Episode 36: Cheesecake Factory Channel
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Live from CompTIA ChannelCon 2024, Erick and Rich discuss the importance of finding time to research leading-edge technologies like IoT and blockchain and what vendors can do to earn the trust of MSPs. Then they’re joined by Carolyn April, CompTIA’s vice president of industry research, for more talk about the evolving nature of vendor-MSP relationships in today’s channel. And finally, one last thing: cocaine shark!
Discussed in this episode:
No, Really, IoT’s for Real This Time
Transcript:
Rich: [00:00:00] talking with you, services, strategies, and success tips. You need to make it big and manage services. My name is Rich Freeman. I am chief content officer and channel analyst at Channel Master, the organization responsible for this podcast. I am joined physically side by side for a change by your other co host, our chief strategist at Channel Master, Erick Simpson, Erick, how are you?
And where are we?
Erick: Rich, to be candid i’m a little tuckered out because we have been up at here In atlanta, georgia at comptia channel con 2024 and there has been a lot Going on
Rich: the stuff that tires you out of the channel con event is the stuff that makes this an event such a great one and important that just lots and lots of people to talk to lots of vendors in the expo hall to learn about amazing sessions And in fact, we have got an interview segment coming up for you live and in person with Carolyn April, a part of the research team at CompTIA hosting this event here.
She did a panel earlier today about channel relationships. We’re going to get into that, some other issues with her. So we’re going to bring a piece of the CompTIA ChannelCon experience to you on video and audio folks. Until then though, Erick, let’s just dive into our story of the week and it’s a little bit different.
I am going to reference two different articles that I have posted on my blog Channelholic, which you can find, folks, at channelholic. news. Two separate pieces that I think are related in a particular way that I’ll sketch out. And then I’m very curious to get your perspective on my theory about this.
So a few weeks ago I wrote an article on Channel Holic about IOT. Because from my standpoint, as somebody who’s been writing about the internet of things for years, for the longest time, it was this sort of whiteboard concept the analyst organizations were saying, this is going to be a trillion dollar industry in three years time, and it just never actually turned into something real.
And as I talked to distributors and to vendors and people who plan the internet or things, just within the last. Six, 12 months. They’re all saying, Oh no, this is actually a real thing. Now, people, partners out there are selling in writer of things solutions. And so I wrote a post about that and about why MSPs might want to look into that IOT opportunity and get into it when there’s still an opportunity to get into it early.
I’m not going to tell you that it was a dud, Erick, but judging by the traffic numbers. This was not the most compelling topic I’ve chosen to write about for my audience in recent weeks It just didn’t seem to generate a lot of attention Now as we’re talking here, I am, about a day away from posting.
Another story that’s going to be about blockchain Technology everybody has heard of, and there are all sorts of, there’s all sorts of talk and buzz and theories about what people can do with blockchain. And that one isn’t quite as close to actually being a moneymaking opportunity immediately.
As IOT is right now, but I did an interview with a CompTIA member named Curtis O’Neill here, who is very progressive on blockchain. And he is right on the verge of going to market with some solutions that take advantage of blockchain in one way or another for security purposes or validation, authentication purposes.
And He pointed out, don’t think about blockchain anymore as tomorrow’s technology. It’s here now. Microsoft, Google, they are using it all over the place. They don’t necessarily showcase it, but they’re using it. And Google in particular has a managed blockchain service, that anyone can tap into if you don’t know the first thing about blockchain, but you like the utility and the use case.
You don’t have to learn and you don’t have to manage it. You can just sign up and they’ll take care of all that back end stuff for you. Haven’t published that post yet. I’m going to be interested to see what the the traffic numbers look like. I have a hunch might not be huge. And my theory is that if I’m correct about that, that the reason people maybe aren’t plunging into a blockchain story or an IOT story to the same degree that they are.
Plunging into a cybersecurity story or a mergers and acquisitions story is because MSPs out there and vendors as well, everybody is heads down fighting fires dealing with today’s issues. It’s difficult to carve out the time to think about tomorrow’s opportunities. And yet, the two of us have had conversations at this event with MSPs who do somehow.
Managed to think [00:05:00] ahead. We were talking yesterday with Bob Coppedge, very successful, well known MSP from Ohio, he was telling me. He is getting into the industrial internet of things. He sees that as an opportunity and he’s been doing that kind of thing for a long time. Corey Kirkendall, 5k technical services.
We’re speaking here at the event about what his company is doing in AI, not theoretical. He’s selling stuff there. He is getting there before his competitors do. It’s not easy to carve that time out, but I think the reason why I have a harder time selling my readers on paying attention to IoT and things like blockchain is because it’s just hard for them to do, to carve out the mental energy to do that.
But I also worry. That puts them at a long term competitive
Erick: disadvantage. Rich, my first thought is, thank you for writing about things that very few are writing about, right? You’re seeing these stories and these opportunities. Everybody’s writing about cybersecurity. Everybody’s writing about AI, right?
IoT, as you mentioned, it’s oh, it was this groundswell. We had all these, guidance early on that said, oh, hey. IOT, RPA, AI. Now we’re hearing all about the opportunity for users and employees and staff and that whole workforce optimization.
You and I were having a chat over a drink, I think. And you were sharing with me an application that you started using. That helps improve or track what people are doing from their apps. Not like big brother thing, but it’s really helping you see things in a different way and how it might be applicable.
To end user customers to MSPs and things like that. I’m curious when you’re going to write about that, because I think that’s another one of those stories that maybe MSPs aren’t thinking about like IOT, like blockchain, but this is a kind of a first mover advantage, an opportunity, the way I see it, rich.
And MSPs, if we’re, if we, as MSPs are doing our job and trying to skate to where the puck is going to be. Then we’re already addressing some of the cyber security needs of our clients. We’re addressing the hybrid workforce support needs of our clients. We’re addressing the cloud migration and maybe a little bit of a contraction after recent news that clients are going through but what are we doing beyond that?
