The certifications not only created a lucrative industry but launched Brand Ambassadors into every business around the globe. Those Brand Ambassadors with their certifications were going to be buying Cisco or Microsoft.
An additional point about the certification, it was a buy-in from the partner. No fogging a mirror to be a partner, you had to take a test. You had to have skin in the game. I'm certain that won't be a telecom channel component any time soon, even though we are at a time when well trained and knowledgeable partners are desperately needed.
Finally, these companies build demand. They market to the channel, but they also market to the buyers, prospects and customers. Demand is a big piece of the puzzle.
One final factor was grass roots building with user groups. Microsoft did this better than Cisco. These user groups provided training, access, networking and more. VMWare has a large user group in Greater Tampa Bay. This helps the certified techie as well as the company. (You want well trained and engaged Brand Ambassadors.)
]]>"But bullishness on future business is tempered by worries about margin erosion. Just over half of the firms cite margin erosion as a factor that keeps them awake at night." Every sector of telecom and IT is seeing price pressure. Every sector has a couple of giants that control the lion's share.
Google, Amazon, Microsoft and Rackspace are the computing giants, but traditional MSP vendors like Cisco and Microsoft have affected MSP business models. Carolyn April, senior director, industry analysis, CompTIA says, "Naturally occurring market commoditization accounts for a portion of slimming margins, but some of the blame also falls on MSPs themselves, many of whom continue to compete with one another solely on pricing."
In an interview for Ramblings, Host.Net's Lenny Chesal remarked, "The world we see requires a lot more hand-holding, problem solving, and out-of-the-box thinking. We're really taking advantage of that, and going forward we are really focused on an open mentality toward solving problems, bringing in more, stickier solutions that aren't pure infrastructure." Creativity, Solution Selling, Out of the Box Thinking - and other cliches are actually needed today. Not just by MSPs either. CLECs, ITSPs, VARs, Agents are all competing in a different world. However, they are using old models to do that with to their detriment.
My favorite quote: "Topping the list of things that keep MSPs awake at night is cloud computing, cited by 62 percent of companies." The hottest sector that they used to own and could continue to own, but they think that price will beat them. All about Value and service.
]]>There are other associations for channel partners. CompTIA for IT training and certs. There is also the Cloud Services Community. Both have alliances with the TCA. I did a webinar for CSC a couple of years ago. With their re-boot last month, the website is new and they are looking for bloggers.
I am sure there are others, but these are the places I know to network online, educate yourself and get certifications. Join up. Be Active. Learn & Grow.
There is an association for master agencies that basically does volume buying. That group is the Agent Alliance. They have a new executive board.
And one plug for a webinar I am doing on 10/10/14 at Noon ET: 3 Secrets for Channel Manager Success - register here.
]]>At the CompTIA meeting with the Telecom Advisory Council, the size of the VAR market was discussed. Analysts rank the size of the IT sector at 120K shops (Break/fix, MSP, VAR, integrator and a heavy dose of one man IT fixers). The estimated number who will survive the current industry and economic turmoil are about 30K!
I know, right?
When you look at the numbers, you have to realize that there are a lot of different verticals inside that 120,000. Microsoft partners, Cisco resellers, Xerox, HP, Dell, Lenovo, IBM and those with no certs or authorized partner status.
The Microsoft shops have been hit by a few moves by Microsoft: end of life of Small Business Server and the closing of Tech Net - both coming on the heels of MS hosting and retailing Office 365. These guys don't want to be sales and marketing arms for MS. They like tech. I am already seeing a chunk of these guys turning to programming instead. Who wants to deal with end users anyway?!
Dell has its own special set of circumstances that make us forget the HP missteps over the last few years.
Hardware sales are moving to cloud sales. Laptops and desktops are becoming tablets and smartphones. Tech Data, Ingram and SYNNEX have had to pivot continually to adjust to this within their razor thin profit margin. Their base of VARs are a lot like Master Agents base of agents -- they share a lot / lots of crossover. That happens because as a VAR you check each data base to see has the gear in stock and close to the customer (for shipping). This will not happen with cloud services. VARs will not manage Hosted Exchange users are more than one platform. It is too cumbersome. Well, they might if they HAVE to, but they don't have to.
