Nancy Teixeira, Vice President of Scale-up & Enterprise at Sage discusses the 4th Industrial revolution and the biggest trends already impacting channel partners

2018 has just barely begun, and yet the technology industry is already hot on the heels of what new innovations the next year or two may bring.

“Gone are the days of the future being 50 years out,” said Nancy Teixeira, VP of Sales, Scale-up & Enterprise at Sage. “In this time of constant innovation, today’s future could very well be tomorrow’s reality.”

The IT industry is currently undergoing a dramatic change. This “4^th Industrial revolution,” as many are calling it, is being driven by a world of technology—with computers powering the way forward. The Internet of things (IoT), Artificial intelligence and machine learning are completely transforming the enterprise in ways that many never thought possible, and VARs, MSPs, SIs, ISVs, along with other channels are finding themselves at a crossroads.

For more than 30 years, channel partners enjoyed opportunities brought forth by technology to develop and implement IT solutions that helped solve their customers’ needs. But just as the IT industry as a whole is changing, so is the role of the channel partner.

IDC attributes these changes to the advent of the 3rd Platform, which is underpinned by four key technologies: cloud, mobility, big data analytics, and social. According to IDC, “The 3^rd platform will grow at a CAGR of 12.7% from 2015 to 2020, versus a CAGR of -4.8% for 2nd Platform technologies.”

So what does this mean for channel partners? While the hardware and software wave of the past several decades in essence built the channel industry of today, channel partners that remain in this 2nd Platform will be competing for market share in a quickly declining market. Today is all about the move to the cloud. While this may seem burdensome for some partners, others are welcoming the change.

According to Joe Arnone, President of BAASS Business Solutions, “Over the last 30 years, we have helped our customers move from DOS to Windows-based systems and then most recently to cloud-based systems. The speed and breadth of this current change and disruption over the next few years with cloud based systems, which also incorporates artificial Intelligence (AI) and machine learning, will be breathtaking. For channel partners to succeed, this will require us to innovate and include the emerging technologies into our solutions. At BAASS Business Solutions, we have already started down this path and the possibilities are endless. We look forward to these opportunities as we help our customers move into this new and very changed world.”

Shawn Ostheimer, CEO of The Answer Company, a software partner & technology consultantancy firm, echoes this sentiment. “As a partner doing business for over 23 years, we’ve seen numerous transformations from DOS to Windows, and Windows to Client Server, and now the cloud. With each change, our business has evolved to continue supporting our clients and providing them with the opportunities the latest technology provides. With people now using cloud on a day-to-day basis, it has become the norm and is now one of the many strong Sage portfolio options we can offer our clients. We appreciate the variety of Sage solutions to meet all of our different customer needs.”

Cloud is impacting every aspect of the channel business today, but this doesn’t have to mean gloomy days ahead for the channel industry. In the InfoBrief “Partner of the Future,” IDC highlights that, “Of all the 3rd Platform technologies, cloud is the most popular, with 64% of software channels already selling some kind of cloud solution.”

“For partners to thrive in this age of constant digital evolution, IT channels will have to be one step ahead of the enterprise by mastering a number of business model transformations in the cloud,” Teixeira said. “Ultimately, the cloud opportunity for the channel centers on its building blocks.”

For data management firm ZAP, digital transformation is creating massive opportunities. “The 4th Industrial Revolution (4IR) will see the Cloud as pervasive in all aspects of our business lives. With the ability to connect, store and manage data quicker and cheaper than ever before, the need to more easily merge data together is becoming a mandatory requirement. We help our customers gather, analyze and interpret this data across their organization. The Cloud helps them extract valuable and meaningful insights and make decisions that are intelligent and profitable all in a fraction of the time and cost,” said Garth Laird, CEO, ZAP. “As a strategic partner of Sage at the dawn of the 4IR, we see a huge opportunity to assist Sage in creating a data cloud platform that truly delivers insights from across all funcitons of the business unlike any other vendor—one that empowers their customers to understand their unified data and act upon what they see. We are delighted to help, enable and empower their success, as data is the core of the 4^th Industrial Revolution.”

