Partner Ecosystems Come of Age

Over the last few years, the B2B tech industry has been buzzing with discussions about the shift from transactional partner channels to collaborative partner ecosystems. While the hype has often outpaced the reality, evidence suggests the concept is finally translating into tangible changes on the ground.

So, what are the factors driving this change and what does this mean for B2B tech providers?

Customers want integrated and streamlined solutions

Probably the most important driver of the transition to partner ecosystems is customer demand. The surge in enterprise app usage – today, the average enterprise has more than 300 SaaS applications – and the transition to hybrid infrastructures has massively increased complexity. This has led customers to seek integrated solutions, rather than managing multiple siloed, point solutions – they don’t want the hassle and complication this brings. Customers want collaboration among suppliers, like Independent Software Vendors (ISVs), systems integrators and Managed Service Providers (MSPs), to deliver integrated solutions that achieve the business outcomes they’re looking for.

The role of the service provider is growing
Customers are transitioning to service-oriented purchases over products, which is fueling the growth of services-based business models within the IT channel. In 2021, the global managed services market was valued at $161.37bn and is projected to exceed $300bn by 2027.

MSPs are expanding their offerings to meet evolving customer needs. For example, the number of MSPs offering cybersecurity and compliance solutions is expected to grow to 70-80% in the next three years, alongside an increase of 40-60% of MSPs offering cloud and collaboration solutions.

As a result, the role that partners play in the customer lifecycle has evolved – extending beyond sales and technology implementation to customer retention and development. So, it’s essential there’s a deeper level of on-going collaboration between technology vendor and service provider.

There is a shifting balance of power between vendors and partners
As customer buying priorities shift to services and away from products, the influence that service provider partners have over technology purchasing decisions is increasing. After all, as a customer, if you’re paying for a service level then how much do you care which vendor’s brand is on the box that’s helping deliver that service?

In some areas, this is shifting the power dynamics between vendors and partners and has no doubt contributed to customers’ decreasing loyalty towards established brands. According to Momentum ITSMA’s CBX research, 41% of enterprises awarded work to new providers in 2022, compared to just 23% in 2018.

The implication for technology vendors is that they need to be far more focused on how they can work collaboratively to support their partners’ service offerings, and not just on trumpeting the merits of the technology itself.

Ecosystems are fundamental for a competitive advantage
Organizations are increasingly recognizing the significance of ecosystems in their business strategies. Success is no longer purely down to in-house skills and resources, and business leaders now understand that collaboration with partners is crucial for providing effective solutions for customers and building a competitive advantage.

Businesses are seeing ecosystems as engines of growth, particularly in challenging times where budgets and headcounts face pressure. A 2022 survey found that 96% of B2B tech marketers expected an increase in revenues from their partner ecosystem, and an Accenture study revealed 76% of business leaders believe ecosystems will be the main disruptor to current business models. Add this to our own research showing 85% of marketers plan to maintain or increase spending on partners and alliances in 2023, and it’s clear that B2B providers need to work with fluid ecosystems to deliver joined-up, end-to-end solutions for customers.

Partnering approaches are changing
Organizations now need to go beyond just paying lip service to the concept of an ecosystem and really embrace the need for a more collaborative approach. For many, this will involve making significant changes to their partnering strategies and programs:

• Partner marketing needs to be re-thought to focus more on ‘with-partner’ initiatives alongside ‘to-partner’ and ‘through-partner’ activities. This has implications for how partner marketing teams are structured and targeted, and for the processes and platforms that support partner engagements.

• Incentive models, MDF programs and the like need to be redesigned to reward partners for their contribution throughout the customer lifecycle, not just at point of sale. They also need to encourage collaboration between channel partners rather than pushing them to compete with each other.

• A greater emphasis on co-creation with partners – working together to jointly develop solutions to customer problems – will be essential. This requires funding, resources, and greater alignment between partner-facing teams and other functions, such as product development and direct sales.

• Partner enablement needs to evolve so that it’s less vendor-centric and empowers partners to create their own value propositions that integrate the vendor’s product with other complementary solutions.

Vendors are moving in the right direction
These changes won’t be achieved overnight but there is evidence that vendors are moving in the right direction.

From our work, we can see that tech vendors are placing growing importance on creating collaborative value propositions and go-to-market programs with alliance and channel partners, often leveraging the combined offerings of multiple partners. Companies recognize that through closer partner collaboration they can achieve a level of differentiation and reach that it’s impossible to do alone.

Modifications in commercial models exemplify the desired transformation in behaviors within vendor teams and partner relationships. As an example, Microsoft has redesigned its partner program to better incentivize partners who have a broader influence on customers, beyond the initial point of sale.

The year of partner ecosystem maturity
Although the path towards collaborative partner ecosystems is still in progress, there are clear signs of significant advancements. This year, partner ecosystems have the potential to come of age, driving innovation, distinctiveness, and growth for B2B technology providers. Embracing this transformative journey requires substantial adjustments. There’s still a way to go, but the benefits of a cohesive and collaborative approach to addressing customer challenges are truly worth the effort.

Are you looking to drive increased growth through your partner ecosystem but not sure where to start? Contact us to take advantage of our comprehensive Partner GTM Assessment, to quickly evaluate your current GTM approach and identify opportunities to accelerate growth.

And if there are any other aspects of your partner GTM strategy you’d like to talk about, please get in touch.