vertical industry work within their business, with 75 percent describing that work as important. But it’s uncertain how many firms are fully immersed in a vertical industry.
“Selling the same infrastructure solutions that they would sell to any other type of customer is very different than becoming a real vertical industry specialist,” she explained. “A specialist understands the very specific applications, needs, and requirements that pertain to that industry. They become a de facto expert for that industry. That’s where the money is.”
Executives at 400 U.S. IT business were surveyed for the study. CompTIA’s “7th State of the Channel: Trends in the Technology Ecosystem” is available free of charge at https://www.comptia.org/resources/7th-state-of-the-channel-research.