The Future Gives the Channel Reason for Optimism
By Larry Walsh
Let’s face it: The past 12 months haven’t been a fount of good news. Amid the ongoing pandemic, political turmoil – particularly in the United States – and the swinging economic pendulum, people and businesses are dealing with levels and waves of uncertainty not seen since the Great Depression and World War II.
By all rights, people should feel down. The business outlook under the pressure of economic uncertainty should be pessimistic. The channel should brace for another year of challenges and hardship.
The operative word is “should.”
The channel is not pessimistic. Each year, Channelnomics (formerly The 2112 Group) conducts two surveys: the Channel Chief Outlook, which measures the expectations of channel professionals; and the Channel Forecast, an accounting of what partners think will happen in the coming year. While we can see the impact of the COVID-19 pandemic in both studies, a comparison of year-over-year future-looking expectations would make you think nothing happened in 2020 to change perceptions.
At the beginning of 2020, the vast majority of vendors and partners anticipated positive growth – which we define as increased revenue of 5% or more. At the start of 2021, despite the continuing uncertainty and turmoil, channel pros on both sides of the aisle pointed to growth in the next 12 months. In the respective surveys, 71% of channel professionals anticipate growth in 2021, while 70% of partners anticipate the same.
In other words, the channel is resilient to disruption and looking forward with positive expectations.
What accounts for such optimism despite everything that’s going on? The world is not returning to pre-pandemic norms anytime soon. And despite people throwing around cliches like “new normal” and “next normal,” few can define what the current state is or what the future state will be.
The optimism springs from the lessons of 2020, a year in which technology was a savior to businesses large and small. While the pandemic shut down whole swaths of the economy, many businesses leveraged existing technologies to maintain their operations. Businesses raced to adopt new technologies – particularly collaboration and communications services – to maintain connectivity with their teams and customers. And now businesses are seeking out new technologies and cloud-based services to evolve their operations.
Many of these lessons fall under the heading of “digital transformation,” a tortured term if there ever was one. For years, the technology industry talked about “digital transformation” as an upheaval, a period of transition when businesses would have to change everything to leverage the benefits of digital technology and service-based models. In truth, digital transformation is more of an evolution as businesses slowly change their resources and processes by carefully balancing risks and rewards.
In 2020, the meaning of two old sayings converged. The first, which describes the previous state of transformation, is, “Change happens slowly, then all at once.” The other expression: “Necessity is the mother of invention.” These two maxims encapsulate what happened. The world was already changing when the pandemic hit. Necessity forced businesses – and the channel – to adapt quickly. The net result: an acceleration of evolution that will continue for the next decade.
Accelerated evolution is the driving force behind channel optimism. Channel chiefs and partners see plenty of challenges and the potential for disruption. Equally, they see a landscape in which the end customer still needs expert guidance in identifying technologies that align with their business needs, help in deploying and optimizing their digital investments, and support in operating and maintaining their systems. Customers need the channel to make the most of technology as much as vendors need partners to get products to market.
When we see trends that seem to defy gravity – increasing channel budgets, the addition of more marketing and training resources, the adoption of partner management and channel automation technologies – we don’t look at the current circumstances for the reason. Vendors and channel pros are optimistic and investing in the channel because long-term evolution necessitates it.
Change won’t happen overnight, and the road to prosperity isn’t smooth. Knowing the trends and understanding their root causes is the foundation for successful navigation to the future. The Channelnomics Channel Chief Outlook and Channel Forecast reports for 2021 provide more insights into the reason for optimism.
Larry Walsh is the CEO, chief analyst, and founder of Channelnomics. He’s an expert in the development and execution of channel programs, disruptive sales models, and growth strategies for companies worldwide. He’s also the host of the Changing Channels podcast. Follow him on Twitter at @lmwalsh_CN.