2112 Group: Partners Expect Growth in 2017, But Lower Their Expectations

Growth chart

Aligning their businesses to the reality of digital transformation is a challenge for partners that bears out new research report – 2017 Channel Forecast – released by the 2112 Group.

Whether lowering their growth potential expectations, dealing with longer sales cycles or seeking sales in legacy products to drive growth, partner firms clearly demonstrate stamina as they also show a willingness to make investments, expand sales of existing products and services, as well as explore new technology opportunities.

The 2112 Group reports that for most partners, 2016 growth met their midyear expectations and that the actual average growth was 16 percent, twp percentage points lower than 2015. The three-year compound annual growth rate (CAGR) was 17 percent. Looking ahead to 2017, seven out of 10 partners expect a growth rate of at least 6 percent, with the average anticipated growth rate for the year in the range of 11-15%.

Security is viewed as a growth opportunity by 64 percent of respondents, while 67 percent of partners anticipate expanding sales of existing products and services in 2017.

Additionally, 32 percent of partners expect to earn revenue from professional services, while another 18 percent noted that they expect to grow through acquisition.{ad}

The downward adjustment of growth-rate expectations is in response to a shifting market and technology trends — what 2112 calls the Interconnected World or the digital fabric connected by cloud computing, mobility, big data, the Internet of Things (IoT), artificial intelligence and automation.

The report notes that partner profits were more likely to come from professional services than emerging technologies.

The 2017 Channel Forecast explores partner growth trends, product profitability, channel value perceptions, products with high potential for driving growth, and the evolution of channel business models.

The report authors signal that, all in all, 2017 looks good for the channel, with growth and opportunity on the horizon, particularly because the channel ecosystem – distributors, resellers, systems integrators, direct market resellers, managed service providers (MSPs), cloud brokers, agents, and consultants – is vital to many technology vendors. Only 24 percent of partners indicated that they believe vendors would rather sell direct than through the indirect channel.

For partners not driving their businesses forward, there are new nontraditional partner entrants stepping in to meet market demand for resale, integration and influence of technology product and service sales, according to 2112 Group. In five years, the researchers expect new partner types to double the number of channel partners overall.

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