New Buyers, Shadow Channels Present Significant Challenges for Traditional Channel Partners

Posted by CuriousRubik on 17 Dec, 2018

Changing buyer behaviors and requirements present some real challenges to traditional IT resellers. In fact, those challenges, which include a shift in the actual buyer and the knowledge necessary to sell to that buyer among others, are only going to become greater, according to Forrester Research.

“We think that there is going to be more change in the channel in the next 18 months than there has been in the last 37 years combined,” guest speaker Jay McBain, Principal Analyst serving B2B marketing professionals at Forrester, said in a recent webinar.

According to McBain, there are a few “uber” trends affecting the channel:

  • Different Buyers

65 percent of all technology decisions are now made by business leaders across finance, operations, HR, sales and marketing -- not IT. Jay predicts this will rise to 80 percent in the next few years. In the past, CIOs would attempt to prevent this type of behavior, but today it is the new normal. In about one-third of these cases, decision makers do not involve their internal IT department. They bypass IT, avoiding possible delays, because they are under tremendous pressure to deliver results and act quickly.

  • Shifting Buyer Behavior

Business line buyers behave similar to consumers. For example, much like consumers, 68 percent of business buyers prefer to do research on their own into a new technology solution, according to Forrester. Business buyers are using online tools like Google, industry forums and peer networks to do their research before ever talking to a sales person. In addition, most people spend most of their time at work, regardless of role, using technology. The result: everyone has an opinion on technology tools and what they need from a new tool to be successful.

This change in buyer role and behavior has led to a change in technology budgets. CFOs and CMOs now spend more on technology than the IT department in most companies, and technology spend is increasing across every line of business, according to Forrester. Business leaders are deciding to spend more on technology rather than people or programs, like marketing demand gen, for example.

  • Hyper-Specialized Skills 

Buyers have researched their solution, even scoped out the technology stack required. Yet when they begin discussions with the sales person, they find that salespeople lack the specialized knowledge required to understand the buyer’s need, McBain said. In the past having knowledge of a vertical industry was enough, but today’s buyers expect sales people to have knowledge down to the specific sub-vertical industry and the needs of each department within companies operating in that sub-industry.

Shadow Channels

Most business buyers are hiring channel partners and consultants to implement their projects, bypassing their internal IT departments in many cases. However, instead of using traditional IT resellers, they’re working more with new types of partners that make up what McBain calls “shadow channels.”

Here are the different types of shadow channel partners, according to McBain:

  • XaaS Ecosystem Consultants: Line of business experts who generally anchor their practice around a select vendor(s), and understand cloud-driven best practices.
  • Industry-based Professional Services Firms: Accounting, legal and marketing firms are becoming IT services companies. For every $1 spent on a SaaS platform there is $4 in high margin services business these firms can go after.
  • Independent Software Vendors (ISVs): There are now 100,000 ISVs that are using SaaS platforms to offer their solutions in the cloud, up from 10,000 10 years ago.
  • Born-In-The-Cloud Firms: There are 10,000 companies with specialized skills that offer technology solutions in the cloud only. They frequently partner with other shadow channels to deliver their solution to customers.
  • Startup Community: These companies are well funded and disrupt traditional markets with unique technology or an approach to the market that solves business problems in a new way.
  • System Integrators: The top SI firms, such as Accenture and PWC, are investing billions of dollars in developing their digital transformation services, and they are now focusing on the midmarket in addition to the Fortune 2000.
  • Managed Services Providers: Almost a quarter of companies have outsourced to MSP that own the technology and business application for their client companies.

3 Key Takeaways

These trends put traditional IT channel partners’ business at risk. In order to adapt, survive and thrive McBain suggests three steps partners can take to assess their readiness:

1) Be Ready to Change: As a partner, what is your capacity and will to change? Are you willing to work with other partners? Do you need to hire people with the required skills to sell, market and architect for the new business buyer? Are you willing to acquire or be acquired to gain needed skills?

2) Focus on the New Business Buyer: Target the line of business decision maker via your marketing and sales efforts. Move away from focus on products, speeds and feeds and instead focus on solving business problems.

3) Specialize and personalize to meet the needs of the today’s business buyers. Identify your value-add, hyper-specialize and build your intellectual property and brand. Who is your ideal customer? Is there an industry, sub-industry, geography or other area where you do especially well?

The process for purchasing business solutions, like ERP, is changing. Decision makers and budgets reside outside of IT departments. These business line buyers exhibit unique purchasing behaviors and they require a greater level of personalization and customization. Traditional IT resellers today must consider a strategy for adapting to this new landscape or they risk being left behind.

If you are interested in becoming a NetSuite partner, we have a program that can enable you to start selling and implementing in 90 days. Contact SolutionProviders@netsuite.com to find out more.

View the full webinar to learn more about the challenges modern channel partners are confronting.

Source of the blog: Netsuite blog

Topics: NetSuite, Netsuiteblog, netsuite technical blog

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