2023 was a year of opportunity and complexity for channels and alliances. New (and not-so-new) technologies continued to drive opportunities around digital transformation, while global economic uncertainties brought the threat of recession, rising interest rates, and high inflation. While these trends and market shifts impacted sales activity around the world, 2023 saw continued emphasis on the channel, with more companies investing in a broader partner ecosystem mindset.
But where does this leave the channel as we look ahead to 2024? In the cybersecurity world, it's actually stronger than ever. Channel analyst firm Canalys estimates that the channel accounts for 91% of cybersecurity spend. The Canalys report shows that while direct cybersecurity sales were flat in the first half of 2023, channel sales grew by over 12%.
In this blog, I review how the channel trends that were taking shape at the end of 2022 developed over the course of 2023, and I look ahead to 2024 to predict the developments that will further impact the shape of the channel in the coming years. Read on for a glimpse at what lies ahead for the channel in 2024 and beyond.
An update on 2023’s predictions:
Before we tackle the trends that will impact the world of channel in 2024, let’s take a look at where we ended up by the end of 2023. Here’s my analysis of how last year’s predictions panned out.
1. Partner discounts lose steam in favor of stronger enablement programs that drive customer value and success
As predicted, this has been a trending theme all through 2023. I’m hearing more and more emphasis on partner enablement as a top priority for partners, vendors, and customers.
Customer experience, throughout the buyer journey, is heavily impacted by partner enablement. The challenge many vendors encountered in 2023 is figuring out how to transition their partner program and track the ROI of Partner Program investments. Sales metrics on the impact program discounts have on driving partner business are relatively easy to track. Systems for this are already in place. Tracking the ROI of partner enablement is not as straightforward. This tracking and reporting still needs to be developed to properly enable the required shift of investments.
At BeyondTrust, we haven’t adjusted partner discounts, but we are expanding and improving our partner sales, pre-sales, and post-sales implementation training and certification programs to improve our partner enablement experience.
2. New success metrics shred metallic tiers
This is another prediction that came true in 2023. Vendors are looking well beyond traditional partner sales metrics to measure partner performance and assign program levels. Many are now including partner influence, sales and technical competency, and net promoter scores on partner delivery in their measurements.
At BeyondTrust we are in the process of building these new ways to track and measure partner value. Once those are in place, we can migrate our partner program from a tiered program based on sales revenue to a program based on partner capabilities and value added to the customer experience. That will level the playing field for partners and drive more partner value for our customers.
3. CAMs displaced in the partner ecosystem
Words matter—and in 2023, that included the mindset around the word “channel.”
For most people, channel equates to transactional partners, which are mainly resellers and distributors. While resellers and distributors are vital to a partner ecosystem, they are just part of the equation. At BeyondTrust, we are replacing all our Channel Account Managers on Jan. 1, 2024, with Partner Managers who will be custodians of their regional ecosystem. No, we’re not letting everyone go and replacing them with new heads. We’re changing everyone’s title and job description. The training for this new role started in 2023 and will continue into 2024. My own title is changing as well, from SVP Global Channels & Alliances to SVP Global Partner Ecosystems.
New channel predictions for 2024
Now that we’ve assessed the trends that were on the horizon at the end of 2022 and determined where we’ve landed now that we’ve reached the end of 2023, let’s look ahead at what we can expect in the year to come.
1. Partner success gains a seat at the customer success table
Vendors are starting to realize that partner success is a dominant factor in customer success. This is highlighted in a new ASAP (The Association of Strategic Alliance Professionals) report, titled Partners are the Customer Experience.
Customer Success departments and Customer Success Managers first started appearing in the early 2000s. Customer Success teams gained steam with the adoption of Software as a Service (SaaS), which drove the need for greater focus on customer retention. Salesforce was one of the first companies to build an extensive customer success department. That was followed by the emergence of customer success platforms.
Now, customers rely on partners to provide the information and advice they need to make a buying decision. They also rely heavily on partners for product implementation, integration, and adoption. In 2024, we’ll see more partner success managers working alongside customer success managers. Net promoter scores will expand to measure the customer’s view on both the vendor and the partners.
As a result of this shift, what we need, and I hope to start seeing, is a greater inclusion of partner success in the customer success platforms.
