It’s that time when we look ahead to the coming year and speculate on what we might expect to see in the channel. In 2023, I believe the overarching theme for IT vendors will be ‘do more with less’. So how can they achieve that? Here are my top 5 channel predictions for 2023.
Top 5 Channel Predictions for 2023
Cost Pressures to drive IT Vendors to the Channel
Everyone was talking about the impact of the economic downturn on businesses in 2022, and 2023 will be no different. We’ve already seen layoffs of staff among IT vendors. And I feel 2023 will see them forced to take out more costs from their businesses. However, for channel partners, this brings opportunities. Currently, just over 75% of sales globally, go via the channel. If you move into enterprise, that figure is even higher. As such, in 2023, we will see more companies turning to the channel, as they recognise its cost efficiency as a route-to-market.
Vendors Doing More with Less
With vendors tightening their belts, they will be asked to do more with the same – or even less. This will see them look to be more efficient in how they leverage their channel. The first step will be ensuring their partner programs are scalable, uncluttered and not overly complicated by too many manual steps or processes. By doing so, they will keep costs to a minimum. While at the same time, giving their channel teams the tools, data and insights to ensure they are driving their channel business more efficiently.
More Automation in Partner Programs
The channel has become more complicated and less linear, in recent years, with an influx of new partner types and business models. As such, vendors that invested in automation are better able to deal with the ensuing complexities. Our own webinars tell us that the number of vendors using automation has increased 20 to 30% since last year. One example of automation is providing partner performance dashboards, which automate previously manual, inefficient and time consuming tasks like quarterly business reviews (QBRs). Dashboards will also save account managers valuable time searching for partner data in emails, spreadsheets and phone calls, as the data is all in one visual location.
Becoming Easier to Work With
Being competitive comes in many shapes and sizes. It’s not all about cost. To be competitive, vendors know they need to win partner mindshare – not an easy task when partners today work with on average 7 – 12 vendors. The key is to purposefully and actively make it easy to work with you. If successful, partners will gravitate towards you, bringing their business with them. Key to this is ensuring your partner program is easy to understand and delivered in a consumable and automated way. This includes offering partners a single dashboard, or pane of glass, where they can see their entire engagement with you. Thereby easily seeing how they’re performing at any given time, and the benefits available to them.
Currently, we see a lot of vendors still navigating supply chain problems. For example, many, having sold goods, find they are unable to supply them as they continue to be caught up in the backlog. They are therefore unable to recognize revenue, which for some vendors, can run into millions of dollars. However, in 2023 that situation will change. Already we’re seeing the cost of freight back to 2017 prices, and the supply chain is starting to open up. In the second half of 2023, the channel will likely face different supply chain issues. As stock becomes more available, orders will need quicker fulfillment. As such, vendors need to be careful about how they plan for the second half of the year. What they must avoid is becoming overstocked or end up with products stuck in distribution, that they can’t do anything with.
Automation of manual processes in 2023 will not only be critical for vendors to operate a low-cost route to market, but to also scale effectively in a competitive business and economic landscape. But ultimately, the key to remaining competitive while operating a successful partner ecosystem in 2023, is to be a channel company, not just a company with a channel.
For more channel predictions for 2023, check out John McArdle’s Top 5 Predictions for 2023 here