CompTIA: Verticals, Nontraditional Avenues Offer Big Opportunities for Channel Sales

Edward GatelyIntensifying competitive pressures from within and outside of the channel may drive more vendors, VARs and service providers to break free from legacy practices.

That’s according to CompTIA’s IT Industry Outlook 2016. It anticipates strong customer demand for the next waves of digital business technologies. IT industry executives view the year ahead with a general sense of optimism.

For 2016, CompTIA’s consensus industry forecast projects growth of 4.7 percent for the U.S. IT industry. IT executives believe this will be a function of incremental growth in hardware, software, services and telecom, supplemented with new revenue streams from emerging categories.

CompTIA's Tim HerbertTim Herbert, CompTIA’s senior vice president of research and market intelligence, tells Channel Partners that segments of the channel continue to make money with legacy business practices serving customers that have a need for their services; however, for other segments, “questions of survival may be much more pressing,” he said.

“Where customers have shifted their investments to the cloud, or are focused on initiatives involving marketing automation, data analyticsmobile app development, next-gen security or any number of other digital business initiatives requiring expertise in emerging areas, traditional VARs/solution providers could find themselves in a tough spot if their core offering still revolves primarily around on-premises networks and endpoints,” he said.

The partner’s customer profile is changing, according to CompTIA. No longer are they just dealing with IT leaders. Sales, marketing, human resources and other departments are getting in on the action and partners will need to adjust their messaging to attract non-IT buyers.{ad}

“In many ways, it’s embracing and then executing on established marketing best practices,” Herbert said. “For example, HR professionals read HR publications and attend HR events. Chief financial officers do the same, and so on down the line. How many channel partners are making the effort to engage with prospects on their own ‘turf’? Part of this strategy may entail seeking partnerships with firms in that space.”

The main source of channel profit, or vendor margin, is changing in today’s cloud-based or “as-a-service” world, becoming secondary to what the partner can earn through their own services, according to the report. To succeed, vendors will need to update their partner programs to reflect changes in …


… the way partners want to make their money today, it said.

Also, partners will not stick with a vendor, no matter how prominent, if that vendor’s products have “lost relevance with customers,” Herbert said.

“The research suggests a greater degree of evaluating and/or experimenting with new vendors or channel partners – with both sides trying to find the right fit to best meet customer needs,” he said. “Other vendor program practices that are evolving include incentives and rewards related to cloud computing, vertical specialization, and vendor-specific certifications.”

The competitive landscape now includes pure cloud players, telecom providers, digital agencies and even companies outside of the IT industry that are building applications to deliver IT services, according to CompTIA. It’s a “perfect time” for channel partners to jump in the fray by developing their own IP to drive revenue, it said.

Low computing price, scalability and reach of major public cloud providers make it possible for partners to follow market leaders like Verizon and HP by “throwing in the towel” on large data-center build-outs, according to the report. A better bet for the channel is to look toward “juggernauts” in the market such as Amazon Web Services, Microsoft Azure, IBM and a few others as the back engine for their own cloud offerings to end customers.

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