Digital Transformation will lead the channel in 2017

Dell EMC’s global channel chief outlines his view of key channel trends for the year ahead, and what partners need to do to take advantage of them.

John Byrne, Dell EMC Global Channels President

The impacts of the digital transformation trend are far-reaching. Organizations are under increasing pressure to become digital businesses, and vendors are building out their portfolios to offer the technologies and services these companies need. Similarly, the channel is having to adapt to a world that is rapidly becoming more digitized and cloud-centric. Systems integrators, VARs, distributors and managed service providers that are flexible and willing to evolve their business models to address the changing needs of their customers and adjust to an increasingly fluid vendor landscape will benefit greatly from digital transformation.

Our recent Digital Transformation Index outlined the opportunities ahead for the channel. Of the 4,000 IT leaders in 16 countries who we interviewed for the report, only 5 percent were classified as digital leaders. Forty-five percent feared they could become obsolete in three to five years. However, 73 percent said their business needs to prioritize technology and 66 percent are planning to invest in IT infrastructure and in increasing their digital skills.

At Dell EMC World in October, Michael Dell talked about how the world is moving from the physical to digital, and how businesses are going to have to make the same transformation. Pointing to the results of our Digital Transformation Index, he described what many businesses are going through now as “digital fear.”

“They know this future is coming very rapidly and the future doesn’t care if you’re ready,” he said. “But we do.”

Businesses are turning to Dell Technologies and other vendors to help them with this digital transformation, and the vendors in turn are looking to the channel. The opportunity is out there for channel partners that are agile enough to navigate the roiling waters caused by digital transformation. As we roll into 2017, they will be able to work even more closely with tech vendors that are expanding their portfolios and to have a broader palette of offerings for their own customers, and are looked to by customers that are trying to find their way forward in the new age of increased digitization. In this environment, challenges become opportunities. Those opportunities are going to show themselves in a number of ways in 2017.

Vendor consolidation to be a boon

The consolidation among vendors—as well as within the channel itself, as illustrated by HNA Group’s recent acquisition of Ingram Micro—that has been seen in recent years will continue as we roll into the new year. Vendors are looking to increase the breadth of their portfolios and offerings, and are going to continue looking to partners to help them bring those offerings to as many end users as possible.

Acquisitions—particularly huge mergers like Dell and EMC—have ripple effects that roll through the channel allowing our partners to scale to their business needs. Consolidation means fewer vendors to partner with. For example, the PC market is continuing to consolidate around three primary PC manufacturers. However, in most cases, these vendors are offerings PCs as part of a growing product lineup, which means a broader portfolio of products, solutions and services for partners to sell. Dell EMC is a leader in Gartner’s Magic Quadrant in almost two dozen areas, from general-purpose disk arrays and integrated systems to business continuity management planning software and IT risk management solutions, all of which can be sold by partners.

In order to build out their capabilities, vendors are going to need to rely on their partners, and that will mean pulling together competitive channel programs that will let SIs, VARs, SPs, MSPs, CSPs and others expand their expertise and drive profits. Vendors will have to make a strong financial business case to their partners.

Mergers and acquisitions also tend to result in larger R&D budgets, fueling innovation and more selling opportunities for the channel.

Solutions and services on the menu

In 2017, the channel also will see greater demand to sell not only products, but also solutions and services. Traditionally, the focus was on selling hardware, with partners often playing the role of resellers of a product. But that’s changing. They still want to sell that hardware, but they also want to sell solutions, and going into next year there will be an increased emphasis on services as well. Partners increasingly want to deal in multiple lines of business, and in 2017, there will be a more balanced approach for solutions and portfolio capabilities.

Dell’s standing in the data center is a perfect example. We’re not only the top vendor in servers, storage and virtualization, but also in cloud infrastructure and software, software-defined data center, converged and hyper-converged infrastructure and platform-as-a-service (PaaS). Partners have a broad array of products and solutions to bring to their customers.

Selling solutions and services is really a pot of gold for channel companies. Their customers are continuing to wrestle with the digital transformation trend, and are demanding more than products from vendors. They are looking to the channel for help and guidance during this migration, and the partners that can help guide them on this journey will be the big winners. They’re going to be asked to advise customers on such thorny questions as whether to leverage on-premises or off-premises data centers, and will be asked for services to help them get their new infrastructures designed and deployed and to help them when something goes wrong.

Channel companies are going to have to be able to not only sell the products that give their customers the foundation they need to become a more digital business, but also the services and solutions that enable their customers’ digital transformation. Customers want to know how to migrate to a cloud-centric environment, how to leverage data analytics, how to deploy and run integrated infrastructures and to take advantage of software-as-a-service (SaaS). Channel companies will become the crucial partner in making their customers’ digital transformations happen.

MSPs to seize the spotlight

Channel companies also will see their relationships with vendors to continue to evolve. Digital transformation will continue to be a driving force in the industry, breaking down the silos of how technology is sold. Partners’ needs will continue to change—the growing demand to sell solutions and services, for example—and vendors will need to empower their partners to be able to sell what their customers want. The relationship between vendor and partner will continue to grow and adapt as the structures around technology and sales change, and that will open up even more opportunities for the channel.

The various partner types—including VARs, distributors and MSPs—will continue to play important roles in the channel in 2017, but with the ongoing digital transformation, MSPs will have a particular turn in the spotlight. They will be able to help customers of all sizes—from SMBs to enterprises—acquire and implement the newest technologies and services, helping the customers to ensure that these technologies support their growing and changing businesses. But don’t discount any of the other players in the channel. At Dell EMC, for example, our distribution partners are growing at three times the industry pace, so their impact will be significant.

Channel is seeking simplicity, predictability

I owned and operated two channel companies previously, and I know what partners can do for a vendor and what they need. Over the past three months, we’ve been traveling around the world to talk with—and more importantly, listening to—our partners about what they need to accelerate their businesses. The feedback has been thoughtful and deliberate.

So what are they looking for? First, to partner with people who share the same desire for remarkable results. They want to partner with winners. From there, they want a channel program that is Simple, Predictable and Profitable. Simplicity in a channel program is important. They want a clear understanding as to how the program will work, where they fit into it and how they will make money. In an industry that is changing at a blazing speed, simplicity is important. Partners also want it to be predictable. They don’t want any surprises regarding what products and services they’re selling or how they’re being compensated, and they want to know the program they signed onto will be the same one down the road.  They want good training, and they don’t want conflicts with a vendor’s salesforce. Deal registration is a critical point with clarity around Rules of Engagement.

And they want to sell more services. Throughout my discussions with partners, there was a strong emphasis on being able to sell services along with products and solutions.

In the end, channel partners want to grow their business and make a profit. Even in an industry that always seem to be in a state of flux, that is in the midst of such immense change as digital transformation and vendor consolidation, there will be ample opportunity for the channel to make money. It’s up to vendors to help make that happen. We are in some unique and wonderful times and should enjoy the journey, it’s going to be extraordinary.