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Ashish Vazirani
ZS Associates
John DeSarbo
ZS Associates
  Jason Bell
  Associate Principal,
  ZS Associates
Kyle Heller
Associate Principal,
ZS Associates
  Alex Southworth
  Associate Principal,
  ZS Associates
Brandon Mills
ZS Associates
Leon Wei
ZS Associates

Channel Sales Forecast: Only Partly Cloudy

Posted by John DeSarbo on Thu, Jul 18, 2013

cloudy forecastEarlier this week, Forrester released their latest estimate of global IT spending, predicting that investment in technology products and services will increase moderately to $2.18 trillion by 2014.  An increasing portion of this staggering investment will undoubtedly go toward new cloud services. But while the IT industry is in the midst of a modern-day gold rush, the channel is scrambling to catch up.

Every month it seems a new study highlights the increasing demand for technology delivered as a service via the cloud. Evolve IP released interesting results this month from a survey of more than 1,100 IT professionals from mid-market companies that confirmed, once again, that demand for cloud services is red-hot. According to Evolve IP, 43% of midmarket companies plan to increase their budget for cloud services in 2013, and more than 61% plan to do so in 2014.   

While demand for cloud services is booming, adoption in the channel is relatively low. For most solution providers, cloud services still only account for a small portion of their revenue and profits. Many solution providers that have made their money implementing on-premise technology solutions for their clients are frantically building new cloud services businesses. It’s unclear who will win and lose in the cloud services game; it is clear that there will be a shakeout.

Some traditional VARs will successfully transition to a new business model, whereas others will miss the opportunity as new, "born on the cloud" resellers emerge to fill the gaps and capture market share. With so much at stake, IT vendors are investing big bucks to help existing partners weather the storm while simultaneously recruiting new partners that have what it takes to succeed in the increasingly competitive cloud services marketplace. Unfortunately, vendor investments have not had the anticipated impact. While there is a lot of buzz in the channel about the cloud computing opportunity, actual sales of cloud services are too few and far between. Channel partners are getting plenty of marketing and technical support from vendors, but partner sales reps are asking for more help from their vendor counterparts.  

Much has been written recently about the struggles IT channel partners are facing and the changes they are making to transform their businesses. Surprisingly little research, however, has focused on how IT vendors need to change their channel sales organizations to capitalize on the cloud services opportunity. After all, if your channel partners are reinventing their businesses, isn’t it reasonable to assume that that your channel sales team also needs to change? Of course, the answer is a resounding yes. The real question is how?

ZS Associates is partnering with the Channel Focus community to investigate the changing role of the channel sales function in the cloud services era. As part of this effort, we are conducting an online survey to gather input from IT providers regarding the changes they have made or anticipate making to their channel sales team to drive adoption of cloud services. The findings will help answer critical questions such as:

  • How should the channel sales team be structured to drive growth in an increasingly heterogeneous channel?
  • What are the most important skills and competencies IT providers need to develop in the channel sales team to address evolving partner needs?
  • How should channel sales team members be compensated to drive focus on cloud opportunities and ensure incentives are aligned with their partners?

Channel sales and marketing leaders who would like to participate in the survey can do so by visiting this page: Changing Role of Channel Sales. The survey takes approximately 10 minutes to complete, and participants will receive a summary of the results. We look forward to sharing insights from the research in September. 

Topics: channel partners, cloud services, John DeSarbo, channel sales

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