Partner Relationship Management (PRM): The Ultimate Channel Sales & Partnerships Podcast

36 - Selectivity in Partnerships + the State of Channel Research + ChannelCon with Carolyn April

• Magentrix • Season 1 • Episode 36

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Carolyn April discusses: the state of the IT channel, research availability, the impact of AI, the importance of quality over quantity in vendor-partner relationships and what to expect at ChannelCon.

She also shares exciting details about the upcoming ChannelCon event in Atlanta. As well as taking us through her journey in the tech industry, highlighting significant shifts such as the move from hardware reselling to cloud computing and the current buzz around AI.

📽️ To watch the video of this podcast, please see here.

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References:
ChannelCon 2024 is happening on July 30 - August 1, 2024 in Atlanta, GA.
To learn more about ChannelCon, please visit their website here.

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This production is brought to you by Magentrix ✨💜
Magentrix is a pioneer in platforms for partner ecosystem management and partner relationship management 🤝

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To learn about Magentrix PRM, please visit www.magentrix.com

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Podcast Credits:
Host: Paul Bird
Executive Producer: Fereshta Nouri
Content & Research: Fereshta Nouri
Graphics & Branding: Fereshta Nouri

Paul Bird:

This is partner relationship Management, the Ultimate Channel sales podcast. Welcome to another episode of the Ultimate Channel Sales podcast. I'm your host, Paul Bird. So our guest today is a seasoned professional with over two decades of experience in the technology industry, specializing in IT channel program strategy, business strategy, and market analysis. She's a respected voice in the tech community, having authored numerous articles and reports, previously serving as editor for Channel Insider and the principal analyst for IPed. That's the Institute for Partner Education and Development. Today she's the vice president of industry research at CompTIa. She's here with us today to discuss selectivity and partnerships, the state of channel research and Channelcon. Please welcome Carolyn April. Welcome to the show, Carolyn. It's great to have you here.

Carolyn April:

Excellent to be here. Looking forward to our conversation today. Paul, thanks so much.

Paul Bird:

No problem. So tell us, what are some of the highlights in your career in the IT channel so far?

Carolyn April:

Oh, boy, that's a big question. Highlights in the IT channel. I've been in the channel now. I was trying to do some calculation here, aging myself for, I would say, since about 2003. All right, so there's been a lot of change in the last 20 years or so. Clearly, we moved from being, when I got into this game, you know, very much a hardware reseller world. And it was a Var. It was the VAR world. In fact, I was an editor for VAR Business magazine back in the day. So, you know, so much has changed, yet so much is the same. I will say within the channel, there's still a very strong reseller lineage. There are lots of companies that still make a, very good living being more of a reseller mode and selling hardware. We're all going to still need hardware for all the abstraction that we see happening because of the cloud and the Internet and everything else going, software as a service, etcetera. At the end of the day, we still need some devices, and we still need wiring and networking gear to hook things up. So we've never seen a full scale evolution just to a completely new thing in the channel, which I think is okay. It's sort of like a foot in the old and a foot in the new. Cloud computing really did, though, shake things up. So I would underscore that as a highlight to the channel. When I started at Comptia, which was in 2010, we had just formed a working group about cloud computing. It had just gotten onto the scene, and this working group was a bunch of very apprehensive, I would say is a good word for apprehensive channel owners sitting in the room wondering what this all was going to mean for them, and quite frankly, being a little bit on a m negative side about it, potentially putting them out of business. You know, if everything is going to move to the cloud, you know, what are we selling? Does the vendor need us to be in the middle as the intermediary? A lot of questions. And so I watched this apprehension turn into a little bit of a light bulb going off over people's head that, maybe this is an opportunity. Let's figure out where we can play here. And we've all seen this play out. There has been significant change in the go to market strategies for a lot of channel companies with how vendors build their products and services and what they're selling. We've seen the rise of the online marketplaces to such prominence in our industry, whether it's the AWS's of the world, or the Googles, or the Microsoft Azure's, those marketplaces are real juggernauts and they're not going anywhere. And that has changed the way that the channel has to do business. They either have to learn to play nice and figure out a way to make their money, in and around those marketplaces, or try to compete. And I'd argue that the competition piece of it is the losing proposition for a lot of channel companies. So it's really about trying to figure out how you can fit and provide your value in and around marketplaces and what they do well. So, a lot of highlights. I mean, I could keep going on and on. I think right now we're entering an era of AI right now, which was remains to be seen how that's going to impact the channel. But it is certainly, I would say we're back to that room that I was sitting in in 2010 with the channel owners wondering what was going to happen with respect to cloud. I'd argue we're in that same place a little bit with AI today and the same channel owners going, m, how do we monetize this? How do we take advantage of it? Is it going to kill us? It's up in the air right now.

