The Effects of COVID-19 on the Technology Channel: What We Know for Sure

28 April 2020 | Partner Enablement and Loyalty

Jay McBain, Principal Analyst: Channel Partnerships and Alliances at the market research company Forrester, recently wrote about the different scenarios that the implications of the Coronavirus (COVID-19) could hold for the technology channel. Here are his most important points – regardless of scenario.

These are the things we know for sure about the effects of COVID-19 on the technology channel, regardless of scenario, writes Jay McBain:

  1. Vendors and partners will suffer short-term revenue losses. Other than a burst in triage activities including laptop sales, VPNs, cloud sign-ups, UCaaS, and help-desk services, many core IT services businesses will be impacted as on-premises work grinds to a halt.
  2. The channel’s “brand” is benefiting as an essential service that empathizes with customers and shapes responses around their needs. The channel is also helping broader communities prepare and cope, reminding many businesses why local service and support is necessary.
  3. There is a new “channel normal,” one that is more agile, responsive, and cross-functional than before in response to this fast-moving crisis. For those who don’t adapt, it could hasten their decline.
  4. The coronavirus pandemic has created millions of new home workers, including channel partner employees, customers, and suppliers. The cloud apps and platforms they need to be hyperproductive and always connected are being put to the test. This change in work may never fully rebound.

Pandemics pose serious threats to business operations for vendors, partners, and customers alike, including rampant employee absenteeism and supply chain disruption. While customers expect heightened levels of service, delivering may be very difficult. Before the crisis, the channel was dealing with parts shortages and rising component costs due to tariffs — these will only amplify.

Business models will also be challenged. For example, the rapid growth of managed services over the past 20 years has given customers a predictable level of service and support for (mostly) on-premises infrastructure. If the future of work changes, the monthly value delivered in a typical MSP contract may be scrutinized at a line-item level.

Beyond the initial surge in remote work, including communication and collaboration tools, channel partners will need to capitalize on moving customers to cloud infrastructure faster, recognizing and securing new threat parameters, automating customer workflows and business logic, providing new disaster recovery and redundancy protection, and engaging deeper in business consulting to help customers survive and, later, thrive from this crisis.

One last word of caution for vendors: During economic downturns, especially when partners’ accounts receivable are threatened and customers are spending less, there tends to be higher claims on partner programs from cash-starved partners. This can change the forecasted yield on some programs and, in some cases, could be a material impact that needs to be reported internally and externally. We also observe that gaming the system can happen across the multitude of incentive programs, as well as an increase in fraud.

This excerpt is taken with permission from Jay McBain’s Forrester Insights article: Quantifying Coronavirus (COVID-19) For The Technology Channel. McBain is an accomplished speaker, author and innovator in the IT industry.

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