For the last decade, an agent model has been the easiest way vendors had to engage solution providers in cloud offerings. The shifts a cloud business model demands in marketing, sales, compensation methods and customer success are difficult for both vendors and solution providers. Thus, a simple referral or an agent model was a quick win for vendors looking to gain awareness of their cloud offerings. There isn’t enough margin available in a referral deal for the solution providers to be profitable long-term so we've seen growth in other solution provider roles in cloud models.
Focusing on customer experience and success is one way to support the solution providers’ evolution to cloud-based business models. There are a host of other barriers to their transition and the survey results show a bit of a disconnect between the vendor and the solution provider perceptions. Finding, training and retaining top talent has always been a barrier to growth for solution providers (or any company for that matter). The vendors* cited this reason the most for the solution providers struggles in growing their cloud models, but it was ranked third by the solution provider respondents. Not wanting to change their business model was the second-most cited reason by the vendors. Moving the model is tough, but there is little doubt of the solution providers’ desires to do so. This issue didn’t even make the top five barriers to transition ranked by the solution providers.
Shifting to a cloud or subscription model is a tough multi-year journey that requires changes across every department. Often the new business blooms alongside the traditional business to keep revenues flowing.
At a recent vendor conference, I presented on the significant roles vendors and their partners play in customer success. To highlight the urgency with which vendors should help their partners, I cited data from our 2019 State of Partnering study: 67% of solution providers haven’t yet invested in the people, methodologies and technologies to be effective at customer success. After what I thought was a fabulous presentation with moments of greatness, an attendee came up and asked me, “so how do I do this and help my partners invest in customer satisfaction?” Epic fail. After making sure it wasn’t a slip of the tongue, I realized the difference between customer satisfaction and customer success may not always be clear. So here goes.
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.
In the multi-year transition to cloud models, we've found six key trends affecting how vendors engage, enable and evolve their partner models and programs. From the data gathered in the 2019 State of Partnering study, corroborated by hundreds of partner interviews and dozens of client engagements, the themes introduced in last year’s State of Partnering Study are getting a few updates.
Back in 2015, after eight years of talking about the technology industry moving to cloud consumption models, we conducted PartnerPath’s first research on how vendors and solution providers were coping in the transition. This research led to Driving Cloud Transitions, a report which found the on-demand model was producing challenges for both vendor and solution provider partners. Both groups experienced minimal revenue and profitability impact from cloud business models. Partners needed significant help developing profitable and sustainable businesses that highly leverage cloud technologies and on-demand business models.
This week, CEO Diane Krakora is in San Diego, CA for the Cisco Live! annual customer and partner conference. After a full day of keynotes, sessions and meetings, she has five main takeaways from Day 1. Watch her short video ruminating on these five main points.
Cisco is a partner-centric organization (reporting that 90% of their business comes through partners)
the importance of new buying centers (line of business buyers)
This week, CEO Diane Krakora was in Carlsbad, CA (near San Diego) for the Channel Focus North America Conference. On Day 3, she attended more sessions in an extremely busy and content-filled last day. During many sessions, channel executives shared details on their partner programs, structures, business models, and best practices. Diane noticed attendees frantically taking notes and has this caution, "put everything into context." Hear why she thinks you shouldn't implement what others are doing without taking a closer look at your own partner maturity.
This week, CEO Diane Krakora is in Carlsbad, CA (near San Diego) for the Channel Focus North America Conference. On Day 2, she attended 10 hours of sessions which included 1 keynote, 3 tracks and 12 workshops. (Alas, she can't be in multiple sessions at once!) Watch this 4-minute video to hear her comments on some of the interesting points made in the keynote by Gavriella Schuster titled, "New Channels New Challenges - How should a smart vendor respond?"
