IT Services: Top 2022 Challenges for the Channel

Over the past two years, the channel has faced several challenges. Take for example adapting to new product and service demands, accelerated cloud growth and SaaS deployments, and an increased focus on the end-customer experience.

As we emerge from the pandemic, there are sure to be more challenges in 2022 but equally as many opportunities across the channel ecosystem.

AMR’s (acquired by Stax in 2022) challenges to watch for the channel in 2022

• Adapt to demand for cloud-based consumption models: Just as subscription models became the norm, a new model emerges – consumption models. The consumption model has a lot in common with subscription models, the major change is that monthly billing fees vary based on the level of usage, or consumption, of products and services.
• Disintermediation and disruption threats: The channel has always faced various forms of disintermediation and disruption threats; however, marketplace platforms present a more material challenge. These platforms attempt to connect MSP/VARs directly to vendors and add a variety of services along the way (e.g., taking care of ERP processes, or providing cross-sell / up-sell analytics). Many platforms have already launched, typically either coming from forward-looking distributors, such as with TD Synnex with Stellr or Exclusive Networks with X-OD, or new market players, such as Pax8.
• Channel Process Automation (CPA) Becomes A Reality: As more and more channel programs rebrand as ecosystems, the IT market is becoming less of a linear value chain, but rather an increasingly fragmented and non-linear ecosystem. Ecosystems have, on average, 10 times more partners than transactional channel programs and require the core elements, such as recruitment, onboarding, incentives, enablement, co-selling, co-marketing, and management, to scale comparatively. There was a huge uptick in opportunities around robotic process automation (RPA) heading into the pandemic, and these were accelerated significantly in 2020 and 2021, which is helping such build-up of an ecosystem
• Increasingly sophisticated tech stack: Changes in the market are leading to demand for several more capabilities from distributors, and resellers (including MSPs) such as compliance, data management and subscription and billing management. To provide these offerings efficiently, a strong tech stack is required.

Overcoming these challenges will bring big opportunities

Channel partners able to overcome these challenges will be well-placed to navigate the future. It will enable them to increase their customer base through increased influence over the IT ecosystem, increase revenue from existing customers by adapting to the latest demands, and even launch new business models through the likes of a marketplace.

It will be interesting to see how channel partners evolve throughout 2022, with heightened interests from private equity to help with the acceleration of the transformation of some of the well-positioned players.