2. SaaS business metrics replace channel metrics for measuring partner ROI
In 2024, companies will need to enhance their channel metrics with broader SaaS growth metrics to gain a more accurate view of channel impacts on the company.
As vendors transition from channel to partner ecosystem strategies, they run into a challenge: how do you measure the impact and justify the investment in the ecosystem? Traditional channel metrics do not recognize the expansive value and contribution of all the different partner types. I mentioned earlier that you can measure things like partner influence, competency, and service quality, but even those metrics don’t tell the story of the overall impact on the business.
Companies will need to look at the impact of their partner ecosystem on broader SaaS growth metrics, like Customer Lifetime Value (CLTV), Customer Acquisition Costs (CAC), and Net Recurring Revenue (NRR).
3. AI accelerates the growth of partner ecosystems
All the buzz, hype, and fear of generative AI is starting to settle down as we figure out what this technology can and cannot do. Generative AI will start accelerating the growth of partner ecosystems in several ways in 2024, largely driven by partner technology vendors who are incorporating AI technology into their products and platforms.
We leverage partners to expand into foreign countries, yet the cost and time required to localize content can be a limiting factor. Partner enablement and learning platforms will offer huge advantages by using AI to generate partner sales, marketing, and learning content in multiple languages.
We are already starting to see full self-service partner enablement and partner management platforms adding AI to expand their capabilities. This allows partners to receive information contextualized for their specific needs, including AI generated value propositions. We’ll be able to test joint value propositions with potential partnerships before we even sign a partnering agreement.
Ecosystems show their full power when partners are operating in a coordinated and interconnection fashion. I’m looking forward to having AI assistants orchestrating our ecosystem community meetups.
Looking further ahead: one more prediction for 5 years out
With 2024 quickly approaching, let’s look a bit further ahead to see where we can expect those coming trends to lead us.
Partnering moves from a department to a business strategy
The rise of the orchestrated partner ecosystem is expanding the value of partners across all departments of the organization. Channel Chiefs are seeing this added value and are educating their cross-functional peers on the impact the ecosystem can have on more effective marketing, sales, product development, and service delivery.
Classic inbound and outbound strategies are becoming increasingly less effective. That is leading to a surround strategy, also referred to as “Nearbound,” that recognizes customers are surrounded by their trusted advisors. Smart organizations are driving a better partner experience to ensure those trusted advisors are positive and educated advocates for their offerings.
Over the next three to five years, this trend will extend much further as organizations see the impact of the ecosystem on driving higher business growth, EBITDA (earnings before interest, taxes, depreciation and amortization), and company valuation. SaaS vendors are recognizing the broader power of the ecosystem, leading some to elevate the Channel Chief Role to the C-Suite. We’re already seeing more and more Chief Partner Officer titles on LinkedIn. As equal members of their Executive Leadership Team, they are well positioned to drive alignment on partnering as a company strategy and help their peers incorporate partnering in all departments.
Conclusion: moving from strategy to execution
This is an exciting time for channel teams. For most of my career, channels have been viewed simply as a route to market. Channel managers have been seen as overhead, taking a seat behind the sales teams. With the shift from channels to partner ecosystems, partner teams can play a critical role in the success of the entire organization. As vendors transition to the SaaS model, they are relying on their channel chiefs to drive this shift, building the ecosystem for customer success and the team to support it. 2024 is the year we move from talking about an ecosystem strategy to fully executing on that strategy. Now is the time to reposition and rebrand your channel program, team, and mission.
Click here to learn more about the Partner Trust ecosystem at BeyondTrust, or stay up-to-date on channel trends and conversations by tuning into my Channel Journeys Podcast.
Rob Spee, SVP of Global Channels and Alliances
Rob Spee is the SVP of Global Channels and Alliances at BeyondTrust, where he leads a growing team to build a modern partner ecosystem. He is also the founder and CEO of Channel Journeys, and hosts the Channel Journeys podcast where he interviews other channel pros to explore best practices in partnering.
Rob is a guest speaker on other IT and channel podcasts, and guest blogs on numerous channel publications. He excels at creating visionary channel strategies that accelerate revenue growth and open new routes to market. He knows what it takes to build global partner ecosystems and performance-driven channel organizations. In fact he’s done that as a vendor, a reseller, and a distributor.
He enjoys sharing his passion for the channel, bringing new insights and innovation, and energizing his clients to excel.