Josh Budd
Josh Budd (Research Manager, EMEA Partnering Ecosystems)

The world of partnering has never been more complex. Vendor strategies are evolving faster than ever to keep pace with changing customer buying behaviors and partner business models.

Understanding how partner business models are evolving can help vendors build a partnering framework that is robust and flexible enough to reward partner activities while remaining customer-led.

Trend 1: Partners Are Deepening Commitment to their Strategic Vendor Partner

The breadth of a partner’s portfolio can provide an indication of the level of commitment a partner gives to each vendor relationship. Partners with multiple strategic vendor relationships are likely dividing their energy and resources between multiple vendors. Partners that work with just one, two, or three core vendors will likely give greater attention to each relationship.

This is important. While each vendor has visibility into what their partners are doing with them, they may not know how they are engaging with other vendors.

IDC’s EMEA Partner Survey 2024 showed that partners derive more than half of their total revenue from activities connected to their most strategic vendor partner. Just 6% of partners expect the share of revenue connected to their core strategic vendor to decline in the next 12 months, with 45% expecting it to remain at today’s level. Half expect it to increase.

For partners, there are specific benefits from concentrating resources on a single core vendor relationship. At the vendor level, demonstrating commitment can lead to the allocation of more resources, drive new business, launch new technologies, or to co-sell and co-creation activities that drive new customer wins.

For the partner’s business model, deep commitment to a specific vendor’s portfolio and road map can provide clarity in terms of future business development planning and skills development in the organization.

Trend 2: P2P Collaboration Accelerates Within Non-Linear Go-To-Market Motions

Partners traditionally seek to serve as a single point of contact for the end customer. The customer turns to the partner to procure, deploy, and service their IT environment.

However, changes in customer buying behavior and new routes-to-market and deployment models have led to the emergence of non-linear go-to-market motions in which multiple partners can be involved at different stages of a single customer’s journey.

Customers have choices in terms of how they procure, consume, and optimize their IT environments. They can involve a unique combination of marketplaces, platforms, and partners.

IDC’s EMEA Partner Survey 2024 shows that 60% of partner revenues are now direct payments from end customers. This means that 40% of partner revenue is coming from elsewhere — as a sub-contractor through another partner, fund disbursement from a marketplace operator, or payments from vendors.

Trend 3: Looking Beyond the Primary Activity of Partners

Many vendors used to categorize their partner base according to their primary activity. Partners that primarily focused on reselling vendor products and solutions were categorized as VARs. Partners that derived most of their revenue through services were labelled as some form of managed services or consultancy services provider.

Results of our survey suggest there are potential risks in this approach. Most partners now operate multiple partner business models that span sell, service, and build roles for the customer. While only a small number of partners in the survey self-identified as cloud service providers, for example, a significant number offer this as a secondary business model.

It is increasingly important for vendors to consider the activity mix of each individual partner to uncover how they engage with the customer. Vendors that only engage with a partner based on their primary business activity are potentially leaving opportunities on the table to drive additional customer engagement through other areas of expertise and capabilities the partner possesses.

Bottom Line

Gaining a deeper understanding of the activity mix and commitment levels of partners is key for vendors to allocate resources based on partner potential and to look for untapped opportunity within their existing partner base.

Knowing how your partners interact with other vendors and customers — and knowing how important you are to their overall business and what their long-term strategy is — has become critical to inform vendor ecosystem strategies.

To learn more, listen to IDC’s 2024 Channels and Alliances Predictions webcast, or reach out to discover how we can help unlock partner potential for vendors of all sizes.

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