What is the next hill? Where’s the next opportunity? And I do believe that it’s going to be. Inclusive iot for sure. It’s going to be inclusive of blockchain is like the underpinnings of you know secure Transactions we see it with things way beyond Bitcoin, right?
That’s where it I started tracking it right blockchain, but then no blockchain Actually secures everything that is transacted digitally and NFTs and all this stuff, I know it’s more of a, that kind of a story, but really it’s driving behind under the hood stuff for these big behemoth companies, Google, you mentioned and others, and I’m sure, and Microsoft, of course, so I guess for me, just hearing about it and appreciating that, oh, I can differentiate myself.
I can lead the charge and be a first mover and take advantage of that great idea, but how, where do we go? To say, okay, here’s some prescriptive guidance. Other than coming to channel con and hearing from partners that are sharing, that’s one thing I love about, the CompTIA community.
It’s we’re up there and we’re sharing, we’re going to talk about the panel where we had vendors actually sharing, and being very open about. The way they see the channel evolving and things like that. That’s the great thing about being a Comtia member. But where do we go to get that prescriptive guidance?
If we’re just interested in some of that stuff. You got any thoughts?
Rich: And I’ll quickly point out that, if you have gotten to the point of where do I go, that’s a good thing because that means you have committed to find the time to, to do some innovation to get into one of these markets ahead of your competition, to remain relevant to your customers, to position yourself, to compete with these giant M and a.
Private equity backed, managed services, behemoths out there. So that’s good. So one thing and content events are a particularly good example, but just getting out there a little bit making some time to attend events and attend sessions and have hallway conversations with strangers.
That really is a good way to to learn some information, make connections that can help you without turning this into anything hopefully that sounds like an advertisement. The other thing you can do if there is a distributor that you work with regularly is approach them because they tend to get to these markets [00:10:00] before their partners do, and they quite often have either educational resources or in some cases, like professional service.
Ingram micro TD Cinex. If you’re interested in IOT, take that example that we’re using before they can teach you all about the different solutions in the IOT field that you can offer to your customers. And if there are skills required to do that, that you don’t have, they do, they have those skills and on a sort of white label basis, they can roll that into your offering.
So that’s often a pretty good place to get started too.
Erick: Yeah, those are good tips, Rich. And again, leverage your strategic relationships first and find out beyond the product and service outcomes that you’re receiving from the strategic relationship is those business outcomes, right? What can you leverage from them that can help you grow your MSP practice, right?
So sometimes I think I did this, in, in my past, where it just. Categorize my strategic vendor and distributor relationships as just, Oh, I’ll reach out to him when I need something for one of my clients. And I’d like to, I’d like to swizzle that around a little bit and say go to them and figure out what they can do for your business.
Rich: Let’s move on to your tip of the week, Erick. We are both longtime CompTIA members, longtime ChannelCon attendees. I’m going to say, I haven’t actually gotten this from CompTIA. I’m going to say, this is the biggest ChannelCon they’ve ever done. It’s an enormous event. There are 174 vendors in the expo hall, which is an enormous number.
And it segues us into your tip of the week in terms of what those vendors need to do to earn an MSP’s trust.
Erick: Yes, rich. During Carolyn April’s power panel this morning, it we had some, leaders from different vendors come up and just went through some of what they’re doing to shift and earn the trust and maintain the trust and loyalty of their partner channels.
But one statistic that Carolyn shared really I think it. And then we raised a lot of eyebrows and then we raised my eyebrows. And this is something that rich I would have felt was really accurate and relevant, 15, 20 years ago when I was still an IT provider and the stat was, but I was surprised to hear that.
Recent research has revealed this net to be true now or how respondents have responded. And so the stat that Carolyn shared was that. 36 percent of MSPs don’t trust that their vendors won’t sell directly to their customers. I thought that number was high. Yeah. I feel like we’ve evolved beyond like the dark days, the dark ages of, this, we, get a quote for some product.
From a vendor. And then the next thing we know, they reached out to that customer directly and given them a price that even our discount levels, we couldn’t even match it and not even on a break even. So it was very interesting. And as the panel continued Carolyn shared this and the panel, had some ideas about how do we overcome that?
And I think the biggest takeaway is for me, art. revelatory in any way, but it’s doing right by your partners, right? You’ve got to earn that trust and confidence and, adjust your partner programs so that the partners feel like you have their best interest in mind. And we’ve talked about this before on the show, rich.
You’ve got to understand What the day to day of an MSP is, what’s important to them, what’s important to their end customers, what’s important to their staff, how do they make decisions and then what do they value? And, we just, segued from, your new story of the week is, how do you help me become better in my business?
We’ve evolved from, just leveraging. Vendor relationships from just getting what I need when I need it to really these vendors moving toward, Oh, we’re now delivering. We’re not just, product centric. Now we’re delivering services from you. We can white label these services to help you in your business.
We now have training and education, right? And it goes beyond some of the table stakes that we figure. Every vendor has to have to earn our trust and loyalty. Okay, a tiered partner program where I get more benefits, the more I transact with you, I can get some MDF, I can protect my deals, deal reg and things like that.
Maybe I get some spiffs once in a while. At some point those are just like the basic table stakes, but now it’s like, how can you help me in my business beyond these things, the things that we were just talking about. And I think the other thing that came from [00:15:00] this panel discussion, Rich, that I took away was MSPs also have to do their own research and engagement with their vendor.
Partners and not listen to what somebody might be spewing on, fill in the blank social media, right? And sometimes that just skews the whole conversation and we know that you know It can get involved, it can get really nasty sometimes in some of these platforms But do your own research look at the vendors that you’re partnered with build those true relationships establish trust contact partners that You trust directly and ask him, Hey, who are you using?
