The channel has been through quite a ride in the last 15 months since COVID-19 hit. Forrester principal analyst Jay McBain calls it a “tale of two cities” with a K shape to it: traditional computer and telco revenues falling off while cloud infrastructure and SaaS businesses boomed.
The takeaway? Opportunities still exist for channel partners that focus on the right trends — and the right technologies. According to IDC surveys in EMEA, 61% of channel partners believed the pandemic would accelerate their customers’ digital transformations. Almost half (46%) said COVID-19 was driving their own internal transformation efforts.
Despite shutdowns and stay-at-home mandates, direct investments in digital transformation are still growing at a compound annual growth rate (CAGR) of 15.5% and are expected to reach $6.8 trillion by 2023. What this tells us is that data is critically important.
To seize these opportunities, it’s wise to study what’s happening across the channel. Here are five key trends — all linked to data — that I believe will determine how partners can best strategize for the rest of 2021 and beyond.
1. M&A Activity Is Through the Roof
Consolidation is happening on all fronts: OEMs, VARs, and distributors as well as data integration companies. Here are a few recent examples:
- Tech Data announced a merger with Synnex, creating a $57 billion global IT powerhouse distributor
- AHEAD, a builder of platforms for digital businesses, continued a buying spree that started in 2019, and picked up Roundtower and Kovarus, adding to a portfolio that includes the previously acquired Data Blue, Sovereign Systems, and Platform Consulting Group, broadly extending its reach in North America.
- Toronto-based Converge has rolled up 19 regional VARs to create an organization with nearly $1 billion in revenues across the U.S. and Canada.
Amidst all this activity, the overall number of regional partners is shrinking rapidly as larger companies snap them up. Standalones may now be wondering how to move forward or whether to find their own exit strategies.
Before deciding, it’s critical for channel partners to make the right bets on the right technologies and businesses behind them. The investment partners and customers are making in Cohesity is a bet on data and managing that data. That data will continue to differentiate organizations and simplifying how it’s managed is critical to business success. Consult with your Cohesity channel rep to make sure we’re on a common path forward to success.
2. Freedom to Work from Anywhere
Companies are now looking at a permanent shift in how employees work. The pandemic created a work-from-anywhere environment that, now that we seem to be returning to offices, is causing businesses to rethink workflows, processes, business logic — even real estate investments.
This is a big opportunity for the channel. We can leverage this openness to think in new ways; to help our customers reimagine their businesses to fit the changing times. To make data available at the right times, and places for people to be able to do their best work.
We’re going to see heated demand for “next-gen” everything — from cloud solutions to data management, security and edge computing to AI. The partner ecosystem has tremendous opportunities with work anywhere acceptance to create, integrate, deliver, and manage cloud-to-edge environments for customers that leverage next-gen technologies while delivering loads of value to customers.
Software-defined, hyperscale Cohesity is a perfect fit for partners looking to provide next-gen data management solutions to customers that want the freedom to work from anywhere.
3. Rise of Everything-as-a-Service (XaaS)
XaaS, or everything as a service, is the practice of delivering aspects of IT as end-to-end services, rather than products. The global XaaS market will grow at an impressive compound annual interest rate (CAGR) of 25.5% between 2021-2026.
According to a recent survey by Deloitte
- 81% of companies say COVID-19 accelerated their move to XaaS, with 51% saying the pandemic has driven them to invest more in XaaS than planned
- 75% of businesses say they already runs more than 50% of their enterprise IT tasks as-a-service
- 60% say XaaS gives them a competitive edge
- 80% contend that XaaS is critical to digital transformation
The most significant aspects of the XaaS model are twofold: First, customers don’t worry about licensing an enterprise software program or managing infrastructure. All that is taken care of by the XaaS provider. Second, businesses can reduce capital expenses (CapEx) and transform them into more manageable operating expenses (OpEx). But there’s a third for people and that’s giving them better and more access to data and applications.
Major vendors we work with have embraced XaaS. For example, HPE with GreenLake to deliver XaaS to HPE customers. Instead of buying a server and licensing HPE enterprise software to run on it, a business can subscribe to an HPE package that includes hardware, software, and service management. HPE says its plan is to sell all products as XaaS by 2022. Cisco, IBM and others are quickly moving this direction as well.
The implications of XaaS for the channel are huge. Align yourself with vendors building these XaaS environments for customers. Embed yourself in their ecosystems. This is where the money increasingly will be in coming quarters and years. One of the reasons for Cohesity’s bold move into data management as a service (DMaaS) offerings is to provide greater opportunities for partners to help our joint customers participate in this growing opportunity.
4. Power and Influence Growth in Digital Ecosystems
Digital ecosystems are one of the biggest trends to emerge in years. And they’re rapidly gaining economic clout. Whether you belong to a digital ecosystem — and which one — may determine your organization’s success over the next 5 to 10 years.
According to McKinsey, at least a dozen industries — including B2B services, mobility, travel, and health — are reinventing themselves as vast ecosystems, also called “networks of networks,” which are predicted to generate a $60 trillion integrated economy by 2025.
A digital ecosystem is a network of interconnected companies—created when two or more formalize a relationship to offer a wider range of digital products or services than each could on its own. The goal is usually to give customers a comprehensive, end-to-end IT experience without having to step outside the ecosystem.
Cohesity is building a large ecosystem, and if you’re part of it, you may already be recognizing benefits, including data sharing. If you aren’t, you should know this. Cohesity’s partner ecosystem of service providers, traditional VARs, distributors, OEMs, managed service providers (MSPs) and global system integrators (GSIs) will be a key ingredient in our future, and a big contributor to the success of our data management business.
Think of Cohesity’s digital ecosystem as having the power of having an OEM (hyperscale platform) + VAR partner (customer engagement and possibly services) + GSI or MSP (hybrid, services), or any other combination of partnerships. It’s immense.
5. Global Demand for Cybersecurity and Privacy
Everyone wants more security. And everyone, it seems, is concerned about privacy. Who has my data? What are they doing with it? Is it safe in my vendor’s systems? What if it gets hacked? And both consumers and businesses are right to be concerned. The frequency of and damage done by cybercriminals has dramatically increased over the last decade. Businesses have lost billions as a result.
Here’s one especially egregious example: In March 2020, nation-state hackers believed to be from Russia compromised a DLL file linked to a software update for the Orion platform by SolarWinds. The supply chain attack impacted up to 18,000 SolarWinds customers, including six U.S government departments. None of this was discovered until mid-December, 2020, by which time untold damage had been done.
The silver lining, for channel partners, is that sales of security products and services are booming. The global cybersecurity market was $167 billion in 2020 and will grow at a very healthy CAGR of 10.9% through 2028. This opens up lots of opportunities for channel partners to hone their data protection and security expertise, driving higher revenues.
Cohesity can be your partner in growing security and data protection expertise because our platform — with immutable snapshots — is ideal for defending data against ransomware attacks.
Seize Your Opportunity
As markets reset from the shock of 2020, this year is turning into a year of change:
- Companies engaging in frenzied M&A activity.
- A workplace of the future that looks very different from the 9am to 5pm office grind.
- XaaS taking over traditional data centers.
- A digital ecosystem trend and a silver lining in multiplying security hazards.
In every case, there’s an opportunity for partners that understand not only what’s happening with data, but can help customers safely navigate digital and data transformation to grow and prosper.
