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It was 15 years ago when I sat down to write my first channel “New Year’s projection.” I remember the article and many of the terms that were just gaining prominence at that time, including managed services, remote monitoring and video conferencing. The latest solutions using RFID tags and readers were peaking the interest of others and rumors of one terabyte desktop storage devices were circulating throughout the industry. With the Y2K fears dead and buried, 2002 was set to be a lucrative year for providers, vendors and distributors.
As 2017 approaches, that same strong vibe seems to be resonating. While some predicted that the channel would lose tremendous power with continued advances in cloud, SaaS and mobility — the truth is, its value is actually rising. Many providers were quite successful in 2016. Those that support certain customers and markets, or possess skills that are in high demand appear to be doing quite well. In fact, everyone seems to be clamoring for those types of specialist. Not just the customers looking for their expertise to manage the increasing complexity of their technological infrastructure and solutions, but vendors and distributors that want them to be part of their valued partner networks. It’s a great time to be a skilled provider.
That isn’t expected to change significantly in 2017. If anything, the value of forward-looking and highly skilled solution providers should continue to rise exponentially along with the business relevance of technology. The channel is the SMB’s chief IT resource and that symbiotic relationship won’t be weakening any time soon based on the need for efficiency and desire to be seen as innovators.
2017 should be no different. In fact, the practical IT services providers will assess and strengthen their business models and prospects over the next twelve months. They will periodically re-evaluate their practices and portfolios, measuring their long-term viability and profitability, and identify potential future growth opportunities. As needed, they will transform and innovate each area.
But what will influence that change? Which trend will entice IT service providers to make a shift (or at least set the wheels in motion) in 2017? Here are five of the most likely candidates:
There are three different trends driving modern security and, per the 2016 CompTIA Security in the IT Channel report, IT service providers can position themselves to capitalize from each. Those approaches include shifting away from secure perimeters, balancing prevention and detection, and increasing the focus on proactive security activities to lock down digital assets. That will require the right mix of technology solutions, processes and policies, and end user training (all valued services channel firms can deliver with the right support).
After all, even the smallest customers need protection. Regardless of market size or geography, one of the best differentiators in the IT field today is a company’s security skills. Credit unions need help protecting their members account information. Restaurants, retailers and other businesses that accept credit cards must meet industry protection standards. The IT firms that can deliver that protection in a cost-effective manner will be more likely to thrive in 2017.
Those involved in the buying and selling of IT services firms have been busy this year, and those activities are sure to accelerate in 2017. Why? Let’s start out with the economic factors. Few industries are as ripe for an infusion of venture capital and other investments as ours. IT is driving business innovation and the technologies and services channel companies deliver will be needed regardless of the economic conditions.
In good times, businesses will need more support to compete at the highest level, and in down times, they’ll invest in “efficiency solutions” that drive costs out of production and delivery. That doesn’t mean the industry will thrive no matter what the future brings, but well-run, profitable IT firms with secure long-term contracts should be attractive targets for M&A activity in 2017.
The naysayers predicted it would be the death of the channel. The cloud did pose challenges for IT service providers, vendors and distributors the past few years, but those who learned to adapt are much better positioned for the future. The short-term focus on margins from a single sale has shifted to a healthier and much more strategic business approach that offers more value to all parties involved. MRR (monthly recurring revenue) is king. IT services firms are expanding their portfolio — and their income opportunities — with consulting services, infrastructure design, vendor management, end user training and a host of other customer-desired offerings.
In other words, the channel companies that have learned to embrace the cloud without relying on it as a prime income source are finding themselves in a much better position. That approach will be crucial as more customers (and providers) tap into the rapidly expanding SaaS market with fewer channel support options.
Like the cloud, much of the “channel money to be made” will come from the comprehensive support services. IT service providers have a prime opportunity to be the SMB’s IoT architects, helping them design, construct and support the ideal solutions for their organizations. CompTIA’s Sizing Up the Internet of Things report outlined a number of these options, as well as several case studies that illustrate how channel firms can capitalize on them. Those with network and wireless infrastructure experience have what it takes to succeed here. And with an estimated 50.1 billion connected devices to be in play by 2020 (and $1.9 trillion in global economic value-add), it’s an opportunity every IT firm should be scoping out in 2017.
Brian Sherman is Chief Content Officer at GetChanneled, a channel business development and marketing firm. He served previously as chief editor at Business Solutions magazine and senior director of industry alliances with Autotask. Contact Brian at Bsherman@getchanneled.com