Are you finding this and, stay off of the social media, attend these vendor events, ask questions of the leadership, and then once you’re in, then partner together so that you can overcome this trust confidence issue.
Rich: You know what, what’s interesting and scary about that 36 percent statistic that you cited there is I guarantee you nowhere close to 36 percent of MSPs out there have had one of their vendors take business direct, I just don’t like you were saying, I don’t think it happens very often anymore.
And so what’s scary about that is about a third of MSPs out there, even when the vendors tell them, we don’t do that about a third of MSPs and, and so it just gets the words earn and trust get thrown around together a lot, but that’s for good reason. Trust is something that must be. Earned and as you were saying it’s something that the vendors in particular have to earn with respect to their msps And they have to do it by doing not saying and so it’s how you do business It’s the resources that you offer.
It is the consistency you know when you make a promise do you keep it or not if you do that’s going to help you earn trust And if you do earn an msp’s trust you can almost get on the flip side of that equation where you can actually tell an MSP we do go direct, but only when we’re selling to businesses with 10, 000 or more employees or something like that, like we’re never going to compete with, and if you’ve earned an MSP’s trust, they’re going to be okay with that because they believe what you say when you say it, and yeah, absolutely yeah.
What that statistic means for vendors is you need to be aware of the fact that there are a lot of skeptical MSPs out there. You need to be working every day diligently to earn their trust. And the scary thing about earning trust is it takes a long time to do. It takes an instant to lose trust. You make one mistake.
And you got to start all the way back at square one again. So get to work, earn that trust, keep that trust. So that this sort of issue about, am I competing with my vendor? Isn’t an issue for you.
Erick: And when you’re doing that properly, you’ll build. A groundswell of partners that will provide you testimonials and case studies and be on your panels and on your webinars and things like that so that you can use that to overcome this sentiment that may not be based in, real reality in some cases.
Rich: So you’ve been referencing a panel that was moderated by Carolyn April, who is part of the research team here at CompTIA. She is also our interview guest on this episode of the show. Erick and I are gonna take a quick break here. When we come back, we will be joined by Carolyn April for a conversation about the panel that we’ve been referencing and some other things going on the channel, so stick around folks.
We’ll be right back And welcome back to part two of this episode of the msp chat podcast where we are live at comptia channel con 2024 and so pleased to be joined by one of our favorites at comptia carolyn april. Hello Good to be here just a few hours ago, as we’re recording this, she led a panel discussion on evolving channel relationships, and so we now get an opportunity to dive into that topic with her, talk about some other trends she is seeing in the channel.
Before we do that, Carolyn for folks who are not familiar with you, tell them. What you do
Carolyn: a little bit about me. Sure. Thanks. So as Rich just said, I do work for Comtia. I am on the research team at Comtia, vice president. My main focus is on the channel industry, the business of the channel, I guess you would say less so on technology, we have analysts who focus very specifically on, on the techie stuff.
I’ve been with CompTIA for almost 15 years now. And prior to that, my background was in journalism. So I wrote, I was on the media side for a long time in my career. So I’ve done both tech media and now tech analysts. So I’ve seen both sides of the aisle, which is fun.
Rich: No wonder it’s so easy to interview you.
You know exactly what [00:20:00] journalists want. So the panel that you led today zeroed in on a topic that Erick and I have discussed a few times already just this year on the the podcast here, which is this idea of MSPs consolidating their vendor. How are you seeing that reflected and what do you think is driving that?
Carolyn: Sure. It’s that phenomenon is one of the big, wow, takeaways from our annual state of the channel research, which we did, I think you saw me present the data on that at our event in March. And the Genesis for the question is a tracking question that we put on this study every year and it’s just very simple.
It’s, how many partner programs are you enrolled in formally and that has been on our study for 11 years and every year it’s been very consistent. The sweet spot has been about. nine to 10 programs. It the needle has not moved much on number of programs going down or going up. It’s been very stable this year, this past year.
We saw a pretty steep drop in the number of the average number of programs that were channel companies said they were participating in and a deep decline in the number on the high end. So those who had, were in like 15 to 20 programs. That went way down. The number that are pretty satisfied with being in four programs went way up, which I think is highly unusual.
I did at the time. So what do I attribute this to? I think the business models for, of a lot of channel companies have been changing. So the number of vendors that they’ve needed to work with has, been reduced, namely because they, a lot of these vendors are working in the cloud. They’re selling their wares over marketplaces today.
Channel firms are focusing on services. And one of the other big trends that we saw this year at the state of the channel was that move to really doubling down, tripling down on a services oriented business for a lot of channel companies, which kind of abstracts them from the tight alignment with the.
Formal partner programs of specific vendors. They’re focusing on the consulting work. They may do the integration. They may do. They may be simply doing work around helping customers figure out what they should buy, but not necessarily being part of that sale. So we see there are many Many channel companies today who are just getting themselves out of that initial transaction altogether.
And as such, then they don’t necessarily need to be in that product partner program with a vendor. And they’re opting instead is I’ve said quite a bit for quality over quantity, and what we’re seeing is in going with fewer vendors, the satisfaction rates have gone up. A lot of partners are happier with.
Working with fewer vendors. I believe they have more meaningful relationships. They’re probably making more money because they’re focusing very specifically on that, on those particular vendors products and can give their all, dedicate some salespeople, dedicate the marketing, dedicate their technical folks as opposed to trying to spread themselves thin over 20 different vendor relationships, which as we know, never really happens evenly And so you end up focusing more on fewer anyway.
And then just being involved, being enrolled in these programs that you never take advantage of. So you might say, Hey, I’ve got 20 vendors that I’m in programs with and really you are only focusing on maybe five of them very everyday as strategic vendors. Maybe this year’s data was just finally coming out of the woodwork with that and saying, this is how it actually has been now we’re admitting it to, and we decided to drop these It’s six programs or seven programs that we don’t get anything out of.
