Long Live or R.I.P. Channels?

Basking under the California sun these last few days attending a global channel meet of a leading tech vendor in San Diego, I have been getting mixed responses and signals about the future of IT channels, at least in the form it exists today. This is both confusing and exciting at the same time, as though there is uncertainty about the future, partners from across the globe (and I mean it as I have spoken to partners from US, Canada, Brasil, Japan, China, Netherlands and even Peru, Mexico, Eritrea and South Africa) are nearly unanimous that new ways of doing business are bound to emerge.

As I write this sitting in Los Angeles after visiting some of the biggest studios like Universal and Disney and seeing the homes of some of Hollywood heavyweights (in Beverley Hills and Sunset Boulevard), I get the impression that the future of channels is not going to be anything less exciting or dramatic than a Hollywood potboiler. The school of thought that is predicting the imminent demise of channels (within next 18-24 months) are cooking their eggs on the basis of a few critical points. The emergence and more importantly wide-scale adoption of cloud, institutionalization of services (changing the mode of service delivery), emergence of serious b2b e-commerce leading to online delivery, retail flourishing especially once FDI comes in and vendors too looking at a different profile of partners are expected to be some of these game changers (or ironically 'killer blows' for the channel.)

Now let us look at how serious these threats are to the future livelihoods of our channel partners. Yes, cloud is a game changer and it is time everyone stops looking at it as an esoteric technology but more as a new business paradigm. The heartening point is many channel partners too realize this and are already gearing themselves up to fit into the new milieu in cloud. Hence we are seeing the emergence of partners either as cloud service providers, or as partners to cloud service providers or at least as cloud service resellers. That depends on the individual maturity of the partners and where they are currently on the growth curve-it does not mean cloud will wipe them out, but even the smallest one could survive if by nothing else but by reselling cloud services.

Institutionalization of services rather is a tougher challenge than the overhyped cloud, as most partners have not evolved much on the maturity curve as far as service delivery is concerned. The coming year will see growing productization of solutions and that will drastically change the rules of the game as far as services delivered by channel partners. While a smaller section seems to have acknowledged the challenge, it is time that most look at developing their own intellectual properties around services rendered. Unless this is done, there is a possibility of margins rapidly shrinking from the services business of the partners.

Emergence of b2b killing the physical business of channel partners is perhaps the biggest and hollowest myth. Nowhere in the world (including the advanced markets where online is common nowadays) has b2b e-commerce completely replaced the physical aspect. Even in b2c, the most amazing online example Amazon.com does maintain a huge physical inventory to supply the consumer requirements. What is likely to finally emerge here is that partners will have all modes of delivery-physical (business as it is), online and even through newer devices like mobile. So online will just be a complementary to their existing model, rather than threatening it might just ending up boosting their businesses. Similarly retail is definitely going to be another booster to the partner businesses, as evident from many in the channel community having taken the retail plunge and so many retail showrooms are coming up in IT hubs itself.

Therefore, I believe that the doomsayers predicting the death of channels are not just farfetched, but are getting their facts seriously wrong. Or that they are grossly underestimating the resilience and intelligence of the channel partners. And even overlooking their capability to be flexible and their adaptability. It's true and no one is denying that just box pushing is not the future and most partners have already moved away from that road. Rather than getting ready to prepare their epitaphs, it is time to sing their odes and paens and celebrate the exciting times ahead.