There are a good percentage who don't want to stop selling gear (premise equipment). It's a mindset and it is wrapped around a control issue. It will get harder for them to eke out a living.
VARs are also competing with their vendors more and more for professional services contracts and other business. That channel conflict gets old very quickly, especially when you didn't really have that issue for the last 15 years with Cisco, IBM or Microsoft. Now you do. Welcome! We have a support group that meets at the bar every day at 6 pm.
So about one-quarter will come out of all this with viable business models.
Vendors and carriers are hoping these remaining 30K will all have MSP models - meaning that they will sell a wide portfolio of services, including ours! Yeah!
The model will have to work. We are watching pricing shrink. If you are used to selling servers or PBX or video conferencing codecs for $5000 plus each sale, selling an MRC of $299 per month seems ridiculous and a waste of time.
Even at 25 points, a $299 per month service is $75 per month. You have to sell a lot of them as fast as you can to make a living.
You have to sell a lot of different services to get that MRC to $2500 per month and take your overall 10 points off that. And still have to do that often to accumulate a decent recurring pile of money.
Think about it from the carrier side: revenue is dropping constantly but their costs - especially the cost of sales - has either been stagnant or increased. But each quarter you have to report the same or more revenue or suffer the consequences.
When Gig ports are selling for $1000 or less and 10GB pipes are selling for sub-$3000, how in the world do you increase revenue?
They say that there are 4000 Agents in telecom, but less than 200 of those are vibrant (active, selling, inking). Those 4000 account for just 5% of the total telecom spend. A whopping 95% of the telecom buy comes directly.
That leaves a huge pile of sales that could be going to the channel. Let us not forget that some of that business is precluded to go to the channel. For example, government, E-rate, house accounts, wholesale and other to-be-determined later accounts are all off limits to the channel.
Welcome to telecom! We will tell you if you can sell to that account (that we haven't touched in a year) AFTER you submit the quote form. Then we will wake up our direct rep with a kick to his chair and he will call the customer directly cutting you out of the deal. But thanks for bringing it to our attention!
The cost of acquisition is going up. The markets for broadband, cellular, TV, phone lines are all flat! The residential market is tapped out. It's all about SMB. But the cable companies - specifically Comcast, TWC, Bright House and Cox - will be grabbing between 10-18% of that market by year end. That was the lucrative part of the pie chart for the ILECs and CLECs.
Carriers, hardware vendors, VARs, VADs, Master Agents and Agents are all suffering from the economic turmoil and the cloud disruption.
But now the cloud is being disrupted by the NSA!!! See Josh's blog post here. Supported by these 2 articles:
Why NSA Surveillance Will Be More Damaging Than You Think
Snowden isn't the story: the fate of the Internet is
All of which is why my pal Todd is going to crush it (after disrupting Disrupt with his let's hack capitalism idea)!
]]>the study found that "Eight in 10 say conflict has affected their business negatively, including 21 percent that described the impact as "major."
Channel "programs can prove challenging for both parties and cause headaches and hard feelings for channel partners. Problems most often occur in three areas:"
"More than a third said that a set of best practices would "make a huge difference" in improving deal registration programs," according to the study.
Sales in general begins to crumble when the rules and compensation changes constantly. The indirect channel is no different.
Channel conflict is part of the deal. I don't know anyone in the channel that has not been bitten by a vendor.
Microsoft's launch of Office365 created a lot of channel turmoil (as did its end of life on SBS). Today, Microsoft is wondering what to do about its partners who are making bank downgrading win8 machines.
The IT world is in a similar state to telecom. In telecom, the carriers want to go up-market, increase ARPU, stop selling commodities, and shift revenue to cloud services. In the IT world, the shift is from hardware to cloud - from hardware to services. But all of this has to occur for all - channel partners, IT vendors and carriers - while not imploding business models. The conflict will continue as we weave through this cloud shift.
FYI.. I am a member of the CompTIA Telecom Advisory Council.
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