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Switch to cloud or wither away

by Stuart Wilson, Monday 17 October 2016

Todd Thibodeaux, CEO at IT industry association CompTIA, pulled no punches in his message to channel companies and their need to adapt to changing market dynamics. Speaking to Channel EMEA at CompTIA’s recent EMEA conference in London, Thibodeaux said: “Channel partners that do not make the transition to cloud now will see their business wither away. Some still believe they can survive with the old model, but this will become harder and harder. Our best practice roadmap is screaming a simple message as loud as possible to them: change your business model now.”

CompTIA is a non-profit trade association, dedicated to advancing the interests of IT professionals and IT channel organisations. The event in London gave CompTIA members an opportunity to reflect on the changes that are reshaping the role and function of the traditional IT channel.

Thibodeaux added: “The channel business model has totally changed and is now all about managed services and recurring revenues. Channel partners have to adjust their model and the way they charge customers to pay for services.”

“There is opportunity around the cybersecurity challenges that businesses now face in the market. That is one of the key themes at this year’s CompTIA EMEA conference,” he continued.

“It’s not just cloud though. Apps are taking on a lead role in terms of delivering IT. We’re seeing everything moving towards mobile and tablets and the growth of cloud-based apps,” he added.

Channel organisations are advised strongly to identify the changing needs of their customers and respond accordingly. For those that do not heed the warnings, the risk of disintermediation or even business failure is real.

“The customers can move ahead of the solution providers and in some cases they want to work with the vendor. The vendor does not want to work directly with hundreds of thousands of small customers so there is a role for the channel to play,” added Thibodeaux.

“What we’re seeing in the channel is that the barriers to entry in terms of setting up an MSP or service provider business are now minimal. It is currently a very precarious position that many resellers are in and we are likely to see a great deal of consolidation occur,” he continued.

“In the past, local resellers had geography as protection. The ability to be physically close to the customer and make site visits and fix things on-site was important. That’s now gone,” he added.

“There may not be a better time for some channel partners to look to get out or find an exit strategy. They may find that their business will be worth far less in the future than it is now,” explained Thibodeaux.

CompTIA is encouraging channel partners to look way beyond where they are now and their current field of expertise. They now need to look at their sales skills, compensation models, their business process expertise and their service delivery capabilities.

“Resellers will end up being brokers and consultants to their customers. They can make their position more defendable by taking on the role of trusted advisor,” said Thibodeaux.

“Resellers need to be brave to step outside their comfort zone. We don’t want to see channel companies go out of business, and even with all these changes, there is still a lot of IT infrastructure out there that needs to be managed,” he concluded.

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May, 2021

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