I’m sure you are counting the days until the whole pandemic situation is “over” and we can “get back to normal.” Yet, as most commentators are saying, normal has changed forever, and this is especially true in the world of the IT industry channel.
Overall, the channel is experiencing a rapid growth trend, and the importance of partners in the technology ecosystem is clearly increasing. As the Covid pandemic took hold, we saw a lot of end customers scrambling to quickly enable themselves for a new way of working. This caused supply chain issues for distributors and partners: especially short-term inventory sell-outs in displays, notebooks and peripherals, as companies tackled the immediate problem of enabling employees to work from home, and the second challenge of giving them access to core systems.
However, the scramble in these last few months has also helped channel partners understand what they are good at – and equally, has highlighted areas where they are better served by a partnering approach. For partners who had been experiencing a slow decline in their core business, this has been a scary – but also exciting – time to start focusing on the future. The last few months have accelerated a shift from focusing on products and features themselves, to concentrating on understanding and improving customers’ experiences in using technology.
Technology vendors like Fujitsu are rethinking their roles too. Considering the key part they play in shaping the customer experience, the need for vendors to improve their relationships and gain more knowledge of the partners is becoming crucial. For Fujitsu, with indirect sales accounting for more than 80% of our business, we’ve had a seat in the front row as the drama has played out.
The big picture: The accelerated arrival of a new era
Taking a strategic viewpoint, we are witnessing the highly accelerated arrival of a new era that will be dominated by partner experience (PX). This transition was happening anyway, but the pace of change is now extremely rapid. PX is already a key metric and top priority for technology vendors and their entire ecosystems to achieve customer success.
PX requires a subtle shift away from the now-conventional “360-degree view” of customers towards an approach that foregrounds greater customer intimacy. It is only through developing and sustaining dynamic relationships with customers that Fujitsu’s partners can expect to create seamless, frictionless PX across multiple touchpoints.
One way this is playing out in real-time is the ability to demonstrate fast-paced innovation. For channel partners working to evolve from the old “box shifting” model, this has been the perfect opportunity to show customers just what else they can do, apart from just providing a laptop or a server. Customers have had urgent, short-term needs, and not only for hardware – which has given high-performing partners a chance to shine.
The agility demanded here by pandemic responses has stress-tested business models for our partners – and it’s increasingly apparent that in today’s evolving, digitally-transformed world, no single vendor can expect to provide its customers with 100% of the solutions, 100% of the time – nor should it need to do so. Increasingly complex IT infrastructures are making this impossible anyway, as they span core to edge to cloud, which is helping force partners to pick their poison.
This big picture now emerging implies a need for more complex interrelationships in the future. We predict the channel will move to more complex structures, where partners will be grouped by the value they bring, with an influencer channel, a traditional transactional channel, and a retention channel originated by the need to deal with increasingly popular subscription-based models.
Partners will also become more valuable to their customers as they become experts in new trending areas. One area that I think is set for massive growth in the 12 months ahead is cyber-security. We’re seeing the early development of new security-focused partners, who will bridge the gap between physical and digital security. I expect this to grow fastest at the network edge, an area that has expanded faster than security has been able to keep pace. It’s also a classic example of how disruptors are on the rise: partners that are investing more in their own intellectual property are now starting to reap the benefits, in terms of winning new business in implementing vertical or functional use case-based solutions, and in integrating technology from multiple vendors – and this is delivering higher margins.
Fujitsu’s support for the PX channel transformation
The need to refocus on PX was already clear to Fujitsu. We have been listening to the needs of our partners and redefining our role in the ecosystem. Over the last few weeks, the tactical topic of cashflow support has risen to the top as one of the key qualities that our partners ask of a technology vendor like Fujitsu. Our partners’ end customers too are moving more towards pay-as-you-go or pay-as-you-use models, rather than fronting substantial amounts of money for what can sometimes turn out to be a risky bet on the latest technology, then facing an investment that can take years to amortize. This is especially the case for small and mid-size businesses. Our flexible payment models are getting more attention than ever.
Looking into the future, I’ve asked my team to step up the pace of change. Why? Because as customers digitally transform, deals become smaller, more iterative and more frequent, and are built around very specific use cases and proof of value. Technology comes to market very quickly too, and our role is to provide our valued partners with the skills they need to stay ahead of this fast-paced landscape. This means training will continue to be a major focus.
As the nature of our relationships in the channel shifts from supplier to collaborative partner, we are going to be more of a strategic matchmaker. Solution complexity is increasing, driving end customers to seek a greater variety of stakeholders, and looking to work in tandem with selected IT, OT, data and other partners to achieve specific outcomes. Part of my vision involves widening the scope of what we call a partner. We are not just working with resellers but with ISVs, systems integrators, developers, and other specialists. By enabling partners with different specializations to come together, we can help our partners become faster to market. You can expect to see more of Fujitsu actively promoting ecosystems where our partners are working together – because the days of needing to do everything in-house are long gone.
What does success look like?
Of course, on the face of it, success looks like building a bigger pipeline of joint business with partners, and taking a more structured approach. But, if we’re honest, the channel has been laboring under structural pressures for many years. There is always opportunity in a crisis and now is the time to address these issues.
I believe Fujitsu’s overall data-driven transformation strategy is a core component in the change that is necessary and overdue. We want to engage with two specific groups. Firstly, the influencer channel – decision-makers, with very early influence, who help customers understand the digital journey before they ever engage with an IT vendor’s sales teams. Secondly, the retention channel. Here, we want to see partners moving to subscription models for services and placing more of a focus on retention. Successful channel account managers will also see their roles morph into that of a community manager for the ecosystem in which they are involved.
There is one noticeably big consequence of this change: A reduced focus on price. This has dominated the traditional volume channel, and as a result, margins are now wafer thin. This is not the basis on which anyone can build a sustainable business model. It’s just a race to the bottom.
A quote from the mid-20th century sums it up for me: “Coming together is the beginning. Keeping together is progress. Working together is success.” There’s some debate whether the great industrialist Henry Ford actually said these wise words, nevertheless, it is great guidance for the Covid era.
Whether you are an existing Fujitsu partner ready to explore how PX can help transform your business, or currently not engaged with us but intrigued by how these concepts might play out – contact me or my local teams to arrange a meeting.