Originally published by 2112 Group, Larry Walsh
According to 2112 Group’s new 2015 Midyear Channel Performance Report, solution providers are expanding at substantial rates even as sales in the rest of the IT market are slowing.
The consensus is that the technology market is contracting. Analyst firm Gartner says global technology spending will shrink 5.5 percent this year as organizations cut spending on equipment and software. Raymond James says technology vendor profits rely more on margins than on increased product sales. And Computer Economics says U.S. IT spending will remain positive, but shows signs of erosion.
None of this is really good news. Yet there’s a sector of the technology market that’s defying gravity: the channel.
The 2015 Midyear Channel Performance Report demonstrates that the collective community of solution providers — value-added-resellers (VARs), managed service providers (MSPs), systems integrators, IT consultants, and agents/brokers — is far more optimistic and is having an easier time conducting business than their suppliers/vendors.
The health of solution-provider businesses isn’t just reflected in revenue and profit. The report indicates that average sales cycles – the time it takes solution providers to originate and close a sales opportunity – are getting shorter. Meanwhile, average deal values – the total sale price or value of a customer engagement – are increasing.
The 2015 Midyear Channel Performance Report shows that opportunity still exists for vendors and solution providers alike. Vendors need to tap into the strength of solution providers by providing more support for expanding sales bases and delivering more customer-engagement resources. Solution providers, meanwhile, need to leverage their gains to invest in their businesses.