Phoenix Rising Blog – Ecosystem Optimization

Posted Thursday, September 28, 2017 at 12:00 AM by Norma Watenpaugh

Business models have fundamentally changed from selling and buying gear to responding to how customers consume technology and how it changes their businesses.

We are experiencing seismic changes in the tech industry driven by the convergence of SMAC (social media, mobile computing, analytics and cloud technology), the change in technology consumption, the rise of Digital Transformation (DX) and the Internet of Things (IoT). Though the industry has experienced massive disruption before, the changes underway now seem to be different. Why? One reason is that business models have fundamentally changed from selling and buying gear to responding to how customers consume technology and how it changes their businesses.

For a clearer picture of what’s happening, consider the following:

  •  Channels are consolidating: According to the 2016 CompTIA study, there has been a 30% decline in the number of partners transacting since 2008.
  • Despite this decrease, channels remain productive: 70-80 percent of IT products and services continue to be sold through channels in North America, according to a 2016 CompTIA study.
  • Channel partners face increased competition due to the convergence of partner types, including traditional solution providers and telecom agents.
  • While the number of traditional channel companies has declined, it’s been offset by the rise of influence/affiliate channel models and new partner types including marketing and digital agencies, accounting firms, private equity companies, and HR firms.
  • Amid this upheaval, traditional IT/networking solution providers are transforming their business models to accommodate for cloud, IOT, SDN and SaaS applications.

What else is driving change? The new buying paradigm led by line of business (LOB) managers for one thing. They are now in the driver’s seat and their motivations are keenly focused on business outcomes. IT in certain software applications and solutions may be an influencer, or taking a back seat in the sourcing of technology solutions. Similar paradigm shifts are also happening among infrastructure vendors who have responded by reorienting their organizations around business value, software, and not allowing their businesses to become plug-and-play commodities.

The conversation is also shifting regarding who is a vendor, who is a partner and who is a customer. Vendors may be hardware, software or services-oriented, and channel partners may be cloud providers, master agents, solution providers or some combination thereof. Vendors, service providers and solution providers are all partnering together to create additional value for end customers and to ensure long term solvency and success.

All of these trends, changing business models and buying dynamics amount to an incredible transformation happening in partner ecosystems. We must rethink how vendors and partners go to market as an ecosystem. Partners once on the fringes are now more powerful as influencers.  Often, they are becoming orchestrators of the ecosystem. With their established customer relationships and trusted advisor positions, they are diversifying their revenue streams to incorporate managed services, API innovation and integration.

As we see more and more consolidation in the traditional IT channel, we see an influx of new players centered on particular industries. For example, GE Digital is becoming a powerhouse in IoT and industrial transformation. Today, there are over 1,000 new VC-funded entrants into the IoT space. This is a space where digital transformation and IoT require a more verticalized approach and level of expertise.

So what does this mean for companies seeking to transform their current partner ecosystems to meet the challenge? TCC & Phoenix Consulting Group have recently engaged in extensive research to understand how companies are engaging with new partner ecosystems. We have interviewed partnering professionals across a “Who’s Who” in the ICT industry to glean their insights so we can better understand their actions.

Here are three trends that stand out from our conversations and research:

1.  Organizational Structures Are Evolving  Vendors are compelled to think more holistically about their different routes to market. As partners adopt a more blended business model of services, homegrown IP and recurring sales streams, vendors need to break down silos between their channels, ISVs, alliances and services business units. Companies are beginning to organize their various partner communities under a single reporting structure and framework, and a unified partner program.

2. The Meaning of Value Has Changed Partner programs need to restructure to accommodate the changing nature of value. Instead of sales volumes, they must think in terms of rewarding new definitions of value prioritized by end customers. Thinking value means reevaluating incentives. Vendors can no longer subsidize partner profitability through back end rebates or discounts.  They must instead reward skills, competency, vertical expertise, customer relationships and sustained engagement. These behaviors are the new leading indicators for partnership success.

3. Encouraging Peer-to-Peer Collaboration Since no single vendor or partner can deliver DX or IoT solutions by themselves, working together effectively has become a premium competency. Many of these solutions are custom-assembled for each customer, and the constellation of partners may be different for each opportunity. A new model of more agile, more integrated partnering is required. A partnering model dependent on trust which becomes easy to replicate—or terminate—once the work is completed.. 

