Channel: The evolution story

Channel: The evolution story

Few years back the word channel meant a distributor or re-seller appointed by a hardware company that pushed its boxes, primarily a box-pusher. And then depending on the layers one had (distributor, regional distributor et al), we used to call it a two-tier network, three-tier network etc. The closest the software companies came to the channel was in terms of selling end-user licenses for software products, interestingly sold in boxes again. It would have been something straight out of an Asimov's fiction then, to imagine that an ERP software company targeting enterprises would sell through channel partners.

 

Evolution so far

In the recent past, channel started facing a completely different set of demand (one-stop-shop solution with big order value attached) from their customers who grew big in terms of their IT implementation owing to organic and inorganic growth over the years. This made the channel realize the opportunity and the fact that they would miss out on it if they do not turn into value-added sellers (VARs). They wanted to cash upon the relationship that they had built with the customer all along. This is precisely why some of them diversified into product implementation or system integration as well besides the conventional box pushing.

 

On the other hand we had pure system integrators and network integrators who realized the business opportunity in aligning with a certain set of vendors every time they implemented a turnkey solution. Even the enterprise software vendors (ERP, SCM, CRM etc.) were happy to find such partners and termed them as their channels. Further, these 'channels' got categorized as per the verticals they specialized in. That's evolution that has happened so far.

Evolution in the days to come

However, if you look at evolution in the days to come, the entire approach is beginning to change faster than what we can possibly comprehend. We are becoming more and more solution centric. Product centric approach is passé. So, if you have to sell boxes, they better be a part of a solution suggested by the new breed of channel - the system or network integrators.

 

Let's do some hocus-pocus, open sesame or abracadabra into the oracle and look at how these solution implementers that have changed the channel paradigm will evolve in future and the very reasons behind their change. At the end of the day, all system and network integrators will have to move towards providing end-to-end managed services. It is their more evolved form - having taken upon themselves greater responsibility owing to the relationship they've come to share and enjoy with the customer. And why not, for it is the next step on their learning curve.

One may question the need for managed service providers or MSPs and the answer is that it is a part of the evolution or growing-up process - not as much of this new class of channel but of the clients they service.

Why MSPs?

Almost all big user organizations have outsourced at least some part of their business process by now. Having achieved excellent results in outsourcing business process, the next on their minds was outsourcing network integration and management as well. And then there were some success stories wherein businesses achieved greater efficiency and saved considerable sums in terms of bandwidth usage, human resources (engineers) etc. which influenced them further to go in for managed service providers. These MSPs made more sense for organizations running business critical applications like airline or railways reservation and ticketing system, B2C sites with lot of retail customer transactions. They cannot afford to have downtimes. Therefore, MSPs are required to do real-time monitoring of networks and generate alerts as and when required. Besides, as the business is spreading to newer locations, the pressure on the network is increasing exponentially. Tomorrow, poorly managed networks can spell disaster because they can bring down the response time of business critical applications to an all-time low. MSPs can also help businesses manage their IT assets and do configuration management. What's more, as long as businesses have their networks secure and running effortlessly, they wish to do away with all time and resource intensive issues like retention of skilled manpower. They are better off concentrating on their core business operations. These are just some of the reasons why MSPs will be in and why product vendors will be interested in talking to this new channel clan.

Essentially, the customer will demand a hand-holding partner that can identify, buy and implement the right kind of IT products for them i.e. offer complete services from consulting, project management and integration to managing networks. If you still think that signing and meeting SLAs (service level agreements) is the end of the road for the new channel, you are wrong. They want the MSP to optimize bandwidth usage, coordinate with telecom operator providing the fat pipe (broadband) connections, application response time, implement and manage security and storage networks, and perform disaster management as well. The new SLAs would incorporate each of these aspects.

 

What the oracle also tells me is that with increasing speed and globalization of business, centralization of network operations and management will be the trend. They will move into B&C class cities along with the BPOs moving to these cities. Last but not the least, availability of good connectivity options and infrastructure in future will enable these ‘new' channels to manage client networks from remote locations as well.

By Dhiraj Ahuja, an avid writer on technology and the business of technology