Insight

Is ‘the channel’ too simplistic for what we do?

A debate was sparked recently on LinkedIn as whether the IT channel is an industry, or vertical industry, in its own right.

It’s an interesting question: is the channel an industry or a business model? Or both?

Purechannels CEO Glenn Robertson argued that the indirect channel is a model – a process of getting something from someone who makes it to someone who buys it.

“For me, it’s about getting to the end customer,” he said. “You either go direct to those customers, or you go through a network of people/companies who can help you get to those customers, and more of them. And humans have been doing this for a really long time.

“The ‘indirect’ version of this model (which is typically what we lovingly refer to in shortened terms as ‘the channel’) is no more or less the industry than the ‘direct’ version. It’s just a different way of selling within a particular industry. And it is not therefore, by default, an exclusive model to any industry.

Glenn compared it to everyday goods we have in the house, our clothes, the food we eat – it all arrived in the room through an indirect channel model. Therefore, he said the channel isn’t an industry as such, but a model.

“I suggest that it becomes a simpler animal to understand because it’s then not about servers or storage or cybersecurity or cloud or tech or specs or SaaS or solution or, or, or. It’s about taking anything from its origin to someone who will buy it. Which actually opens up what we do and allows us to become better at it.

However Forrester analyst Jay McBain indicated things aren’t quite as simple as that.

“With 64 percent of IT goods and services going through the channel last year, the point of change is that it is not just about how dollars change hands – it is about how consumers make decisions on what to buy and how do you create customers for life in a subscription/consumption economy? Upwards of 90 percent of our industry is ‘partner assisted’ and the companies that get this are the most valued today,” he said.

Ashley Speight from channel software firm Channelyze pointed to something we have probably all done in our lives when trying to explain what the channel is to our friends and family – come up with an analogy everyone will understand! (Hands up if you’ve ever been truly successful when explaining the channel, by the way – if so, good work!)

“I always use the shampoo analogy when explaining how distribution works to someone that has never worked through distribution before. The factory makes it, sends it to the distribution centre, sends it to the shops, sells it to you...The reason I do that is because that’s a model that people can understand,” said Ashley.

“I suppose if you have sold software through the ‘channel’, you can switch ‘industries’ quite easily and work in the channel within another ‘industry’. Same structures throughout the world of sales no matter the product.”

Ashley notes that it doesn’t make much sense to say that you work ‘in the channel industry, in software’ as opposed to ‘I work in channel sales within the software industry’ or even ‘I work in channel software within the software industry’.

“I think people have the word industry wrong at the end of day,” he said.

However, former IDC analyst turned partner marketer for Tableau, Margaret Adam agreed that historically channel was a go-to-market model, but these days it is a little more complex, particularly in software, and especially in the cloud.

“Many partners are ‘manufacturers’ too, building their own software IP sometimes to extend/customise a vendor’s software/cloud platform but sometimes independent of vendor software. So using the shampoo analogy, customising by adding their own scents or own packaging to the shampoo or making a complimentary treatment that can be sold with the shampoo. They also service more than resell now, so I think linear descriptions can be dangerous.

“As annoyingly complex as the term ‘ecosystem’ is, it is a better descriptor, the IT industry is an ecosystem with multiple partners performing different activities. The term ‘channel’ is a little too simplistic these days as it denotes purely a resell model where the reality of the activities performed by partners is a lot more diverse.”

More industry experts chimed in with their excellent opinions, with the discussion veering into the future of the channel, the value of partner-assisted sales and development in the partner experience. Please do check it out here, and perhaps share your thoughts as to the channel: industry or model? (Or a bit of both?)

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