Jay McBain (Forrester Research)
After talking to 497 organisations and receiving 78 briefings from technology companies last year, Forrester Research principal channel analyst of channel partnerships and alliances Jay McBain has outlined what he thinks is coming for the channel in 2020.
One of the more notable expectations among McBain’s list for 2020 is the assertion that indirect sales will shrink every year for the next decade.
Broadly, McBain asserts that consumer trends are starting to shift into the business realm, a move that is likely to see the direct to consumer dynamic carry over into the enterprise market.
In fact, this factor may have already come into play, with 73 per cent of business-to-business buyers reporting that purchasing goods and services via e-commerce platforms, marketplaces or directly from the web is “very convenient,” according to McBain.
“Brands are developing the capability to sell and fulfill directly to consumers, and this will extend to their B2B buyers, as well,” McBain said in a blog post published on 7 January.
Moreover, McBain points out that while cloud technology, along with newer or emerging technological areas such as artificial intelligence (AI) and the Internet of Things (IoT), are growing swiftly, they are typically associated with lower indirect percentages than many of the legacy technology areas they are replacing.
As such, McBain suggests that although the estimated US$2.26 trillion of global indirect technology spend will probably continue to grow, it is likely to grow more slowly than direct sales.
This is expected to cause the current division between indirect and direct spend in the technology industry, which McBain puts at roughly 64 per cent on the indirect side, to fall each year for the next decade.
Given that the flow of indirect sales is likely to slow due, in part, to the rise of online marketplaces, it should come as little surprise that such marketplaces are, in the words of McBain, set to make their mark on the channel.
Indeed, Forrester predicts that 17 per cent of global business-to-business spend will be channelled into marketplaces by 2023. And although some of the big marketplaces are indirect, such as Amazon and Alibaba, McBain expects that most business-to-business marketplaces will be operated by the giants in the vendor space -- players such as Microsoft, Google, Salesforce, IBM and AWS.
McBain even puts the number of expected “super marketplaces” likely to dominate business-to-business technology marketplace revenue share in the coming years at 20.
Rise of the ‘retention’ channel
McBain also touches upon the rise of the so-called ‘retention’ channel -- basically another name for those channel players that have built their businesses around the kind of recurring revenue model that arises from dealing predominantly with subscription-based software-as-a-service (SaaS) offerings.
From McBain’s perspective, the ‘retention’ channel is starting to take hold. And while the trend for partners to shift to recurring revenue models of operation as SaaS takes hold is nothing new, the ability to upsell and cross-sell is becoming critically important.
The partners engaging in these cross-sell and upsell activities currently come in the form of consultants, integrators, digital agencies and adjacent independent software vendors (ISVs), according to the analyst.
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