Channel Transformation: 'Work in Progress'

Business model transformation among channel partners is not a new topic. It's one that Channel Partners has been exploring in one way or another for many years. We have been following two primary trends:

1. The incremental evolution of discrete partner types – be they telecom agents, telecom equipment dealers or IT VARs – from transaction-based to solutions-based models (click here for the conclusion of our most recent coverage on this topic).

2. The convergence of the channel types (e.g., IT VARs selling VoIP) as a result of the convergence of voice and data technologies and the extension of LAN capabilities to the WAN (e.g., telecom dealers networking multilocation communications).

Today, a third trend is accelerating partner transformation and convergence:

3. The emergence of managed and cloud services are pushing partners of all types to adopt service-based delivery models for both telecom and IT (see graphic, "Channel Convergence").While these trends indicate all roads lead to one destination, the idea that there might one day be a homogenous pool of "converged partners" is too simplistic and also anathema to a competitive marketplace. Instead, there likely will be variations on the theme as channel partners continue to monitor, evaluate and address market demands. Channel transformation, then, necessarily will be a "work in progress."

With that in mind, Channel Partners is proposing some likely future business models for your consideration. Admittedly, getting your mind around the possibilities is daunting, and committing them to print is risky. That's why we are using a "back of the napkin" approach for this exercise. Many terrific businesses are born this way; but just as many are wadded up and lobbed into the circular file. That, dear reader, is your role — to accept or discard what you like. And, we hope that you also will be willing to sketch out your own thoughts and share them with us and the channel community. (You can comment on this article online or send me an email at mailto:khenderson@vpico.com.)

For simplicity's sake, let's think about the three major partner models — telecom agent, telecom dealer and IT VAR — and how they might evolve in a somewhat linear fashion from transaction-based to service-based as illustrated in the table, "Channel Business Model Evolution." While generic, it offers a glimpse into where channel partners originated and where they might end up. Labeling them on a continuum from past to future is tempting but not realistic as the legacy models likely will persist for some time alongside the newer ones. Certainly, a solutions focus is not one that would be abandoned in favor of a service focus, as one example. But, even the transactional activity is not expected to die out in its entirety though for some partners it will by design as they make a conscious decision not to pursue that business in favor of higher value offerings.