Why out-of-the-box channel services are no longer viable

For businesses of any size, collaboration is nothing new in the channel. Companies working alongside each other will always be commonplace, whether it’s a logistics relationship, a 24/7 partnership providing end-to-end solutions, or the delivery of financial or admin support.

As a result, trying to shape a company into one that operates entirely self-sufficiently from other channel companies rarely works. Developing a skill-set or channel provision that would be more efficient and easy to manage through outsourcing is a no-brainer, especially as the end-customer’s appetite for a widening remit of services increases.

While there are many in the IT channel that have the resource to invest in adding these varied solutions to their portfolio, it can still place a strain on time and financials, with the ability to launch and test a new service – within the customer’s desired timeframe – frequently proving difficult. Therefore, it’s much easier to engage with other channel entities who specialise in delivering these services.

Research shows that over a quarter of the revenue in a channel business is generated through the utilisation of skills from other companies, with the number of these partnerships forecast to increase within the next year.

Out-of-the-box solutions are no longer viable; customers want a tailored solution that meets their ultimate business objectives, not where they are currently. As such, the need for firms to provide an increasingly flexible service, adapting to the way in which customers consume services, is crucial.

Businesses no longer want to be tied down in long-term fixed contracts which gives them little option to scale up and down. Within the channel, this has largely been facilitated through an outcome-based service delivery model.

Existing and new-to-market providers need to assess how they can adapt and operate, whilst the more ‘traditional’ vendors must develop their proposition. This could change the way the business delivers in-house developed services or reaches out to potential partners. If businesses achieve this change and continue to grow, it may leave them with no option but to enter into increased partnerships with other companies.

The chances of an organisation thriving by delivering a one-stop-shop suite of solutions is rare. They must identify the core services that they can continue to deliver to a high standard, while looking at solutions that can be outsourced to strategic partners.

There has however been some scepticism within the channel when it comes to embracing collaboration. Just a third of channel companies in partnerships are comfortable with informing customers that some of their services are being delivered to them through a third-party. This reluctance can be due to the fear of appearing weak or not keeping pace with customer demands by developing services in-house.

Customers will rarely baulk at their channel partners entering into partnership with other companies; it will ultimately help them to offer a more rounded solution. As a result, collaboration should continue to be embraced as a positive concept, as should total transparency.

In order to fulfill their agreed Service Level Agreements (SLAs), it is more beneficial for organisations to enter into multi-vendor/technology partnerships utilising existing skills within another company. They should continue to deliver their core focuses to a high standard, but partnerships can enhance their reputation and positioning within the market.

This has been strongly echoed within industry research, with over half of IT channel leaders believing their customers would be happy with channel suppliers collaborating together, if SLAs were still met, reflecting the growing appetite for an increase in collaborative channel support-based services.

Although most businesses like to pride themselves on developing solutions in-house, a flexible service delivery model is becoming increasingly common for businesses; ‘in-house’ doesn’t necessarily mean they are advantageous when compared to outsourced alternatives. Providing measurable benefits for both the organisation and the customer, collaboration is undoubtedly the best way for channel companies to deliver outcome-based services to customers.

Shaun Lynn is CEO of Agilitas.