Paul Bird:

And that change is always going to create opportunity and you're always going to have this kind of resistance to change. So what attracted you to work with comptia? What were some of the key initiatives that, you're currently involved in there?

Carolyn April:

Well, it's funny, my background is in journalism, so I spent half of my career working before I even got into tech, I was a newspaper reporter. So, I covered government and education. And I was that person before. I worked for a daily newspaper outside of Boston for many years, and that's what I thought my career was going to be, frankly. But along the way, in the late nineties, I worked in the Boston area. And for those of you out there who may know IDG very well, IDG was kind of a powerhouse in technology publishing at the time. And a lot of my colleagues at the newspaper were jumping ship. They were like, you know, they're going to this info world or this computer world magazine. And I got swept up in that. So that's how I ended up. That's how I ended up in technology. But I was in tech journalism for a very long time, and in my role as a tech journalist, that's how I came across Comptia. They were rolling out some initiatives. Todd Thibodeau, our CEO, had just been hired, and he was kind of doing the media circuit and was new to the game, and I ended up interviewing him. And over a couple of years time, when I was still in the tech journalism world, I would write stories and cover things that Comptia was doing. And so that overlap led me to kind of be interested, that they needed a research analyst. They were beefing up their research team. There's a lot of synergy between the journalism world and doing industry analysis. If you're a good journalist, you're doing industry analysis, hopefully within the context of your job, and vice versa. If you're a good researcher, you know how to ask questions, which is what comes from the journalism world. So there's a lot of synergy. One thing led to another, and the next thing you know, I got hired, and Conti is a very cool place. It's a nonprofit, does a lot of good things for the industry. So that was another really big attraction for me, is getting out of a for profit world, which media at the time was really cutthroat, and working for an organization that actually does quite a bit of good for the industry, and you feel a little bit less of that stress of working for a for profit organization. So there's. Yeah, not gonna lie that that was a big attractor as well.

Paul Bird:

So what do you think about the current state and availability of research data and findings, and are they really available for the people seeking it out, whether they're channel chiefs or channel partners?

Carolyn April:

Yeah, I mean, I think that content has exploded to a point where it's almost overwhelming. So I do not think that we have a scarcity of research analysis. You name the content, podcasts. I have my own. So, you know, I've got one, and I join many like this one. Blogs, you name it. So, content? Tons of it. Research? Tons of it. All right. Then you get into the quality conversation. So how good is some of that content? Right. There's a lot of good research out there. I'd argue our research comptia is quite good. There's other sources of very good technology research as well. There's free research. There's four pay research. So, I mean, I don't think anyone in the industry, vendors, channel chiefs, even, you know, people in the channel who are looking to get some research that helps them fuel a presentation, helps them make a decision about their own business, whether they're going to enter a new market or anything, are going to have problems finding that research, where I think it gets a little trickier is what to do with the research. So take, you know, making sure that you have the ability to take a look at what's there and understand it and comprehend it in a way that you can apply to your business, and that's not always intuitive. So I think when I say good research and bad research, what I sort of mean is you can have a lot of good data, but unless there's somebody who's the explainer in chief that can kind of help you with that data, sometimes it's not as useful as you think it might be just because there's a ton of numbers there. So.

Paul Bird:

So aside from your own research, where do you turn for it? Channel research and other insights?

Carolyn April:

Oh, we use all kinds of sources, so we are happy to play nice with other research firms. We don't think that we have the best in the one and only, and we, and we don't play in a lot of areas when it comes to some straight up market sizing and things of that nature. We turn to IDC, we turn to Gartner. We use those sources. We do a lot of workforce studies. In fact, that's probably like our bread and butter at CompTiA, is workforce studies related to the technology industry. So we use tons of government statistics. We use the Bureau of Labor Statistics like crazy. We use, like, we use a lot of other sources, and we're happy to marry those very good sources in with what we do well and hopefully provide value and a, comprehensive picture for the people in our membership and the people that are interested in reading what we have to say.

Paul Bird:

Very good. So, Comptia has channelcon coming up soon. Tell us a little bit about what we can expect from the conference.

