Vendors in our State of Partnering study corroborated IDC and Gartner predictions about increases in cloud revenues growing as a percentage of overall sales. However, when we removed the increasing number of vendors who are 100% SaaS or cloud-based, the lion’s share of vendor sales are still traditional on-premise solutions.
But the question remains whether cloud adoption can accelerate by 2022 to surpass spending on non-cloud IT infrastructure as predicted by IDC. That’s a big leap from where most technology vendors are now. We would assert this growth cannot be achieved without the channel. Or more specifically, not without a channel. The vendors responding to this survey are just beginning to add new types of partners to their ecosystems. Legacy solution providers currently filling the technology vendor channel ranks might not be the businesses to drive widespread cloud solution adoption.
If these solution providers aren’t contributing to the growth of the sector, who is? There is a new breed of solution provider emerging that drive more cloud business than the traditional channel partners who are struggling to transition to cloud models (who participate in vendor programs and thus are included in our studies).
Direct vendor competition is the primary threat to the majority of the solution providers’ business. Peer competition and lack of available talent round out the top three threats they see to their business in 2019. This is a subtle change from years past when available talent was a more significant concern than their peer competition. Highlighting both direct competition and peer competition as top threats, even more than finding and keeping talent, is a bit alarming in the US economy which has the lowest unemployment rate in four decades. Competition must really be on their minds.
As solution providers become micro-specialized to meet their customers’ expectations, we anticipate increased differentiation which will reduce the threat of peer competition. It’s a bit surprising cloud self-service doesn’t seem to worry the solution provider respondents, as it was ranked near the bottom of their concerns as a threat to their businesses. The solution providers clearly see they have a role in cloud.
The good news is a whopping 75% of the vendors indicated their partner-driven revenues will increase in 2019. A scant 2% said their partner revenues would decrease. This points to vendors becoming increasingly reliant on partners to create full solutions that address customer needs.
What to Do: Remove Roadblocks to Cloud Success
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This blog is an excerpt from the PartnerPath 2019 State of Partnering report: Driving Cloud Adoption. More excerpts will be published in coming months. Be sure to subscribe to our blog below!