Erick: Carolyn, I found it telling when Rob Ray mentioned during the panel this morning that they’re not using the term distributor anymore, right? He said, we’re dropping the D. We are now a marketplace, which I thought was very telling. So in your opinion, to what extent are distributors a factor in this story?
Thank you. And what are the implications of that trend for vendors?
Carolyn: Yeah. That was funny when Rob said that, I think part I, my interpretation was that for those viewers out there Rob works for Pax8 which he’s, I guess you could describe as new age type of distributors, the newer cloud based distributors that have evolved over the last, I don’t know, five to six or seven, maybe 10 years now.
And. I think my interpretation of what he meant was that they are trying to separate themselves from the more traditional broad line distributors that you think of who are perfectly wonderful and they’ve been doing their own evolution as well, the Ingrams and Cinex tech data’s of the world.
But I think distribution has really evolved. And that includes old line and Rob’s outfit in, in that they are playing in this cloud based world, a much more integral part of the partners. Journey with respect to how to put together solutions, how to find pricing and at the best levels they can, and how to almost deal with vendors who are abstracted from them.
As opposed to, I think, distributors now are really the relationship for a lot of channel distribution. [00:25:00] partners. They’re the relationship as opposed to working with whoever your channel executives are on the vendor side. The vendors even more removed in a primarily cloud based type of business model that we’re all working in.
And so distributed, distributors have had to step up and evolve their models. And I think for a lot of channel companies, that’s the go to relationship nowadays versus whoever they might be working with. With with the vendor and I see that continuing into the future. So I, I get where Rob is going with that.
The role of distributor is multi faceted now. It’s a lot more than pack, pick, pack, and ship, as he said which was very hardware oriented back in the day. And I think today distributors play a role in helping. Customers navigate the 8 million SaaS solutions that are out there. And, figure out what’s right.
And, it’s impossible today for a partner, I believe with the number of applications that are available in on marketplaces to even scratch the surface of understanding who these vendors are, knowing who some of these vendors are. And distributors have a very unique role where they can help.
Negotiate that, facilitate that for maybe even boil it down. So if you have, you think about going to a chain restaurant with a menu that has 8 million pages, and you’re like, Oh, this is overwhelming. A distributor has the ability to take that menu and make it the fine dining menu that only has 10 things on one sheet of paper, much easier to navigate and present that to the partner to help them make decisions about what’s best for their customers.
Erick: I love that analogy, like the cheesecake factory menu versus your fine steakhouse. It’s just this is what we’re serving tonight.
Carolyn: Yes, correct. Sometimes fewer choices. There’s been all Malcolm Gladwell did that famously. I think he said, when there’s some too many choices, which some people think is a wonderful thing, people lose it.
There’s inertia takes a, takes hold and no one can make a decision too few choices. Then you’re not giving them full array of options, but there’s a sweet spot for the number of choices. And I think that fine dining menu to use that analogy is a good sweet spot.
Rich: Cheesecake factory channel.
We’ve got our episode title. There you go. Perfect. For vendors this is potentially an interesting set of development. So the MSPs want fewer relationships, quality over quantity. They view that And I won’t say distributor, that marketplace relationship is the primary one that that really focused on.
The vendors, theoretically, Want to remain relevant, have some kind of relationship with the partners anyway. What are the implications of all this for vendors in terms of what they need to be doing versus what they traditionally have been?
Carolyn: Yeah, they need to reorient around what partners value today.
And that means, kick some of those partner program staples to the curb. They’re not useful for a lot of partners anymore. So if you want to remain useful, you got to talk to your partners first of all. So communication is huge and figuring out what they want. What we find in our studies is that partners today.
They’re looking for assistance with their business. They want to learn how to run their business more effectively. They want to understand how to navigate some of the newer technologies that are guys, AI gonna, ruin my business. Is it an opportunity for me? What does it mean? That’s just one example.
So vendors have to get out of the mindset that partners are a, an extension of their own sales arm and. Think about how they can, move up the chair. It’s not about you can grow in our partner program. It’s more about the vendor understanding how to help the partner run and grow their business.
I think somebody on my panel today, and I can’t remember who it was said, if you weren’t where I might’ve been Cassie from Lenovo who had said. that if you’re not, if you’re not keeping tabs on it, might’ve been Erick actually, if you’re not keeping tabs on your partner’s profitability and growth versus your own you’re doing it wrong in today’s newer type of relationship.
So I think it really behooves because vendors are a lot more abstracted, especially from the customer. Now, I often talk about this, but if you look back, 10, 15 years ago, if you were a reseller going to market you would have We’re selling yourself as the premier HP partner or the premier Microsoft partner, and your customers wanted to know, do you sell HP?
Are you an IBM blue partner? Cause that’s what we were told. That’s what we’re supposed to be buying. That’s not how it’s done anymore. Now. Vendors are abstracted and customers are looking for a tech solution. Can you solve my problem here? They don’t really ask as much about. the products you’re using to solve the problem.
So I think for vendors to answer your question, they have to jump through. They have to get over that chasm of it’s about pushing our stuff and talk to their partners about what they value. And then that’s the way they can re partner programs. Aren’t going to go away, but they’ve got to be rewritten, redeveloped, recreated.
Erick: Carolyn your data. Reflects that partners today are more successful, more profitable as they’re reducing the term I’ll use as this vendor sprawl this platform sprawl, they’re consolidating what implications does that motion have for vendors in general? Has, as this gets into a [00:30:00] tightening kind of a motion here as we’re trying to do less.
Do more with less vendors. What does that mean for the
Carolyn: vendor? It, obviously it’s a bit more competitive, right? Vendors have got to step up and they have to make their case. I think for many years, vendors coasted by, they didn’t have to really do much. Partners needed to sign up with them to sell their stuff.