Carolyn April:

Yeah, Channelcon. Wow. It's our big event of the year. It represents our largest membership event of the year. We've got a lot of membership events all over the world that happen all year long. But Channelcon is kind of like the big come home and see everybody event that we do each year. It is typically a great place for all channel companies of all stripes to come. So you've got vendors, you've got MSP's, you've got solution providers, you've got vars, you've got consultants, and everybody comes together. Distributors shouldn't leave the distributors out, and everyone comes together. And it's generally, it's like, unlike a lot of industry events, Channelcon is non vendor specific. We are vendor neutral. So you're not going to see a lot of sales pitches up on stage. We're not giving you a keynote sponsored by. Fill in the blank of vendor. I won't single anybody out here, which is what you get from a lot of for profit events. And that's okay. That's just the way those events are run. Channelcon is different, though. A lot of the content, most of the content is educational, so there's a lot of training modules. If you're interested in something very specific about how to run your business better, whether that's marketing, sales, finance, you name it, you can find that sort of thing at, channelcon. A lot of research presentations like my own. We try to touch upon anything and everything that channel company would be interested in seeing. Typically, we have a big keynoter this year. We have, Kara swisher is our keynote. So most of you out there in the tech world should know who Kara is. If you don't, she's a really cool pundit who's been in the industry a very long time. Started as a journalist, like myself in the tech journalism world, has a cool podcast with Scott Galloway, who was our keynoter a couple of years ago. So she'll be talking with our CEO, Todd Thibodeau on stage. That's always really fun. We've had celebrities in the past. We've had shacks from the basketball world. We had Peyton Manning one year. We've had some, yeah, we, kind of go back and forth between some big stars or celebrities in the sports world or whatever, and then also in the tech world. So it's a good time. I think if you come and the only thing that you get out of channel con is some great networking, that's a win for you. I think a lot of the people who do attend channel conscious, like, love talking to their peers, and that's part of what it's all about.

Paul Bird:

So where is it, when is it? And anything else that you're really excited about in particular?

Carolyn April:

You want logistics. This year it is. Let's see, it is in Atlanta this year. First year that we've done it in Atlanta, so it'll be a new city for Channelcon. The two main dates where you will see the Keras whisper keynote and then a second day of full programming are on the 31st and the first 31 July, 1 August. So if you haven't, there's still, registration is still open. If you are, a Comptia member is free for you to attend. You need to get yourself there and all of that, but, as far as the conference goes, it is free to attend. So that's another one of the big perks of joining Comptia as a member. But registration is open, so if you're in the Atlanta area in particular, so you don't have to figure out how to get there right now, and it's close to home, come see us. We'd love to have you.

Paul Bird:

That's awesome. And how about yourself? Will you be speaking at, channelcon this year?

Carolyn April:

I am moderating a mainstage panel on the second day. So the keynote with Kara is the first day mainstage session, and then I've got the second day mainstage session. And so we're doing a power panel with the four really bigwig luminaries in the industry. I don't have everybody's name in front of me right now, but it's representation across vendors, distributor. We've got a couple MSP's and we're going to be talking about the evolution of relationships in the channel. So the evolution in particular of partner and vendor relationships, and throw in some distributor relationships there as well, because a lot has changed since we moved from that previously discussed era of the VAR to what we are today, which is much more of an ecosystem where the power balance is not really the same, with vendors kind of manufacturers owning all of the power and kind of dictating the terms of what relationships look like. Partners are in more of a leveraged seat now where they can make some demands about how those relationships work. So we're going to talk about all that fun stuff on stage. So that's day two. It'll be in the morning on the keynote stage.

Paul Bird:

Very good.

Carolyn April:

Yeah.

Paul Bird:

And those of us that, can't make it to the event this year, is there a way that we can hear a recording of your session? Somewhere afterwards.

Carolyn April:

That's a good question. They do do some recording. I believe the main stage sessions are recorded, but that unfortunately, I don't have the correct answer one way or the other. So let's circle back. If there's a way for you to kind of get that message out, I can get the answer for you after the podcast.

Paul Bird:

That'd be great. Absolutely. So, as a researcher and an analyst, what areas do most of your research focus on in regards to the IT channel topics?

Carolyn April:

Sure, I focus mainly on the IT industry, the tech industry, and specifically the channel. But then as vendors relate to the channel and as distributors relate to the channel, I do two flagship studies each year, in addition to a bunch of smaller studies. But I do an annual state of the Channel research report, which is a really big blowout on all things state of the channel. And that usually comes out at the very beginning of the year. So look for it in like the February March timeframe. I'm working on it in January every year. We've done that for eleven years straight. So the research is pretty comprehensive in terms of doing year over year over year comparisons of the data. So I ask a lot of the same questions each year to be able to track how things have changed or not changed. And then I also include a lot of new questions each year, and those typically are based on whatever happens to be trending at the moment. So, you know, we'll ask AI questions, for instance, probably in the coming year and things like that. I also do a study at the end of each year that I do with my colleague Seth Robinson, which is called the IT industry outlook, which is more of a take not just on the channel, but on the industry itself and what some of the trends are. And they can be very technology specific trends. They can be business trends, they can be workforce trends, because comptia spends a lot of time on workforce. Those are the two big studies that we do every year. But in general, I'm also got my hand in a whole bunch of other things. Studies on the workforce. We did a study last year on the MSP's and how they run their HR function, and what some of their workforce pain points are with skills and hiring the right people, and what some of the travails that they may be going through right now and trying to staff up, keep the right staff, etcetera. So a lot of irons in the fire, but typically tech industry channel specifically, and a lot of trends around those two areas.

