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EDGE 2018: New buyers equal new rules

Channel trapped in continuous cycle of acknowledging change yet failing to respond
Mark Iles (Tech Research Asia) outlines findings of EDGE Research

Mark Iles (Tech Research Asia) outlines findings of EDGE Research

The emergence of new technology buyers within organisations is nothing new, but the channel’s inability to act on change continues to hamper partner progress.

Because as the grip of the IT department loosens, technology providers are failing to capitalise on the influx of sales, marketing, HR and finance personnel taking control of the purse strings.

Sentiment among the channel differs however, with the supply chain confident that change is in the air and transformation is underway.

But as EDGE Research highlights, a sobering picture for partners is emerging.

“New buyers equal new rules,” observed Mark Iles, executive analyst at Tech Research Asia. “This is a trend we’ve been seeing for a while and for partners, they already know this.

“But, knowing this and actually acting on this represent two different behaviours entirely. We find that when partners are presented with such data, the response is almost always ‘yeah, yeah, we know’.

“When we speak to the customers however, the common line is that technology providers are still talking in technology speak.”

In short, Iles said new-look buyers are struggling to understand or engage with partners, due to the channel’s inability to change the lines of communication.

“Partners say they are changing, but they’re actually not,” Iles cautioned. “Partners say they know the line of business buyer and that they are focused and speaking the right language, but our customer data challenges this."

As outlined via EDGE Research findings - profiling customers, partners, distributors and vendors across Australia and New Zealand (A/NZ) - 65 per cent of partners claim to be “ready and selling” customer experience, highlighting misalignment between channel expectations and market reality.

“Are they really?” questioned Iles. “Because customers don’t agree with this statement.”

Specifically, and according to findings, buyers want partners to “understand my customer”; “understand my business” and provide “deep solution expertise”.

EDGE Research
EDGE Research

Such demands differ to those viewed by the channel however, who consider the key hallmarks of customer value to be centred around an ability to be “easy to engage and do business with”; to provide “comprehensive end-to-end support” and to demonstrate “understanding of a customer’s business”.

Delving deeper, changing buying patterns demand a change in behaviour and approach, with customers encouraging partners to start “actually talking to us instead of telling us”, while also housing the flexibility to “go off script” and present new ideas and strategies.

Therefore, customers are marking partners down for “not understanding the business problem”; “poor account management and communication” and “not providing business case support”.

And in a market filled with new-look partners - spanning specialists, developers, agencies and consultancy firms among others - the traditional channel crop can ill afford such mistakes.

“There’s still a difference between what partners say they’re doing and what they are doing,” Iles acknowledged. “The ability for partners to change how they speak and communicate with buyers is difficult.

EDGE Research
EDGE Research

“And this issue comes back to the fact that partners still employ the same sales people. Traditional partners are unlikely to fundamentally change so they either need to re-skill their current base of sellers, or bring in new blood.

“Partners should be looking to hire staff from the customer side, it’s crucial to have a different perspective in the business.”

For Iles, re-skilling and recruitment will form crucial factors in a partner’s ability to engage with new customers in new ways - resulting in some difficult internal conversations, if required.

“The lens partners should put on their staff is that, can you charge for this sales person today?” Iles explained. “You might not want to or plan to do, but if you did charge, would buyers pay for it? That will be your answer as to whether you need to re-skill or replace your staff.

“Can your staff speak this new customer language? Do they know enough about a particular solution or industry? Once you’ve worked through this filter, the people that don’t talk the traditional technology speak will become the hires of today and the future.”

EDGE Research
EDGE Research

Of encouragement to partners however is news that 44 per cent customers are planning to increase the number of providers they use within the next 12 months.

Specifically, 15 per cent of end-users plan to up the partner ante “significantly”, with only two per cent of customers expecting to reduce the number of outsourcers in the business.

EDGE Research
EDGE Research

“The market is buoyant and budgets are increasing but spending patterns and decision makers are changing,” Iles added. “Traditional IT buyers are being surrounded with decentralised technology business representatives with a focus on operational outcomes.

