Information technology (IT) channel companies are increasing their involvement with emerging technologies and actively seeking new partnering opportunities as they strive to maintain their market relevance, according to new research from CompTIA, the trade association for the global technology industry.
CompTIA’s “8th State of the Channel” study surveyed 451 U.K. IT businesses to gauge their views on the opportunities and challenges in today’s marketplace. Among the study’s findings, many respondents indicated that emerging technologies such as artificial intelligence, blockchain, drones, and the Internet of Things are an answer to the question about the channel’s future relevance.
“Most channel firms see major potential in emerging technologies,” said Carolyn April, senior director of industry analysis at CompTIA. “In many instances it remains a slow, iterative process for technology providers and customers alike. But more than half of the channel companies say they’re selling at least one category of emerging tech to customers today.”
The primary reason for adding emerging tech business lines – cited by 50%of UK channel companies – is because of customer demand. Second to this is the potential for greater revenue opportunities than provided by existing product offerings.
Of the channel companies engaging with emerging tech, IoT, AI and 5G are the top technologies either being sold today or tested internally. However, a key challenge for these companies fully adopting new technologies is still a lack of appropriate skills. Nearly 4 in 10 said the need for technical training stands in the way, while another 35% said hiring staff with the right skills is a top difficulty.
“Customers are eager to take advantage of this new crop of technologies as a way to drive their own revenue growth or streamline their operations,” April explained. “Many are turning to their current tech providers to help them get there.”
Competitor or Partner?
Accounting firms, law practices and digital marketing agencies are just a few examples of non-traditional players that have become sellers of technology products and services in recent years. This shift has created its own set of unique challenges for the traditional channel of MSPs, resellers, system integrators, and VARs.
But many channel firms are turning these challenges into opportunities by partnering with new market entrants. Two-thirds (67%) of channel firms say they frequently or occasionally partners with new players.
“These arrangements help fill gaps in skill sets or solutions portfolios, mitigate technical complexity that prevents some companies from entering new markets, and enable an easier entry into the emerging tech arena,” April said.
Greater use of marketing and social media is also part of the channel’s game plan for the future. Roughly a third of firms are investing in these areas, including 41% that are hiring people with marketing skills that fit best with today’s omnichannel way of communication with customers.
The embrace of emerging technologies and new types of partnering arrangements underscore changes in the IT channel as it tries to position itself for the future and remain a relevant part of the supply chain.
“The health of the IT channel remains strong, but some trepidation about its future has crept into the mindset of executives,” said April. “Optimism levels are more nuanced and less positive than in recent years.”
The majority of companies surveyed (63%) believe there is some truth to the notion that the channel’s relevance is waning, while 15% believe that predictions about the channel business model declining is an accurate assessment. Over 20% of channel executives queried however, believe that predictions of the channel’s demise are overblown.
“The channel’s chief worries lean more toward general economic conditions and the gap in skills associated with emerging technologies,” April said. “There are also concerns about new competitors in the market and the changing purchasing behaviours of customers. But many in the channel also see opportunities that can overcome these fears.”