Paul Bird:

So with your state of channel report, who should really read it? Is this targeted at channel chiefs. More channel partners? All the above. Who's kind of your target audience?

Carolyn April:

The respondents for the state of the channel are channel companies. So the data is their life, their lived experience, what's going on with them. So it's particularly instructive to vendors and distributors who work with channel partners to get to see what their ecosystem is up to. But it's good for the entire palette of tech industry people. So whether you're an MSP, a lot of vendors will take my research and then disseminate it out to their partners. A lot of vendors use it in their own materials, so they'll pluck data points or various PowerPoint slides and put those in presentations. But it's a good primer for all of the above. As you said, it's not really targeted at one audience or another, but a channel chief would get a lot out of it in thinking about how they're going to craft their partner programs, for instance, or how they're going to do partner recruitment and partner marketing, because they figure, you know, they'll be getting, you know, they'll look at the data and they'll be able to see exactly what these potential partners of theirs are doing or want out of things. But it's also useful for the MSP community to look at this and say, how do I compare to my peers? So they may look at the data and said, it says here that most MSP's are involved in cybersecurity today. Well, I'm not. Why is that? Should I be, you know, so they can take a look at the data and do a, you know, compare, contrast, which everybody loves to do on, you know, their business versus what the data is showing them. The majority of other businesses doing that are like theirs. So it fits a lot of audiences, let's put it that way.

Paul Bird:

So over the years, would you say that there has been a real impactful change in the IT channel landscape that has helped kind of shape the direction of your research?

Carolyn April:

Yeah, I think the shift to services has really been a, big one. We find it's been a slow march, but in the time that I've been doing the state of the channel study and we ask, like I said, we ask the tracking questions every year, you've seen a greater percentage of our respondents say that the bulk of their business is coming not from product transactions, but from services. And the other change that we've seen, which takes this a little bit further, is we are seeing more and more of our respondents say it's not just technology specific services, but business services that they are now involved in. So we have seen this kind of evolution of the channel from product reselling to technology services, which could be very specific, like we're doing cybersecurity services to you as an MSP to business consulting and the services around that. So these are channel companies that really have evolved into something a little bit more sophisticated, and they are sitting down with customers and working through particular business outcomes that a customer wants and helping them apply technology to that, but also working with them, on the business goal, which is a higher level of complexity, I think, than doing just straight up technology services, which can be as basic as doing, if you're an MSP, remote monitoring and management of a customer's environment, doing patch management and doing all those kinds of things that MSP's at the very basic level provide, but then ratcheting that up to working with your customers on the type of business applications that they're going to need to help them meet a business goal that is like a next level. And so that is the trajectory that I've been watching, and that is kind of the most exciting and interesting that's going on in the channel as we see today. I mean, we see more and more channel companies who will say to us, we don't sell product at all. We are really doubling down on our consulting business. For instance, in the AI arena. I'll just throw this out as an example. We're seeing a lot of channel companies who initially were scratching their heads going, what are we going to sell? How are we going to make money off of AIH? And as you can imagine, AI really isn't a product. AI is an enabling functionality or piece of other products and services. It's a function, and you typically don't sell that. So what is the channel going to sell and how are they going to make AI a business opportunity for them? Well, a lot of companies we're talking to today are deciding that we're going to help our customers figure out how to work with AI. So we're consulting around AI. Instead of selling them AI, we're actually talking to them about how they can take advantage of AI tools, how they can take advantage of AI solutions. And we're calling ourselves sort of an AI architect or an AI consultant. So that's another kind of change in the way that the channel is operated. Now. I don't want to overstate that everybody's moving in that direction. They're not. There's a lot of channel companies out there that are staying in their lane and they're still selling a lot of product and they will continue to do so, and that makes complete sense. But we have definitely seen the changes in the type of channel companies that they've really kind of mushroomed over the years into all different types.

Paul Bird:

So in this kind of topic of channel evolution, how do you think the relationship between the channel partner and the vendor has really evolved over the last couple of years? And, you mentioned the impact of what AI is going to have in the future and the evolution of services. But is there a marked difference in the way that channel partners and vendors work together, let's say, over the last five years?