“Specialisation by industry and/or solution continues to be more important than product expertise.”

Mark Iles (Tech Research Asia) outlines findings of EDGE ResearchCredit: Christine Wong
Mark Iles (Tech Research Asia) outlines findings of EDGE Research

Specialise at the front-end, automate at the back-end

During the next 12 months, 25 per cent of customers plan to deliver more projects and programs of work than the year previously, placing partners in pole position to capitalise.

Yet to maximise end-user appetite for innovation - and crucially, differentiation - the channel must look from within to instigate change.

In short, partners must specialise at the front-end and automate at the back-end.

“Specialisation at the front-end is not just the service offering,” Iles explained. “It’s not just what you build and how you take it to market.

“It’s how you build and the messaging from your website and the voice of your sales team.”

For Iles, the ability to specialise and essentially “know what you’re talking about” is now of fundamental importance to partners, echoing earlier findings centred around speaking the new language of the customer.

“This is an ongoing trend that we’re starting to see,” he added. “Now’s the time for partners to really start thinking about what they offer on top of a vendor product. Simply reselling the technology is no longer enough, and I think the channel is starting to grasp that.

“The play now for partners is around providing real differentiated solutions in the market, solutions that only they do and solutions that will ensure they stand out for the customer.”

But while specialisation is key, Iles cautioned against partners executing such an approach in isolation.

“Automation at the back-end has to also be in play for this entire model to work,” he said. “Automating processes is key because every customer a partner acquires, should now be seen as a customer for life.

“This is the only way for partners to think about their business operations moving forward. It’s imperative to automate at the back-end because partners can’t be having excess costs.

“If you’re adding a customer at the front-end, you must be able to do this without adding any human resources at the back-end.”

EDGE Research
EDGE Research

Iles said that on balance, partners acknowledge this but overall, the channel continues to be driven by “very manual” processes.

“There’s an acknowledgement but little change,” Iles said. “Partners add a customer and then add a support engineer or perhaps even 20 per cent of a support engineer.

“But that equation doesn’t work and it unravels pretty quickly as a strategy. The goal for partners must be using technology smartly at the back-end to automate everything and turn staff into billable resources.

“Partners have to start looking at ways to better automate processes but as history shows, the channel isn’t very good at this and this also applies for the vendors.

“Of course, this isn’t an easy process otherwise everyone would already be doing it, but the use of artificial intelligence [AI] and automation could be a crucial differentiator for partners.

“The benefits of these technologies could be huge to the channel because partners can’t continue with current processes and systems.”

Within the context of emerging technologies, both partners and customers are aligned in prioritising automation as a key offering in 2018 and beyond.

Likewise, further alignment comes through the planned deployments of AI, machine learning (ML) and chatbots - ranked within the top three leading investment priorities in the years ahead.

EDGE Research
EDGE Research

For customers, 91 per cent of businesses believe that AI and ML will have some kind of impact on operations within the next 12 months, emphasising a shift from blue-sky ideas to real-time deployments.

Specifically, 23 per cent of customers are “already evaluating” the use cases, with 39 per cent “planning to evaluate within the next six months” - spanning data security, marketing personalising, financial trading and healthcare solutions.

With the penny yet to fully drop among the partner ecosystem however, Iles urged the channel to adopt such an approach more “aggressively” in the future.

“Partners have always been too focused on the top line rather than the bottom line,” he added. “Automation should take care of the bottom line and investing in technology in the long-term should be a priority.

“Because partners can then lower the costs of doing business with the customer and lower the costs of delivering a service to that customer.”

Tech Research Asia, in conjunction with ARN and Reseller News, created three unique and correlated surveys to analyse trends and alignment between customers, partners and vendors in Australia and New Zealand. 286 respondents including IT decision makers from a broad range of industries and business sizes, traditional and ‘new’ partners and a broad mix of vendors and distributors took part in the online survey from May through to July 2018.