Disruption is the broadest, yet starkest term used to describe the changing landscape of the channel in the run up to 2020. With the tension of an ever-tumultuous UK political environment not relenting anytime soon, the financial implications that this could have coupled with the looming enforcement of the General Data Protection Regulation (GDPR) in 2018, there are many disruptive forces on the horizon.
These challenges represent the ideal opportunity to look at how channel businesses can achieve sustained growth by assessing how they deliver services for their end user customers. Those customers require business outcome solutions in order to deliver their own growth aspirations, so the need for channel firms to provide an increasingly flexible on-demand environment has never been so important.
This reflects the channel’s glass-half-full approach; always looking for new opportunities that can nurture growth. The channel’s leading businesses have always been courageous, innovative and dependable, and it is for these reasons why those firms that respond positively to current and future disruptive factors, will be the trailblazers of tomorrow.
The main disruptive forces in the IT channel
The provisions under which all personal data on all EU citizens is used and stored - otherwise known as GDPR - has been extensively covered in the channel over recent times, ahead of its implementation in May 2018. However, it’s not unreasonable to suggest that some businesses have not considered the full impact of GDPR and the possible consequences for non-compliance, along with how it will affect communication with their core revenue stream - their customers.
This is reflected in over a third of the channel businesses surveyed believing that GDPR and other security changes will have the biggest impact on disruption between now and 2020. Those businesses who may have missed the boat, in terms of preparation, may have to appoint external consultants at an additional cost. This is in addition to the increasing general focus on cybersecurity, as a result of new and innovative ways in which to infiltrate a company’s systems.
Alongside these considerations, the channel is having to adapt to the way in which customers want to consume their services. This is expected to focus on the requirement for on-demand, business outcome-based service delivery and an increase in collaborative channel support-based services.
Businesses no longer want to be tied into long-term, fixed contracts with little options for scaling up and down, dependent on their requirements. With this in mind, the need for on-demand models is forecast to become a major disruptor in the channel.
With existing providers needing to assess how they adapt and operate, ‘traditional’ vendors must develop their proposition. Continuing migration to the cloud has led a quarter of channel leaders to believe that cloud providers will lead disruption. For new-to-market vendors, having a fresh perspective of the channel landscape will allow them to tailor their proposition more quickly to market demands.
These vendors will be driven forward by a changing workforce, with the millennial - frequently defined as those born between 1980 and 2001 - moving into more influential roles within IT channel businesses.
This is reflected by the majority of the channel believing that over a quarter of senior leadership positions within channel organisations will be held by millennials by 2020. Generationally-speaking, this may have always been on the cards, with the technological consumer revolution throughout the 1990s and 2000s having a big impact on future career choices.
The support for a fresh breed of those leading the charge has been favourably received by the channel, who believe they will help overall efficiency to prosper, while saving money on overheads and generally increasing revenue. As they will be unburdened with previous ways of operating, millennials are expected to do this through new and collaborative ways of working.
How the channel is preparing
Despite embracing a period of change as the perfect opportunity to target growth, the majority of the channel feel underprepared and negative towards the opportunities that it will bring.
This is mainly focused around the existing capital expenditure (CAPEX) model of purchasing technology and services, even though the majority of the channel is increasingly driving towards an operational expenditure model (OPEX). As a result, channel leaders believe there will be an increase in the cost of maintaining both physical and cloud-based infrastructure, as the cost of outsourced services and the price of bespoke hardware continues to rise.
Should customer requirements increase, so could the resellers’ need to purchase more hardware, relocate data centres and migrate from physical servers to cloud-based platforms, all of which could prove prohibitively expensive.
Moving to the cloud has long been on the lips of many in the channel, now that concerns over data and mobile access to that information, are gradually being addressed. Reliance on the cloud will only increase as the cost of maintaining data in this way, versus physically storing it, begins to look more attractive, especially in the SME marketplace. If businesses are ahead of the curve, in terms of having already migrated, this should streamline their revenue in the coming years.
The channel must innovate to remain relevant for customers
In order to remain relevant to their target audiences, existing and new-to-market channel firms need to be flexible and innovative when addressing upcoming challenges. They must be ready for the factors that will lead to disruption by preparing as early as they can.
Nearly a third of channel leaders think that meeting evolving customer requirements, including the increasing need for on-demand services that will force some providers to change their entire business model, is the biggest challenge facing the channel.
However, this is countered by an overall positive outlook on how the channel could look by 2020. The introduction of more millennials into senior management positions, who will lead the charge in how to embrace disruption and adapt, will ultimately see current revenue being increased and new streams introduced. The changing faces of CEOs, CIOs and MDs will serve to meet these requirements.
For many years, vendors have controlled how the IT channel operates in terms of the lifecycle and consumption of technology. The difference today is that the customer is now in control, dictating the consumption models they require to drive business outcomes. As a result, the emphasis on innovating to remain relevant for customers - both today and into the future - has never been more crucial, not only for the vendors but all channel firms.
Shaun Lynn, Chief Executive Officer of Agilitas IT Solutions Limited
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