Carolyn April:

Yeah, definitely a lot has changed in that regard. I'll start with some data that we had from this year's state of the channel, which was what we're going to really talk about during my panel at Channelcon, because it's pretty interesting data, and it's the first time that it has changed dramatically in all the years I've been doing this study. So we ask a question, very basic question. It's almost a, foundational tracking question. How many channel partner programs are you formally enrolled in? You know, are you a formal member? Very basic tracking question. And we give ranges of how many. And for the last ten years, until this year's study, that has remained pretty stable. The number of partner programs, the sweet spot was like between five and 14, mostly on the upper range, closer to 14 this year, that changed dramatically. We saw a drop in participation across the board, and that a big chunk of the channel firms were only involved in between like four and six channel programs. And so that was a big change. Like everything, all my charts were like, this is different. This is different, right? Why is that? And so I started to look into it, and there's definitely a selectivity thing going on here. Channel firms are becoming much more picky over who they're going to work with. They're choosing quality over quantity. And yet the other data point that correlates with this is that they are participating in fewer programs. But we also ask a satisfaction question. Satisfaction ratings with their vendors went much higher this year. So you get fewer programs, much more satisfaction. So what that tells me is that partners are finally like, I don't have to sign up for every single program out there. First of all, I never take advantage of half these things. I might only sell one product once from this vendor, and yet I'm in their program paying whatever I have to do to belong. And at some point, everybody this year, you know, decided that was not the way they wanted to go anymore. And I think the greater satisfaction tells me that this isn't necessarily a bad thing, even for vendors. If you're a vendor, do you want all those partners that are really not really selling or doing anything? But you could just say, well, we have hundreds of thousands of partners in our program. How many of them are actually doing anything that is consequential for your business in a good way? When you just, then you can just stop focusing on all of these partners. That might only bring a very tiny fraction, if any, revenue to you in a given year and focus on the ones that are fruitful. So I see this as a win win for all. But, you know, a lot's changed in, you know, to get back to your original question is that, you know, it used to be a very linear go to market chain where the manufacturer, the vendor, their program is what mattered. They dictated all the terms downstream to the channel partner. You know, how you got volume discounts and rebates, and this is the MDF we're going to give you. And if you don't meet these quotas, then you don't get the discounts and you don't get the rebates. And there was a very one sided relationship that's changed pretty significantly in the cloud era. and also with the fact that there's so many more vendors out there. It used to be when I first started in the channel, if you decided, I'm a channel company and I sell hardware with some software, shrink wrap software, and you had, like, two vendors to pick from on each side. Am I going to be an HP reseller or an IBM reseller on the hardware side, or a Cisco reseller? And then on software, you were picking between Oracle or Microsoft. And today there's a, bazillion different vendors out there. A lot of them are SaaS vendors in the cloud that you have to choose from. And if you're niche, you can find a really cool cybersecurity vendor that isn't the market leader necessarily, but fits really well with your line card and what you're selling to your customers, and you go that route and you go deep with them. So it's a very different landscape, for sure.

Paul Bird:

And in my time, I was working for one of the first compaq resellers in Canada.

Carolyn April:

Yes, yes.

Paul Bird:

Sun Microsystems was on the list of hardware that you would offer, and then, well, Oracle came in and changed that relationship. So what do you think some of the key factors are that drive the satisfaction or the dissatisfaction in these relationships. Are there other specific key factors than just going deep with a vendor?

Carolyn April:

Yeah, there are. I mean, obviously the number one factor is revenue generating. If you're gonna make money, that's all. Just make that assumption. You're probably not gonna work with a vendor that you make no money with, but it's not the only thing. And what we've found is that there are partners out there who work with vendors who they do make money with. But if that vendor is just incredibly difficult to work with, a lot of friction, bad communication, bad partner experience, to use that catchphrase. But partner experience is really important. We've found, and we have data to prove this, that there are partners out there that will stop working with that vendor despite the fact that they made some money with them and they'll just move on to number two. That might provide, you know, it might for them. They'll may make a little bit less with somebody else, but have a far, far better experience in working with them. So the zero headaches actually becomes more valuable to them than whatever margin points they might be getting between the two vendors. So part of our experience is really high up there. And what determines satisfaction. In fact, it's way above, and that includes so many different things. Communication is the number one thing. Communicating in the right way too. It used to be, you know, just one way of communicating. In this very omni channel world that we live in, it is very important for vendors to understand the different flavors of partners that they have and the different ways that they may prefer to communicate. So, you know, there are some younger channel companies out there that are doing everything through texting these days. I mean, they have like whole text relationships in business. There are ones that only want to be communicated with via, email or whatever it happens to be. Understanding those preferences is going to be important. Being clear in your communications, making things easy, like by using the right kind of PRM software and the right portals so that, you know, your partners know how to work with you. Working with the right distributors. So a lot of distributors today are kind of the, they're the savior to a lot of partners who can't figure out how to work with all the vendors they have on their line cardinal, who each have their own PRM portal that you got to try to manage and understand. You find the right distributor who can kind of aggregate all of that for you and take a lot of that pain of management that helps as well. So all of these, I think making it easy to do business is really the number one thing more than anything else out there, other than the money factor that drives satisfaction in these relationships, and it's not a trivial thing, it's not easy to do. And for many small channel firms who have, on average, we find, the average channel company is like ten people, ten person shop, maybe a million in revenue, maybe having anyone dedicated on staff to manage all those vendor relationships, that's wishful thinking. It's usually the owner trying to do whatever, somebody in sales, and it's hard to manage that full time. So the easier that a vendor makes it to work with them, the more likely you're going to find some loyalty there and high rankings in terms of satisfaction.

