Although the inter-connected nature of the channel means that each of these themes are intertwined with one another, the themes of Innovation, Disruption and Collaboration will arguably hit the market hardest in the years to come.
Disruption is possibly the most frequent term used to describe the changing landscape of the channel. With the stress of an ever-tumultuous UK political environment not relenting anytime soon, the resulting financial implications that this could have, the rise of millennials in the channel, and the looming enforcement of GDPR, there are many disruptive forces for channel businesses to contend with. All these top down forces are resulting in a pace of change never experienced before in the technology industry. The speed of which we now consume technology in our ‘always-on’ world is driving change, where technology firms need to be delivering on-demand business models to remain relevant.
However, 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; Agilitas is a stern advocate of taking the glass-half-full approach towards Disruption, providing customers with an innovative platform to deliver their own growth aspirations.
This is best facilitated through the delivery of an on-demand, outcome-based service for customers. This provides them with the flexibility to scale up or down, per their requirements, packaged in one fixed monthly cost that reflects the increasingly popular switch from a CAPEX-based model to an OPEX approach.
Trying to shape a company into one that operates entirely self-sufficiently from other channel companies rarely works. Developing a skill-set or channel provision that would be more efficient and easier to manage through outsourcing is a no-brainer, especially as the end-customers’ appetite for a widening remit of services increases exponentially. As a result, these collaborative outcome based solutions need to access a broader range of specialist skills rather than using a generalist approach to serving the customer.
Achieving this level of service for customers can rarely be delivered by one single channel partner, acting as a one-stop-shop. As demonstrated with Agilitas’ recent partnership with IBM, in which it’s providing a unique, end-to-end Inventory-as-a-Service proposition – managing its entire spares, testing and inventory provision for customers. On the flip side, IBM are providing Agilitas with access to their extensive global technology support services’ teams in order for Agilitas to bolt-on engineering services to maintenance contracts for those channel partners who require both a part and engineer to site. This inter-channel collaboration is the ideal way to quickly bolster a channel provider’s portfolio of services, while increasing margin and loyalty from the customer.
This is reflected in our recent research that reveals that over a quarter of the revenue in a channel business is generated through the utilisation of skills from other companies, as the primary channel organisation adds more strings to its channel bow and delivers a greater percentage of margin across its solutions to the customer.
The exact needs of the customer must be adhered to, as out-of-the-box solutions are no longer viable; if they require a service that its current channel partner(s) cannot directly offer, they must work to deliver this though inter-channel collaboration. This is where the traditional vendor is struggling to remain relevant as customers want innovative, tailored solutions that meet their ultimate business objectives, while offering near-instant flexibility that meets the changing technological landscape – notably the increasing move to on-demand based services such as the cloud.
Our research has revealed that the main areas which require innovation investment are, unsurprisingly, technology and solutions, and business intelligence and analytics.
For example, with the complexity of IT systems only increasing, the requirement for delivery of more spare parts, coupled with the expensive requirement of storing and delivering these components, has placed an emphasis on outsourcing to external providers, freeing up resources for businesses to innovate and focus on their core competencies.
This is a perfect example of how innovative services and solutions can be fostered through collaboration with potential partners, allowing channel organisations to remain relevant for customers. Our research demonstrated that each channel business spent an average of £66,000 each on innovation in the 2016/17 financial year; this can be split into internal innovation investment and outsourcing services with partners.
This will be the main priority for channel businesses going forward, delivering outcome-based solutions for customers, rather than standard, off-the-shelf solutions that are not relevant to their business needs. For some organisations, this may involve a complete internal transformation, reflective of the cultural shift that many businesses have undertaken, to meet the needs of their customers and channel partners.
However, this doesn’t only allude to internal transformation; a channel business’ desire to expand its service offering has seen a strong increase in the number of acquisitions and takeovers, collaborating with partner companies before purchasing and re-branding their services under one name.
Many of Agilitas’ channel partners have utilised its 2020 research and insights to enhance their own service strategy – sometimes transforming its entire internal operations in the process. Despite the perceived weakening of the economy, this has allowed channel businesses to expand their portfolio across Europe and the Rest of the World, enabling them to trade in new markets.
For channel businesses, demonstrating that they have a worldwide services provision is crucial in mitigating any uncertainties surrounding Brexit. This is also dependent on how their end-customers leave current markets and enter new ones, ahead of the UK’s separation from the European Union on 29th March 2019. Companies such as Unilever, Lloyds of London, Goldman Sachs and easyJet have all confirmed – or have rumoured to be confirming – that they are moving offices out of the UK. Therefore, even though Brexit will most certainly have an impact, the aftermath of 29th March 2019 around skills and resources will take far longer to become known as we make the transition.
As a result, Agilitas is predicting the themes of Globalisation, Relevance and Transformation will feature heavily in the strategy of its channel partners in the months and years to come. Internally, we are already working with our channel partners to analyse how we can further foster innovation and collaboration to ensure their strategic goals are not only met but exceeded.