Industry executives and experts share their predictions for 2024.  Read them in this 16th annual VMblog.com series exclusive.

Big Changes in Store for The Channel

Larry Walsh, CEO and chief analyst of Channelnomics

As 2023 will soon be in the rearview mirror, we’re saying goodbye to a year marked with AI fueled hype cycles, economic and market turbulence, market consolidation, and even more complex routes to market that dotted the B2B technology sector landscape. It also leaves us with several key takeaways that will shape the future of the industry in the coming year and beyond. Many of these insights will serve as catalysts for change, creating new opportunities against a backdrop of industries undergoing rapid transformation. From my discussions from the front lines and with industry leaders, here are four key areas we expect to see big moves in 2024.

• Hyperscaler Expansion: The surge in enterprise and B2B transactions via hyperscalers (cloud platforms) will persist in 2024 and the following years. Prominent hyperscalers like Microsoft Azure and AWS platforms offer customers extended contracts where they can secure a price by agreeing to a minimum spend. Increasingly, buyers are using their leftover commitments to purchase third-party offerings from these platforms. However, a challenge with this rise in hyperscaler prominence is that it’s not generating new business but redistributing the market share. The expenditures in these platforms often reduce the revenue for traditional distributors or resellers. This doesn’t suggest that resellers are disadvantaged, as they can also sell on these platforms. It indicates that the surge isn’t adding to the overall market expansion.

• Channel Optimization & Focused Investments: Channelnomics anticipates that IT vendors will reduce their broad investments in channel programs, choosing instead to boost incentives for a select number of partners. These actions aren’t contradictory. Vendors aim to concentrate their efforts on a smaller group of dedicated reseller and influencer partners, with the expectation that such deepened partnerships will produce greater outcomes. However, there’s a caveat: a partner’s growth potential has boundaries, which might not always meet the vendor’s revenue and expansion goals. This selective investment approach can be likened to placing all one’s eggs in a single basket.

• Automation Opportunities Creating IT Investments: Increasing wages and constrained labor pools are forcing businesses to invest in automation to constrain costs and maintain operations. This trend will persist through 2025, as inflation and recessionary conditions will continue. Businesses — particularly in financial services, hospitality, and health care — will need to invest in automation for front and back functions, creating opportunities for resellers and integrators to sell products and management services. 

• Services Evolution Paradox: More and more legacy vendors are transitioning to or evolving their sales models to adopt “as-a-service” (XaaaS). The vendors want recurring revenue that predictability over the long-term. The problem is the vendor community already created managed service providers — or partners that use vendor technology to deliver their services to end customers independently. As vendors try to bring their own services to market and sell through partners, it’s creating conflicts that slow services development across the board. 

This next year looks to be a pivotal one for cementing the shape of the channel and roles of all its participants in the coming years.   There lay big opportunities for those well prepared to navigate the changing waters and emerge as dominant players for the foreseeable future.  

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ABOUT THE AUTHOR

Larry Walsh

Larry Walsh is the leading go-to-market advisor to technology executives, channel leaders, and solution providers around the world. Widely known for his ability to cut through problems and challenges facing vendors, distributors, and solution providers, Walsh is sought for his advice, counsel, insights, and consultation on channel strategies and technology market trends. He and the Channelnomics team are responsible for crafting and shaping the channel strategies and programs of companies that span the hardware, software, cloud, and services spectrum of the technology industry.  Before founding Channelnomics, Walsh was the vice president of channels and publisher of Channel Insider at Ziff Davis Enterprise. He was the editor of several technology magazines, including Baseline, VARBusiness, GovernmentVAR, and Information Security. He was also an editor and reporter at several newspapers.  He is the co-author of the book, “The Power of Convergence,” which prescribes methodologies for assessing and aligning business and technology management to achieve goals and produce better outcomes.