Paul Bird:

And that loyalty is so important. So from the vendors perspective, do you think the less is more approach can lead to an increase in satisfaction among their partner firms?

Carolyn April:

I think it can. I think it's showing that in our data, for sure. If a vendor is able to focus more of their attention and it's not spread thin on fewer partners who are very devoted and loyal to them, that's a win win situation for both. You're working within a smaller ecosystem that's in tune with one another, and that just works. And I can't see why that wouldn't generate higher satisfaction rates than being sort of the outlier partner who doesn't get any attention over there. But the vendor doesn't benefit from that either. They may not have to pay attention to all of those partners out there, but they're not making any money off those partners either. So nobody wins in that case. So, yeah, I think the less is, more is a good, now, we vacillate, we go back and forth now, this will change. There'll be a cycle again where channel chiefs are going to, they're going to move to, we need as many partners as possible. Big footprint, everybody. And that, I promise you that will happen again. But right now, we seem to be in an era right now where less is more. Talk to me. You know, five years from now, that'll probably change again. We'll have the long tail versus the short tail again of the number of partners that we need.

Paul Bird:

Or maybe it'll be six months to a year with the, well, it could happen faster now.

Carolyn April:

You never know. You never know.

Paul Bird:

now, do you think changes in business models and shift in tech focus have kind of influenced these channel firm relationships? And do you have any research about that?

Carolyn April:

Yeah, we do a lot of business model research, and changes in business model have definitely altered the relationships. You know, I won't rehash everything we've talked about here. But the shifting from a product reseller relationship with your vendors to a company that is based on your own services, your own brand and reputation out to the customer in many cases, meaning the vendor and their stuff is abstracted from the customer, the customer doesn't see that at all. Used to be the customer would want to know, hey, are you an IBM shop? Because we like IBM products and you better sell us IBM products today. The customer's like, I don't know, you know, they're signing up with an MSP. They know the MSP that works with them. they don't necessarily know what the MSP is using on the backend from a vendor perspective. So it's really all about the MSP's services, the MSP's brand and reputation. It's one of the reasons MSP's and other channel companies have had to finally understand what marketing is all about. They didn't used to have to worry about marketing so much when it was the vendor they led with. Now they lead with themselves. So that's changed the relationship dramatically because the vendor needs to understand more about how the MSP's business runs and m make sure that the MSP's business runs well in order for them to prosper, as opposed to seeing their channel partners as simply a sales arm extension of their own products, which is what I think the old school model used to be. So as more channel firms move into services, become MSP's and are really more of the face to the customer and the vendor product itself is abstracted, then you see what matters in partner programs change. Volume discounts and rebates and things. All of sort of the old table stakes things that were in partner programs, they don't really matter as much anymore to the partner. Today's partners are interested in what vendors can help them do vis a vis training. Like can you help me train business training, any other services training, help me run my business better and be more effective? That is more valuable in a partner program than a volume discount. That used to be the big thing that you would get. What are the margin points I'm going to get on the hardware I sell? So yeah, the business model changes have absolutely changed the way relationships have to work.

Paul Bird:

Absolutely. And I've seen those changes over the years myself, going from again, a hardware value added reseller, also selling Microsoft and looking at volume discounts, to now looking at today and looking at the trends that are now shaping the channel ecosystem. From your perspective, when we start looking at those trends, the initial big trend was the move to cloud, and then cybersecurity became an evolution of the channel. And now we've got the AI piece. Do you think that the AI machine learning are influencing channel sales and partnerships, or how do you foresee it having an effect on the channel today, if any?

Carolyn April:

Well, we've got data on AI. AI is definitely on the radar, and I think every channel firm needs to think about AI. Whether or not it becomes a big part of their business remains to be seen. There will be some channel companies who. It becomes a very consequential to their business. There are others that might be something to do with their business, others who don't. But if you ignore it completely, you risk being obsolete. You really do. So you can't ignore it, just like you couldn't ignore the cloud back in the day. But right now, our data shows that, especially in 2023, AI was really experimentation internal use. The channel wasn't selling anything for the most part. You know, they were using it internally. They were doing the things that their customers might be doing, you know, using AI in their marketing tools, using AI and HR doing some pilot projects with it that's still ongoing, trying to figure out where AI is going to fit if, you're an MSP. They were using it internally to do some, to continue their automation push. Using AI. There's a lot of uses within an MSP's operations that AI makes a lot of sense. There's tons of uses for that that can free up some of the level one basic tech engineers on the help desk for an MSP. A lot of those tasks can be done through AIH. Frees up a lot of resources for an MSP to elevate those human beings in their organizations to more strategic type of duties. But we are seeing that in this year's state of the channel. We asked the question. So, all right, you spent a lot of time thinking about AI, researching it, experimenting with it. What do you think for 2024 and beyond? And, a greater percentage say that right now, they're turning their attention to how they can monetize it, how they can make some money off of it, and they do plan to sell some sort of AI solutions this year and beyond or, and, or get into that consulting posture about AI. So helping their customers figure out what their AI strategy should be and making money from that, being sort of that AI guide for their customers. I'm not necessarily selling AI products, so we will definitely see more to come, I guess, would be a good way to put that. I would not put AI right now in a place where you would say it overshadows what the channel is doing with cybersecurity, which is very much in the forefront of the channel right now. Every channel company, whether or not they are small, big, medium, whatever, has to think about cybersecurity. It's important. And that goes beyond the basics of, yeah, we have AV and we sell firewall services, and we do all that. They have to think about it a much, much higher level for their customers today and realize that just because they might be a small company and all their customers are small companies, they're not immune to the data breaches and ransomware and the potential problems that can happen out there. So I would say cybersecurity is still the big opportunity. It's the direction that channel companies need to go with a lot of their practices. And AI is still something that I don't feel like we can speak to with a lot of specificity about where the channel is actually in the fit.

Paul Bird:

Do you have any insight into whether or not and how channel partners are leveraging AI to enhance their cybersecurity offerings?

Carolyn April:

Well, they can certainly start applying some of those tools to proactive detection. Right. Whether or not there's been some sort of malware or anything introduced to their customers networks, that needs to be addressed. So I certainly can see AI being applied there, and a lot of the companies who are deep into cybersecurity on the channel side are doing that today. So use those tools to help you be faster and more effective at, recognizing a potential breach before it happens or when it's about to happen. So, yeah, that's definitely happening. I think that a lot of the more progressive channel companies with respect to cybersecurity realize very much that AI is going to be important for them. The other angle on the cybersecurity thing in AI is data, and how the channel is using AI to make sure that data privacy is respected, that they are using the right data. So they're working with customers to make sure that, as we all know, that AI is only as good as the data that it gets fed. Otherwise, it's no good. So a lot of channel companies are seeing opportunity there. It's like, well, we can make sure that you are feeding your AI systems with the right data to make sure that you get the right answers. And so the data, it's kind of a two pronged opportunity here, and they intersect, too. So you've got cybersecurity and AI, the data and AI, and then the two do meet. So a lot of good channel companies, savvy channel companies are pursuing both of those.

Paul Bird:

Absolutely. Do you have any advice for channel partners who are really hesitant to adopt new technologies? AI is not going to be the first. We're going to see more of them in the future. But any advice on people that are a little resistant to that change?

Carolyn April:

Well, they might be in the wrong business a little bit, but we change all the time, unfortunately. But that being said, I think I said earlier, there are channel firms that are in their lean and they're doing quite well. I'm loath to use the term lifestyle, but there are small SMBs out there that are perfectly content in the business and doing well. They're putting their kids through college and they're paying their mortgage and they're taking their vacations and they're doing really well. I grew up with a dad who ran a small business, not in technology, but he reached a certain point in his career where he was done with trying to grow revenue year over year at a certain percentage and all of that. He was like, he was happy, you know? And so for those channel firms, you know, I'm not going to push upon you that you have to get into this market or that market or this technology, that technology. But for those who are in growth mode, who do want to try to expand their business, they want to get into the, you know, a better business model, you have to take some risks. And I think, you know, one of the things that we find with the channel is historically, is very risk averse. Doesn't borrow money, you know, doesn't want to finance anything. And it's sort of like you can operate that way to a certain point and then you can't. If you really want to take it to the next level, if you want to go from the 1 million to the 2 million to a $5 million business, those are big growth spurts, and you can't do that on your own credit card. You've got to think about taking a risk and borrowing money. And scary as it is, it's a truism for all businesses, whether you're in tech or not. And so if you want to grow, you got to take risks. I feel like this is captain obvious here, but it is true. It is very true.

Paul Bird:

So as we start to wrap things up, what do you think the biggest challenges are that are facing channel partners today?