Now vendors need to prove their worth. You want to be my partner because I, we have the best product or we have the best service, or we can make you the most money or our partner experience numbers are off the charts. People like to work with us. So it there’s accountability that comes with a consolidation around the number of vendors that.
That partners want to work with but that’s an opportunity. It’s an opportunity to shine I think vendors also want to work with the partners that want to work with them. Those are the best relationships Those are the ones that end up being the most fruitful. So you know that also means that maybe like we often say to I think you and I have talked about this.
We often say to MSPs and solution providers, if you have customers out there that aren’t profitable for you, that are a pain in the ass, or taking a lot of your time for not as much return, you can fire them, right? You can get rid of, I think for vendors, they don’t want a lot of signing up everybody in the room, only to have three of them in the room actually do anything worthwhile with you.
You, there’s no win in having that extra 20. Maybe this is a nice chance for everybody to put their best foot forward from a vendor perspective and only sign up those partners that want to be with you, that actually align to the same. You guys are working toward the same goals. So if you’re a vendor, that cyber security vendor that’s very specific to helping SMB customers, your products really SMB oriented, or it might be oriented to a vertical industry you wanna find partners that are in that same wheelhouse.
Not just try to sign up every vanilla partner out there just so you can say, I’ve got 50 partners versus I have 10. You rather that are opt outta the 10 that are all, that are, aligned with you versus the 50 that aren’t. I think it changes the way that vendors approach recruitment in particular.
Rich: Let’s flip it around and look at it from the MSP standpoint because to the extent the vendors have to compete now for the attention and the loyalty of the MSP and work harder for that than they did before. The implication then is that MSPs can and maybe should be eligible. More demanding, a little bit choosy, so what kind of advice would you have for MSPs in terms of how to take advantage of the fact that you’re a little harder to get now and so they’re going to have to earn your loyalty.
Carolyn: Yeah, I, MSPs can be a little more, I think there are, you see some things I read, like some of the MSP message boards, on social media and you see the things that they’re like deciding, we’re going to speak up about this now. We never used to, no, we don’t want to be locked into three year contracts for anything.
We don’t want to have to be with you because if this relationship is going south and we’re not making money, we want to be able to get out. We don’t meet, we, and that’s just an example, but I think that there’s going to be more leverage. From MSPs. That’s not to say that if you are an MSP or any kind of solution provider in the channel that isn’t doing your part as well and making any money for the vendor that they, it’s got to be a two way street.
But I think for the first time in a long time, we see that The leverage is almost as much in the hands of the channel companies as it is the vendors, whereas it really was a very skewed relationship, power structure before it was much, the vendors really dictated, these are the terms and conditions, you can be my partner or not, and you got to operate under them, that’s changing.
And I think that’s good for the entire ecosystem, keeps everybody having to, no one can be complacent.
Erick: Carolyn, beyond kind of the vendor consolidation that your data reflects, what are a couple of other interesting data points you’re seeing in just channel relationships in general?
Carolyn: Uh, interesting.
The relationship to the distributors, as we talked about, is, I think very interesting. They are becoming more partners than simply that warehousing function that they had before, where they would fulfill orders and needs. And I think that’s going to be something to watch for some time.
I think the number of channel companies that are really getting into services as the main source of revenue for them and less, and away from products changes. All relationships. They’re no longer, if you are, there are a lot of channel companies out there that don’t really sell product at all that are becoming consultants.
One example I think that we’re seeing is in AI, everyone’s like, how do you monetize AI? How, what is the channel going to sell? And I think the jury is still out there in terms of products. However, what I’m seeing is a little cottage industry popping up around channel firms who are saying, I don’t know what, I don’t know how we’re going to make money like that, but we’re going to structure, we’re going to be a consultant that helps customers navigate what their AI strategy might be.
And they’re purely making money off doing that kind of consulting work. That changes a lot of relationships. So if you’re a vendor today who is very product oriented, you’ve got to [00:35:00] figure out. What is the services push mean to me and is it okay for me to then decide I’m going to sell something?
I’m going to sell a significant portion of my products direct But I’m going to be very channel focused anyway And keep bring the channel people in the fold to do all of the services work and does that relationship dynamic work? I think it can I think it does there are examples of it out there today where you don’t have to as a channel firm You know Issue a vendor entirely because they sell direct.
They might not be your enemy for selling direct anymore. They may, this is the transaction. Now you come in and you go ahead and do all the work for us in and around that transaction. And that’s a very symbiotic relationship. I think that does work.
Erick: I have a, just a quick aha moment as we’re talking and you and I have talked about this in the past, where we talk about MSPs maturing to a point where they’re not, no longer delivering technology outcomes, but they’re delivering business outcomes.
So they’re quite. Yes, I just heard you say that’s what the vendors and distributors are moving toward doing. They’re not just delivering technology products, but they’re delivering business services and business outcomes to the MSPs.
Carolyn: Yes,
Erick: you’re
Carolyn: Yeah, so it’s similar when you hear that term customer experience and there’s partner experience and then there’s employee experience.
Like it bleeds through all of the layers. And it’s very true. Partners today are looking for. Vendors who can help provide a business outcome for that, help them with those, but that goal they no longer want to be judged on the volume that they sell, the quotas that they’re meeting. Those sorts of things seem very old school, very passe.
It’s not to say that hardware is not part of the channel anymore. It is. But I think that the way that hardware sales work these days is very different than the And then it was 20 years ago when it was, moving boxes entirely. So business outcomes is going to be another big theme going forward.
Rich: We want to take advantage of our access to you to ask some things beyond the panel. But before we move on to that, one of the things I like about moderating panels is I’ll always go in. With a set of expectations, I’ve got questions, and I’m pretty sure I know what people are going to say in response to those questions, and then there are usually a few surprises along the way, right?