Building a cloud business requires very careful planning. If you try to move your business to the cloud too quickly, it can impact cash flow. But if you decide not to move your business to the cloud at all, it will inevitably deter growth and prohibit your entry into new markets. Channel partners can help customers successfully move to the cloud through providing their guidance and expertise.

As IDC puts it, “A successful cloud business can help your business build more predictable, recurring revenue streams, augment recurring revenue streams from managed services, open doors to new customers, enable you to extract higher revenue per employee, and create a number of upsell opportunities.”

Channel partners need not be scared about the impact cloud will have on revenue or cash flow. Instead, they must change their business model to find new ways to bring about revenue. They can do this be setting their sights on becoming trusted advisors in the cloud. In this way, channel partners will be evolving with technology, rather than being replaced by it.

As Erik Brynjolfsson, Director, MIT Initiative on the Digital Economy, MIT – Sloan School of Management points out  “The future is not pre-ordained by machines. It’s created by humans. Technology is a tool.”

While loss of topline revenue has been a big inhibitor for cloud, IDC found that partners that have successfully made the transition also reported a number of benefits, including:

• More predictable, recurring revenue stream
• Quicker sales cycles
• Higher revenue per employee
• Higher gross profit
• Higher new customer acquisition
• Faster growth
• More upsell opportunity
• Geographic expansion without the physical restrictions of the on-premise world

 

To build a profitable, sustainable cloud business, IDC has identified two key strategies for success:

 

1. Revenue Replacement Strategies – “Look at ways to replace revenue: Revenue generated by resale will decline over time. Resale could turn into referral, hardware sales to cloud. Proactively replacing lost revenue is critical”

 

2. Optimization – “Optimize delivery and sales operations: doing more with less in a repeatable manner is critical in a recurring revenue model”

 

With a strong focus on the channel, Sage is intent on driving step change in partner productivity, growth and cloud to help partners prepare for the solutions of the future—Enter Sage Business Cloud.

From start-up to enterprise, Sage Business Cloud is a purpose-built cloud financial management solution that was designed to support a business’ entire journey with a rich, powerful set of products—from payroll to people solutions. With the Sage Business Cloud, it’s easy and seamless to move up between solutions. Built on the Salesforce platform, the flexibility makes for a much more scalable and customer-centric experience.

Teixeira sees this new offering as a strong opportunity for channel partners that are being asked to bring new capabilities to their customers. “As the only cloud solution you will ever need, Sage Business Cloud makes it easier to do business with Sage from a direct to seller or channel perspective,” she continued. “With Sage Business Cloud, we’re refining our focus to do more for our strategic partners to help them deliver increased capability, efficiency and stickiness by delivering best-in-class partner enablement and support.”

To further assist channel partners with the move to the cloud, IDC has created the following guidelines for generating cloud-based revenue:

 

1. Prioritize – “Pick one or two transformations to action within the next 3-6 months, another two over the next 6-12 months and so on”

 

2. Specialize – “Pick one or more industry and/or horizontal solution to develop deep expertize in”

 

3. Scale – “Create efficient sales and delivery mechanisms, invest in digital marketing, and focus on prospecting online”

 

4. Replicate – “Replace lost revenue with higher-margin services. Look to replicate your solutions and try to productize your IP to create new revenue streams”

 

5. Train – “Train or hire employees in the art of selling to line of business.”

 

Nancy Teixeira has been working in the accounting technology sector since the late ‘90s, when she began selling Great Plains software as a Canadian reseller partner. She joined Microsoft Canada in 2001, shortly after their acquisition of Great Plains, and went on to spend the next 10 years in various leadership roles across partner development, product marketing and sales. Upon leaving Microsoft, Nancy spent a couple of years consulting with the channel partners she had built relationships with; helping them to develop strategic sales and marketing go-to-market plans. She joined Sage in October 2014, and today leads the Sales, Scale-up and Enterprise group for Sage.