Carolyn April:

Oh, biggest challenges, well beyond economic uncertainty, which is always at the top of our list. And it has been a big challenge for channel companies in the last year. Things that affect all of us affect the channel, too. So inflation has been a big problem for a lot of channel companies. It's made their customer spending hard to predict, let's put it that way. So they can't do sales forecasting the way that they used to with any sort of certainty. And so any of those macroeconomic issues, which we don't have any control over, but they loom large for channel companies. And right now, I can't say we're not in a particularly stable time right now. So macroeconomics is a big challenge for the channel going forward. What is going to happen with AI is a challenge. You know, I mean, you can read a headline where it's going to be the next best thing for all of us. It's going to reinvent how we do business, how we do healthcare, how we do everything in a good way. And then you can turn the page in the newspaper and read an article that's going to tell you that it's the death knell of everything. You know, it's the, the world as we know it is going to cease to exist. Human being, humanity is a humanity. So I think that there is some wrestling that goes on with that. So those two things are pretty high level macroeconomic concerns, and what's going to happen with AIH or high level. I think, though, like, on a day to day basis, challenges that the channel have are in those things like deciding whether to take a risk with their business to grow, deciding whether this is the year they're finally going to go all in on being a services business and try to wean themselves off those low margin product sales that they still are living in. Those everyday decisions that small business owners wake up and have to face are just going to be the perennials that they continue to grapple with every year. I don't have any sort of magic answer to that, that there's some giant, looming challenge on the horizon. But I think it's more iterative, and, it's the same things that we face all the time.

Paul Bird:

So on the other side of the coin, what about some of the most exciting opportunities for the channel in the current market?

Carolyn April:

Well, I, will latch onto AI again. It could be a huge opportunity for the channel. I think I'll double down again on cybersecurity. I think that is a huge opportunity. We asked this question on the study this year. We always ask whether you're feeling optimistic or pessimistic about the channel and there was a lot of optimism on the answers this year, and we asked, well, what do we need for optimism to continue? What's going to keep the health of the channel on the uptick? And the number one answer was the continued complexity of technology, which I think is funny because you read that and you think that's a negative. Complexity usually means it's hard. Oh, no, you don't want that. You want things to become simpler and easier, and yet the channel stays healthy if technology stays complex and continues to be complex, because we need experts. So the consumer out there in a non technology business needs experts to help them. Just as I'm not a doctor and I need, when I need a medicine, need a healthcare need, I need to go to an expert. I'm not a lawyer. If I have a legal problem, I need to go to a lawyer. If you have a technology problem and it continues to be complex and it's gaining complexity, you need experts. So I think the more complex cybersecurity is, the more complex AI is, the more complex the interrelationship between a lot of these technologies are, the more we're going to need technology experts out there to fill that void for customers. So that is a big opportunity. To be able to present yourself as the person who can solve those problems for people is really a big opportunity. I think this is also going to be the era where we finally see more companies moving into managed services for real. We've been kind of stuck at, like four in ten channel companies identify as doing managed services in a pure play kind of way, whereas that is the vast majority of the revenue. It's not just something they do, but it's all of what they do. I think we're right on the precipice now of seeing many more channel companies jumping in. Finally, they were the ones who were risk averse and didn't make the change, who are now finally going to make that change in managed services for real.

Paul Bird:

I was right at the start of the managed services kind of era, where the, you know, you're no longer making money on hardware, so you had to move to services. Yeah, and it was a game changer for a lot of people. But you're right, it kind of stalled for a little bit. hopefully we'll start seeing more and more in the coming years. Anyway. Any, predictions for the it channel in the next five to ten years.

Carolyn April:

That it will not go away? That'll be my biggest prediction because I've sat in the audience and listened to many a keynote pundit get up on stage and warn all the channel companies in the audience that the death of the channel was right around the corner, and if they didn't do this, this or this, then, you know, it was going to be wiped out and we wouldn't need the channel anymore. So far, I haven't seen that prediction come true. So I'm going to piggyback on that in reverse and tell you that the channel is here to stay. It may look different, but it is not, on its way out. The death knell is overrated. I want to quote Shakespeare, but I can't remember the quote. And so I'll just leave that one out there. I know it's a little pithy, but.

Paul Bird:

It is what is, and the channel's been around for a long time. I don't think it's going anywhere anytime soon.

Carolyn April:

No.

Paul Bird:

All right, Carolyn, thank you so much for being a guest on the show today. It's a pleasure to have you, and good luck at Channelcon.

Carolyn April:

Thank you very much. Yeah, it was great to be here. have me back anytime. I loved it. Thanks.

Paul Bird:

Absolutely.

Carolyn April:

M.

Paul Bird:

All right, guys, thank you for listening to the Ultimate Channel sales podcast. Please don't forget to join us next time. For more information, please visit channelsalespodcast.com. if you haven't already, please like and subscribe to our podcast. And if you enjoyed this episode today, please leave us a five star rating from the Apple podcast app. Just select our show, scroll down to the rating and review section, and click write review. And don't forget to share with your friends or professional network anyone who enjoy it. See you next time on the ultimate Channel sales podcast.

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