So did anyone say anything? Did anything come up today that surprised you at all? Let
Carolyn: me think about that. What was surprising to me actually was how I thought very sympathetic everyone on that stage were vendor oriented or distributed oriented to be exactly the trends we’re talking about now There was a sense that they got it and a lot of times you can sometimes talk to Especially executives who’ve been in the business for a long time and they’re not Getting it and I felt like everyone on that stage had a sense of we get it We don’t have as much power in this structure anymore This is a the ecosystem is very much leveling out in terms of who holds the cards and I thought it was wonderful that it really came around to the concept of Collaboration like we’re all in this together.
This truly is an industry where we’re all working toward despite the fact that we all want to make money and we’re all capitalism is great and all of that here and nobody says that, this is a a fully socialist situation we’re in. However, they all said the reality is there are things going on with technology today and implications that behoove all of us to work as a collective.
And I thought that was a good takeaway. For all I’ve been on, I’ve done many panels and what was wonderful and a takeaways, nobody was up there. Trying to outshine someone else in terms of I work for a better place or I have a better technology And it was really about some thought into The industry itself and then getting away from the big D, right where I said that And the fact that we aren’t really sure how we’re going to deal with AI.
And I think, I like the acknowledgement of that because I’m somewhat tired of talking about AI only because I don’t feel like we have any answers now, but as the panelists all said, you can’t not talk about it because it is going to be a transformative thing in our industry, but let’s all do a reality check that we don’t really know how transformative.
How we’re going to make money, what the answers are today. So we could all just admit that we, we maybe don’t know and that’s okay.
Rich: Super quickly it occurs to me that even before TD Cinex was TD Cinex, tech data was saying, don’t call us a distributor anymore. We’re a solution aggregator.
Yes. I wonder if anyone answers to the term distributor anymore at this point.
Carolyn: I don’t know. I use it and now I’m feeling a little chastened, until, I’ve been around long enough that we’ve been debating what to call channel companies. They were bars and now they’ve been stuck in solution provider mode and then you just change the name.
And finally I’m like, let’s just give up on this. It’s I don’t know. I think everyone knows what you’re talking about when you say distributor I think. But for some reason it has gotten that sort of four letter word, dirty word, tarnished to it. And and I don’t know, we’ll let Rob Ray lead the charge on nomenclature.
Erick: Yeah, I agree. [00:40:00] So Caroline, setting AI aside, because I’m with you and I think Rich’s as well. It’s we really don’t know what this is yet, but it’s being, Integrated into everything that we do even our operating systems on our laptops and things like that. But beyond AI and beyond channel relationships, what other trends are you keeping an eye on?
What are you seeing in our industry that you could share?
Carolyn: I think workforce is going to be big and that’s a big thing for Comtia. Skills gaps are still a major issue for a lot of firms in the channel in the industry in general. What skills are going to be important is changing.
So evolving along with those skills, how, but also being able to fill fundamental skills gaps that still exist. So I think how companies are addressing their workforce it’s a very competitive marketplace. Unfortunately for the channel, a lot of potential candidates for jobs within the channel are taking jobs elsewhere because other industries can pay them more, so every company has technology experts on staff, whether that’s in healthcare, manufacturing, retail, you name your vertical.
And so for a small MSP has to compete, for that talent with, companies that can definitely outprice them in terms of salary. So I think not to be, I’ll give you a negative trend, but I think workforce is going to be a challenging area going forward. I think how the channel deals with. ongoing cybersecurity is going to be another huge one.
I think we can’t really ignore cybersecurity as something that cannot be ignored. We do a lot of studies on cybersecurity. We’ve got our state of the annual state of cybersecurity coming up in October. It’s in the field, I think right now, or it’s about to be in the field. And that does a deep dive on cybersecurity issues.
But I think that the big trend for the channel is if you were doing cybersecurity as Just a basic thing that you would offer to customers, but not something at a deep level, not an expertise, expert area of yours you’re going to fall behind that every channel company needs to have some higher degree of sophistication when it comes to cyber security.
And they’re going to have to figure out. Liability and accountability and, how much they want to put their neck out there for clients and what the rules of the road are there’s a lot there. And it’s important stuff because it can be, business enabling or it can be business killing depending on how you deal with it.
So I think those two things are going to be amazing. The A. I obviously will be keeping our eye on it. Moving ahead. And then I wonder, all right, I’ll throw this one on here, too, because I just thought of it. Is that will there be any backlash? We saw this week, and I don’t know when this is airing, but this week we saw Microsoft’s Azure platform go down again, right?
Okay, so that affects, all of a sudden, people can’t use this, that, and the other thing, it affects business, whether it’s a mission critical application that you no longer can run, or something that’s just a pain in the butt now, but because you don’t have access to it for a while. And these are becoming more common.
And I’m wondering if there’ll be, will be some sort of backlash of people wanting to go, you know what, this whole putting everything out there in the cloud and relying on that is a potential liability for us. And will there be any pullback to on prem? Type of treatments and I and that would affect the MSP space very strongly, you know Will customers say you know what?
I don’t want let’s keep it all under in our four walls and or yeah And I wonder where that’s gonna go I thought about that a lot this week is that people if they’re gonna be more and more downtime or outages people may not believe in the reliability anymore or be worried about the security of their data or whatever it happens to be and we may see a little mini backlash happen and
Rich: We’ll see.
It’s certainly going to, if nothing else slow down migration to the cloud. There are going to be a lot of questions.
Carolyn: Yeah, no, there’ll be much more. The bar is going to be higher the checklist of before we sign on and do this, you need to pass all of these these checks here. Yeah, I agree.
Rich: So another trend out there in the channel that I happen to have been writing about a fair amount recently in my blog is There are already some really big MSPs out there, offices all over the country, enormous resources They’re actually even bigger ones that are just beginning to show up as some of these MSP roll ups actually begin to roll up among themselves Is there anything you’re seeing in the research?
