“We hear a lot about change and transformation, the doom and gloom, how times are tough and how partners are struggling and it’s all a bit overwhelming.”
But as Hewlett Packard Enterprise director of partners sales, Chris Trevitt, observed at EDGE 2016, the channel is entering an “evolutionary era”, not a new revolution as once predicted.
“Certain partners are rising and shining above others, and there’s an increased polarisation between partners that are being incredibly successful, and those that are just hitting their numbers, or maybe not quite,” he said.
In addressing 250 delegates at ARN and Reseller News’ annual channel destination conference in Hamilton Island, Trevitt observed that while the economy is tough on both sides of the Tasman, there’s “plenty of good business out there” in 2016 and beyond.
“The market hasn’t shrunk,” he explained. “Yes there’s been some shifting but fundamentally the size is still positive for all of us.
“And there’s some organisations that are really capturing the essence of the opportunity more quickly than others and they all have a number of things in common.”
As outlined on stage, Trevitt said successful partners today are consolidating vendor landscapes, moving away from the traditional approach of representing many a leading technology brand.
“The reason why they’ve done that is because they want to build out and enhance infrastructure managed services or application managed services capabilities and they’re starting to talk more to customers about delivering business or technology outcomes,” he said.
“Partners are developing proposals to reflect those outcomes, and it’s proving to be a profitable line of business as they differentiate themselves from the crowd.”
In a moment of industry acknowledgment, Trevitt told the partner delegation that generally speaking, “the royal we of vendors” has a reputation for "making it hard" for partners through an increased insistence on certifications and enablement.
“It's important and you probably won’t see less of it because it’s about our brand protection, but we understand that it's expensive for you as a partner,” he said.
“If not in pure dollar terms, it’s expensive because every time a vendor comes out with some new certification track, it takes your people out of the field and they are valuable assets.
“So partners are consolidating and are using the depth of knowledge they gain from consolidation to stand up against increasingly stringent service levels to provide them as a key point of differentiation. That’s a key aspect of those that are winning.”
For Trevitt, the channel has been finding creative ways to do business with customers for years, insisting in that respect, “it’s evolutionary, not revolutionary.”
In outlining the ‘Business Relationship Ladder’ of the channel, Trevitt categorised the market into five core areas of partner competency.
Firstly, propping up the pyramid is delivering a product, followed by a partner’s ability to deliver “some products and some services”, improved thirdly by its expertise in delivering “good products and extensive service and support”.
Delving deeper into the criteria of a partner today, Trevitt explained stage four on the pyramid, centred around the need to deliver “quantifiable business value”, topped only by the channel’s ability to “contribute to business strategy”.
“We need partners that sit across one to five,” he said. “Those sitting around the three and four mark, in delivering a level of accountability to customers which they haven’t seen previously, are the ones kicking the big goals.
“For many in the channel, level five is perhaps for the specialist consulting houses, and remains an aspiration for most.
“But to be clear, if you have that level of differentiation and a services capability then you’re no longer competing on price, you’re differentiating yourself from the competition.”
Consequently, Trevitt said service-focused partners are “probably not selling on product features” either, revealing a fundamental change in the value of the vendor, distributor and reseller supply chain.
“From a vendor perspective, maybe the badge doesn’t matter that much anymore?” he questioned.
“Today, the customer is holding the partner ecosystem accountable more and more for the outcome and that changes how a vendor needs to engage with the channel.”
Are partners the new vendors?
In reciting a conversation with a partner twelve months prior, Trevitt outlined how the dynamics are changing in the local channel market.
‘You guys don’t get it, you’re treating me like a reseller but I own the outcome, I’m the one the customer cares about. I’m the vendor and you’re just the parts provider so treat me differently.’
“And that changes the way I think about the Hewlett Packard Enterprise partner organisation that I’m building and the skill sets and programs that I need,” he acknowledged.
“We need to help partners stand up and be accountable, and provide different levels of enablement to ensure they can have those conversations. But we also need to help mitigate risk to cover the increased level of accountability they’re taking on.”
While partners are being recognised as the new vendors, Trevitt said that from his perspective in the industry; “partners are the new customers”.
“Customers care less and less about the badge, they care about the impact the partner is having on their business,” he revealed.
“The burden of accountability is changing and while we as a vendor are not distancing ourselves from the responsibility, we need to help partners because it’s going to drive far greater profits.”
As partners grapple with holding greater responsibility, adapting to the demands of the market is nothing new for resellers renowned for progressing in fast-changing industries, as outlined by Somerville Group managing director, Craig Somerville.
“We’re a completely different business and that’s because as technology changes, the customer’s needs change and we have just followed that,” Somerville said.
“We started in 1982 and moved through our networking business to build an ISP practice in the mid-90s, before moving into procurement in the 2000s and then starting building cloud services."
But as illustrated by Somerville, there’s a difference between changing for change sake, and changing to trigger new growth and revenue streams.
“You watch what your customers do, you watch what vendors release and you watch what your competitors do,” Somerville added.
“And there’s a fusion of the three that comes together to dictate where you’ve got to move and when you should make your investment.
“Transformation is not new, we’ve been transforming the business since day one. We used to build datacentres and now we are in datacentres, we’re a completely different business and that’s about working through the cycles and evolving alongside.”
Yet in acknowledging the ongoing transitional challenges facing partners today, Somerville alluded to one of the overriding themes of EDGE 2016, as delivered by headline keynote Stan Slap.
“As a leader, you can’t change your culture because you are the culture,” said Slap, during the opening keynote.
In short, Slap said cultures are were the humans gather in business, and “if these cultures want something to happen then it will, but if they don’t, then it won’t.”
“When you start you’re part of the team but after a while you suddenly realise that actually you’re not and you have to change your approach,” Somerville acknowledged.
“As you change you require different people within the business but once you put those practices in place, it can become difficult to instigate.
“During the last five or six years, we’ve learned that engaging staff in the process as opposed to writing a new structure and saying this is what we’re going to do has been beneficial for our guys to be a part of the journey moving forward.
“We’re actually empowering our team to go forward and help deliver to the customer.”
As a company transitioning towards an MSP model with a strong ISP heritage, TasmaNet COO, Alan Rosevear, also advised that a more collaborative approach internally helps build a foundation for future growth.
“We’re still working on that aspect of the transition and how to bring the team on a little more, and it’s ongoing,” he acknowledged.
“You’re always firing ideas at your colleagues but part of my role is to try and shield the team to some extent.
“We realise that we need more of that collaborative approach and we’re currently going through an organisational change to ensure we’re up for that challenge.”
Operating previously as a Hobart-based traditional full service telecommunications carrier, TasmaNet has reinvented itself as a premium cloud provider, providing solutions to large and small enterprises across Australia.
“During this change we’ve found that it’s crucial to identify those leaders within your organisation, irrespective of whether they are management or a technician and provide them with a level of ownership and assistance that allows your business to prosper,” he explained.
“A true leader is someone that recognises their weaknesses and looks to find people who are able to fill those gaps.”
From a Hewlett Packard Enterprise perspective, Trevitt said leadership represents “a set of attributes, not a title or a position”.
“If you spend time with your team, you will see people are open to adopting new ideas and new ways of doing business,” he advised.
“Because of this they’ll put themselves in positions that may be a little out of their comfort zones.
“But it would not be right for me to dictate how partners should change, our role as a vendor is to help support the channel as they do.”
EDGE is designed to bring the Australia and New Zealand channel together in a collaborative and educational environment, providing vendors, distributors and partners with the competitive advantage necessary to bring continued success in 2016 and beyond.