As tech vendors shift to XaaS delivery and subscription revenue models, they are adjusting their go-to-customer strategies to accommodate changing customer needs. XaaS customers demand more engagement over a longer period across pre-sales, sales and post-sales activities. Vendors must engage earlier in the buying cycle and allow customers to sample solution offerings in their own environments. In particular, tech vendors must ensure the successful implementation, adoption and expansion of those solutions. As a result, vendors are actively questioning the role of channel partners in the new go-to-customer construct.
Historically, many of the indirect sales motions deployed by legacy hardware and software vendors revolved around deploying value-added resellers (VARs), distributors and other resellers to deliver and install on-premise solutions at the end-customer site. Often, the reseller regarded the end-customer as “their customer” and the vendor had little customer involvement after the initial booking. The subscription world mandates a different approach: the natural question is, “Does this obviate the need for partners entirely?” Naturally, this has created considerable uncertainty and anxiety in the partner community.
Fortunately for partners, vendors (particularly those that are growing) are not abandoning the use of indirect channels. In fact, according to a recent Alexander Group survey, tech growth companies with an indirect channel play are actually spending about 15 percent more on partners as they transition to XaaS. The investments vary but include enhanced internal partner support personnel, better digital enablement and automation, increased marketing collaboration, and other key partner growth enablers.
While vendors are clearly investing in the channel, it is important to note that most are directing the investment to a smaller set of more capable partners. Channel leaders are focusing on culling the “long tail” of their partner community to maximize their investments on those partners that can complement the move to XaaS. Alexander Group’s recent engagements indicate a coalescence around four primary areas of focus:
The XaaS paradigm is changing the way tech companies reach, engage and service their customers and prospects, so it should come as no surprise that the role of channel partners is changing as well. The good news for channel partners is that if they are willing to enhance their capabilities to provide what XaaS vendors need, they can reap the benefits of increased investments to grow their own businesses. The partners that remain viable will be those that understand gaps in their vendors’ coverage capabilities and develop complementary capacity to drive XaaS bookings and revenue growth.
Is your channel partner program working at your company? Contact Alexander Group to help maximize key partner investments that will complement your XaaS transition.
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