Any thoughts you have? Just talk to your own in terms of what that trend means potentially for the smaller MSP.
Carolyn: It could be good or bad. There are lots of it. We do a few questions about MNA activity in the MSP space on our study. And, there are plenty of MSPs, small ones out there who are working on their own exit strategies.
So some of this consolidation could be a boon to them. It’s I need to sell my business. Look at this consortium of MSPs that are together. I think that’s what you’re talking about. Some of these larger MSPs that are all, and there, there is a, a potential buyer. And then there is also the downside of formidable competition, for smaller [00:45:00] MSPs just aren’t going to be able to compete with some of these big guys.
However, the way I view it is they’re very different lanes. I think for a lot of these smaller MSPs their clients are small and they’re unlikely to be the ones doing business with some of these larger MSPs. And if you can stay in that kind of smaller local lane you’ll be okay. A lot of the smaller businesses too, are more in the lifestyle mode in terms of growth, so they’re not looking to grow gangbusters in terms of their revenue.
And therefore. The competition factor is not as frightening for them, you know of these larger MSPs I don’t see this as anything beyond like the normal Landscape kind of things that happen within any industry. You’ve got consolidation among some of the larger players We just happen to live in an industry in the channel where the majority the vast majority of the businesses are small most of the SMB, most channel companies are like a million in revenue and they got 10 employees.
That is 75 plus percent, maybe more of the channel companies. Then you’ve got these very large ones. So if you do an average, it skews, that skews the average, but you drop out the very largest and then all the sole proprietors, there’s tons of those too. People are just. Yeah. Okay. By themselves, drop those two and you’ve got like a, you’ve got an average about a million dollars and 10 employees very specific market.
So I see it as either, it really depends on what that small MSP goals are. If they’re at the end of their life cycle and they’re looking to sell them, this isn’t going to be that worrisome if they’re looking to grow, they’re a younger MSP, they’re small now, but they’re ambitious. The presence of some of these larger behemoths could inhibit their ability to do that.
But again, it’s really going to depend on whether they specialize. They have something, something that helps them differentiate themselves in the market, as opposed to being just a horizontal type of MSP that offers, the basic services. It really is a custom, an individual basis type of thing.
Erick: Except. Operational business maturity,
Carolyn: you
Erick: know, challenge, right? Carolyn, you’ve shared with us the the research, the surveys that you’re fielding right now around cyber security. You’re keeping your eye on AI. Would love to see some research on that. Because nobody’s got any answers yet. What other research is on CompTIA’s agenda coming up?
Sure.
Carolyn: I just completed data collection on a study of vertical industries. And as it relates to skills development and workforce issues, it was of end users. So this is not a channel study. However, any any end user study is usually of great interest to the channel because those are your customers potentially.
So if you know what’s going on in their minds and the kinds of technology needs they have, all the better you can target, all the better to sell to them. So this Was the first time we’ve done a study that where we’re going to slice and dice it by eight different verticals So you’re gonna take a look.
That’s what’s going on from a skills needs skills priorities Workforce challenges and some basic business goals and challenges and opportunities Within these eight verticals and I’ve got the data back looking at it over it now. It’s gonna be really interesting I’ve done a podcast on it. I’m gonna produce three Eight different briefs, not full reports, but research briefs that will break out the data by each of these verticals.
So if you’re a channel company who is already in one of the verticals or wants to be in healthcare was one of them, retail manufacturing, professional services you have an opportunity here to take a look at some data that’s going to show you exactly what’s going on within that particular sector.
So that’s coming up that you’ll see that. Maybe a month or so, some of the deliverables on that. The cybersecurity study will be coming up. We do our end of the year industry outlook, which is our annual trends report that we do, so we’ll be prognosticating a little bit over what we’re going to see in 2025.
I don’t know what I’m going to think about yet, but that’s coming up the toward the end of the year. And then I’ll start working in December on state of the channel again. So it will be coming out at the beginning of 2025. There’s all kinds of smaller studies in and around there, but that’s the main thing.
You can be looking for a
Erick: lot of crystal balls,
Carolyn: my crystal balls. Yes.
Erick: Yeah. So partners and vendors and distributors, I’m sorry. Marketplaces will do well to take a look when this stuff is released, maybe chart their course
Carolyn: hopefully. Yeah. Hopefully it’s useful for as a guidepost for some of the companies out there.
Rich: So for folks in the audience who want to read the research you’ve already published, keep up with the stuff you were just talking about on its way. Second half of the year. Or just get in touch with you where would you point people?
Carolyn: Okay much of the content that I’m discussing research is available on CompTIA’s website.
So if you can simply go to CompTIA. org, I’ll, drop down on the research menu, and you’ll be able to find everything that you need there. Reports we also have links to our podcasts and links to other things, other resources that are all there. Need to reach me? That’s easy. See april at CompTIA.
org. You can email me anytime. That’s fine. Love to hear from everybody out there. And yeah, those are the two best ways. [00:50:00] I also have a podcast I can plug here. All right. I got a podcast named Volley and that airs every other week on Fridays. I am a cohost with Seth Robinson, who was also on the research team at CompTIA and we talk all things tech.
The business of tech workforce issues. And it’s about 50 50 of Seth and I doing episodes alone or and then we have a guest periodically, so it’s a breakdown of about half an hour. That’s every other week. So tune in for that. If you get a chance called Bali. I think that would probably keep people busy enough.
Don’t you?
Rich: Volley is an awesome show, by the way. You can find it anywhere. You can find MSP basically. It’s it’s out there. So yeah, I, I endorse, I recommend checking out Volley. Carolyn, it is always a treat to talk to you. It is especially fun to be able to do it face to face instead of on Zoom.