In a very complex and changing landscape, we believe the vendors and partners who embrace the change, build partnerships for the long run, and make partnering a core tenet of their company strategy will achieve a competitive advantage that could last for years.


About the Authors:

Theresa Caragol is founder and principal consultant of Theresa Caragol Consulting, LLC, and Achieve Unite a strategic advisory firm that provides business acceleration services to global enterprises including partner and channel development, go-to-market planning, M&A channel integration and executive learning forums. She has more than 20 years’ experience in building and managing multi-million dollar indirect channel teams and strategic alliance business and programs from inception to sales success. Prior to founding TCC, Theresa held senior executive roles at Extreme Networks, Ciena and Nortel.

Norma Watenpaugh is the founding principal and CEO of Phoenix Consulting Group (, which provides partnering and collaboration consulting services with expertise in partnering strategy, multi-channel and alliance management, and ecosystem development. Prominent clients include, Adobe Systems, Cisco Systems, Dupont, Intel, PayPal, Microsoft, SAP, and Xerox. Norma is also a Board member of the Association of Strategic Alliance Professionals. She also leads the U.S. delegation to the ISO standards committee for Collaborative Business Relationship Management. 

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Posted Thursday, August 4, 2016 at 06:00 AM by Deborah Henken

Do you Have the Right Channel for your Future?The Buyer's journey has changed in the past few years.  Has your channel strategy kept up?  Have your partners?  How are you transforming your channel to address how buyers buy? How is your channel changing to keep up?Here are some facts about...

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Tags: channel strategy, digital transformation, buyer's journey, transforming the channel, channel of the future

Posted Monday, May 25, 2015 at 01:00 PM by Norma Watenpaugh

Partnering Strategies to Accelerate Growth in the Internet of ThingsFor some time we’ve been hearing that Internet of Things is coming.   Well it’s here!There are many examples that we probably don’t think much about.  Beyond our personal devices: smart phones, watches...

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Tags: By one estimate IOT will represent $14T of new value creation by 2020 with 50-75 billion devices connected.

Posted Sunday, January 19, 2014 at 08:00 AM by Norma Watenpaugh

One of the challenges of professional development is retaining the knowledge and incorporating the new learning into the day to day business practice. Most of us intuitively understand the limitations of classroom training. While most well-crafted training includes discussion...

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Posted Thursday, September 16, 2010 at 11:00 AM by Norma Watenpaugh

This Blog Contributed byMonica David, Vice President, North America, CustomerImpactWhat are the critical components in assessing the success of Partner Programs? Clearly, it means putting the Voice of the Partner to work. Successful partner programs need significant investments in technology, products...

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Tags: metrics, dashboards, partner programs, ecosystem optimization, survey, measure

Posted Monday, October 12, 2009 at 02:50 PM by Norma Watenpaugh

One area in which social media is gaining traction is support services.When you combine partners in an interactive forum they become a self-help community.When you add customers to the mix, your partners become very competitive in demonstrating their expertise to the customer base.The result is...

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Tags: Social Media, self service communities

Posted Tuesday, September 15, 2009 at 08:46 PM by Norma Watenpaugh

Findings from a Survey Conducted by Phoenix Consulting Group, June 2009Social media is gaining presence within partner ecosystemsThese are natural communities and naturally lend themselves to these media.There has been a trend for some time by large vendor companies to position themselves as the...

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Tags: Social media, partner ecosystem, ecosystem management, partner strategy

Posted Monday, May 11, 2009 at 11:17 PM by Norma Watenpaugh

Part I discussed how demographic segmentation allowedtargeting programs, benefits, and attention to engender greater loyalty and business through their developers. Part II addresseshow segmentation by 'Loyalty' itself helps to identify andto address specific concerns of developers. While...

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Tags: roi, loyalty

Posted Tuesday, April 28, 2009 at 11:17 PM by Norma Watenpaugh

I was approached by a client some weeks ago to present at conference some work we did on Developer Loyalty. Now there are a lot satisfaction type surveys out there, but my client presented a very specific challenge. She was new in the role as the Director of the Developer Community and needed...

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Tags: roi, loyalty

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