EY study

There’s a real sense of change in the technology industry at the moment, fuelled by big tech redundancies, rising costs and shifting customer expectations. At the recent Davos conference in Switzerland, PwC released its Global CEO Survey revealing that nearly a quarter of UK businesses do not think their current business models will be viable in a decade. Around 40% of UK CEOs believe their company’s tech capabilities lag behind the demands of their strategic objectives, while, as a result, 86% of CEOs are looking at automating processes and systems.

It’s a picture of opportunity but also of a shift in attitude to technology. Automation will change things. Customers are already open to new ideas. As Accenture says, customers want to buy outcomes. They don’t want to get caught in dated cycles of upgrades, constantly re-tooling to try and fit technologies to strategies. It has to be more seamless, more joined-up.

Software subscriptions have to a certain extent, been a part of this journey.  They are expected to account for 83% of the total market by 2025, according to IDC. They have helped reshape business relationships with technology suppliers, enabling faster access to software and licences, more self-service capabilities, easier scalability and in theory, lower costs.

While reselling is far from dead, this new age of relationships, of subscriptions, demand for automated processes, platforms and outcomes represents a shift for the channel. Vendors are starting to rethink how they manage these changes, including how to incentivise and reward channel partners fairly.

Partners must also adapt, changing their business models to address changing market demands and developing a more customer-centric approach that includes initiatives such as building customer success practices. Engaging with customers throughout their technology transformation journey is key, but it is increasingly rare for one partner to manage the whole process in isolation.

Customers now typically engage with at least seven partners across the lifecycle of any project and there are multiple touchpoints. From those that engage early in the project cycle, offering advice and guidance, to those that engage through transactions, deliver services, transformation, training and so on, delivering a project can require an ecosystem of partners.

Despite this, vendors have traditionally tended to only concern themselves with and rewarded the partners involved in actual transactions, forgetting the whole ecosystem around each deal and how it comes to life. When you start to think of subscriptions and the whole customer lifecycle management, how do you deliver that? The economics behind customer relationships is changing rapidly and vendors need to embrace this change.

“We are witnessing a once-in-a-generation shift in the global economy, and partnerships play a leading role,” wrote Canalys chief analyst Jay McBain last year. “Most business leaders across every industry, of all size firms, and in every corner of the world are considering significant business model shifts. They are realising that they can’t do it alone in the decade of the ecosystem.”  

McBain has long been a leading commentator on partner ecosystems and believes that everything is increasingly connected within channel relationships. He has talked about how the channel has sat in its own silo for 40 years, with teams in marketing, sales and finance, for example, working in isolation. And he is right. We have seen this ourselves and have been trying to address it with our partner ecosystem referral schemes and programmes, to reward partners throughout the customer process, whether they discover the leads, manage the projects, or deliver training.

It is going to be an ongoing challenge for vendors to evolve with the needs of partners that are also being dictated to by customers. An indication of this is the rise of customer success management roles in business and what this means in terms of responsibilities. Last year was a big year for this role but  as LinkedIn’s Hiring in 2023 report shows, customer success roles are still going strong. We have also seen the rise of Chief Ecosystem Officers, whose role is to manage longer term relationships and ensure cohesivity and continuity. How customers are looking at and managing their worlds is changing quickly.

Last year, an EY study revealed that 69% of business leaders from companies that are part of an ecosystem believe ecosystems are very important to their company’s current success, and 91% agree that ecosystems have increased the resilience of their business. These sorts of numbers change how customers view technology and how it benefits the overall goals of an organisation. Outcome-driven relationships have emerged, and partners have had to adapt.

It’s our role as a vendor to not just embrace this change but to help lead it. We have to keep asking ourselves, how can we enable partners better? Certainly, we can help partners set up and shape customer success practices, but what can we do within our structure to smooth the whole process? How can we be fair while creating opportunity and loyalty?

Recognising and embracing the rise of ecosystems, is just the start.