Yes, that’s very true. So thank you very much for joining us, taking some time out here at Channel Con as everybody is running around. Folks, we’re going to take a quick break here. Let me come back on the other side of that Erick and I will rejoin you. Talk a little bit about what we discussed with carolyn here.
Maybe have a little fun wrap up the show stick around We are going to be right back Okay, and welcome back to part three of this episode of the msp chat podcast I really meant it when I said it Erick and it’s always a treat to talk to carolyn I as I am A research junkie and her research, Kantia’s research in general is it’s, totally vendor neutral.
They always know the right kind of issues to explore and questions to ask. And so I love it. And so it’s always just a great opportunity anytime I can take it to speak with her, you actually, the thing I want to flag is something that you flagged during the conversation too, which was the whole thing about business outcomes.
And that on maybe both sides of that relationship, there’s increasing awareness that it’s business outcomes, not technology outcomes that are going to make the competitive difference. And that, that’s interesting to me. It resonates for me because I’ve been doing interviews with Marketplaces, we’re not calling them distributors anymore, but I’ve been for the last year or so.
I’ve been td cinex in particular has done some research of their own that they’ve published where they’ve really tried to call attention for their partners to the fact that what your customers want are business outcomes. And our most successful partners are the ones who deliver business outcomes.
It’s good to hear that’s not an uphill climb so much anymore that the the partners and the vendors and the marketplaces all are getting on that same page.
Erick: And you know what, Rich, I love that’s happening because, back when, I was trying to become an msp one of the early msps in the channel.
We did not have that sentiment among our Vendors our distributors. These were the days when it was very hard to be a profitable msp because of the cost of These products and services that we had to consume and then deliver to our clients. And then in addition, we weren’t mature enough to lead the discussion with our clients.
And the clients that we were serving were typically the, the S in the SMB until we started growing a little bit, got a little bit more mature. Then we started moving into kind of the M, but for clients that are for customers that are concerned with what things cost, And they’re in that same business building mode as we were in the target audience that we were, that we eventually replaced as we became more mature and started evolving into this thinking of, Oh, if anybody can deliver technology solutions, anybody, that’s not our differentiator.
Our differentiator is we deliver the business outcomes. We are the strategic. Technology advisor that helps clients not only invest in the right technologies, but get the most out of their existing technology. And we migrated rich from a, technology outcome selling kind of an outfit to a business unit.
Kind of a focus so we stair stepped our way into full overall business outcomes So we went from technology outcomes. Then we were saying oh you know your hr you know your payrolls your sales team your you know that we were rolling in solutions for those units But they were still technology solutions at that point And then we got a little bit more savvy as we started working with more, Smarter clients than us that kind of guided us and led us through the way.
Here’s what we really need, right? And we said, Oh, that’s the way to do it. So now that we had a lot of MSPs moving in that direction, we still had some of those vendors and distributors that, they took a little bit longer to evolve, to catch up with us. But they did. And so what I was hearing from today’s panel and some of the research that Carolyn was sharing here, it’s awesome that the [00:55:00] vendors and marketplaces that get it are moving in that direction with partners.
And that means to me that they will be more successful. Then vendors and distributors that aren’t and the partners that are that are partnered up with them will also be more successful because they’re working towards this common goal.
Rich: Great stuff. Very encouraging. I’m right there with you.
One last thank you to Carolyn April for joining us folks. It’s leads us with time. For just one last thing, and Erick, I didn’t see it myself, there was a movie within the last year or so called I believe, Bears on Cocaine?
Erick: Cocaine Bear?
Rich: Cocaine
Erick: Bear, was that it? I think so, yeah. Cocaine
Rich: Bear.
I clearly, I don’t know, but I didn’t see it, but I was familiar with the phenomenon, there was a movie about a bear full of cocaine. And of course, we are all familiar with the phenomenon of Shark Tornado. What do you get when you combine a bear on cocaine and a shark tornado? You get a shark on cocaine, which is a pretty weird, spectacular kind of concept that couldn’t actually exist in nature, except it does because researchers in in Brazil have tested sharks off the coast of Rio de Janeiro and discovered that they’ve got.
Cocaine in their system and the Nobody knows exactly what the issue is exactly the theory is that drug traffickers, you know The police are closing in they’ll just dump bales of cocaine into the water and sharks will probably go check it out but yeah folks, sharks on cocaine at least in the vicinity of brazil.
This
Erick: is a real thing Frisky sharks stay away from the frisky cocaine sharks, in brazil It reminds me rich of remember like in the early 80s or whatever when like cocaine was the drug of choice for whoever You know that was the thing and I think I remember reading or hearing some news stories about well, Pretty much the majority of every dollar bill now has traces of cocaine right because people weren’t doing so much right now We’ve got the sharks Um crazy times rich
Rich: And all the time we have for you this week on the show.
Thank you so much for joining us We’re going to be back again next week on another episode for you until then. Let me just remind you We are both a video and an audio podcast So if you happen to be watching the video version of this show, but you’re into audio podcasts Go to wherever it is. You get your audio podcast spotify Google uname you’re gonna find us there if you’re listening to the audio version, but curious to check us out on video go to youtube look up msp chat You’ll find us there as well.
Either way, please subscribe rate review It’s gonna help other people like yourself find the show and enjoy it just as much as you do now This show is produced by the great russ johns. He’s part of the team with us here at channel master You’ll be happy to produce a show like this for you as well And you can learn about that and everything else the channel master does for its clients www.channel master.com.
Channel Master has a sister organization called MSP Mastered where Erick works directly with MSPs to help them optimize and grow their practice. If you wanna learn more about that and get engaged, the website to visit is www.mspmastered.com. Like I said, thank you for joining us. We’re gonna be back again in another week.
Until then, let me just remind you folks that you can’t spell channel. Without MSP.
