A CHANNEL CHRISTMAS CAROL
Vendors, VAR’s, IT Solution Providers and Managed Service Providers
On a frigid and foggy Christmas Eve, a shrewd, hardworking, poor-spirited businessperson named Vincent Andrew Reseller, his friends used to call him V.A. Reseller or VAR - works meticulously in his counting-house.
Outside the office creaks a little sign reading "Technology Products & Stuff" - Jacob Marley, V.A. Reseller's business partner passed away seven years previous. Inside the office, V.A. Reseller watches over his CFO, a poor diminutive man named Bob Cratchit who shows him the latest ledger – “Bah! Humbug profits can’t be shrinking that fast!”
V.A. Reseller has followed the same old routine, taking dinner in his usual tavern, and returning home through the dismal, fog-blanketed streets of his town.
V.A. Reseller opens the door and trudges into his bleak quarters. He makes little effort to brighten his home - "darkness is cheap”, V.A. Reseller likes things the way they are and hates change.
As he plods up the wide staircase, V.A. Reseller, in utter disbelief, sees a locomotive hearse climbing the stairs beside him emblazoned with Subscription-based Solutions emblazoned in bright green letters on the side.
The wraith (ghost or spirit – it is my word of the week…) that next appears from the hearse tells V.A. Reseller's that he has come from beyond the grave to save him from slowing growth and margin compression which is his fate. He says that V.A. Reseller will be visited by three spirits…
The Ghost of Christmas Past
Duck, figgy pudding, and crazy parties that never seemed to end – it was a fantastic coming of age when there were thick margins in hardware & product and services were a throwaway.
There are not enough of us, and the technology vendors & distributors are lining up to bring us aboard and are showering us with more money than we know what to do with – what a time to be in the technology business.
There were always transitions that needed to be dealt with along the journey.
Mainframe to Mini, Mini to PC, and PC to the Internet – we handled them all. Turns out we could have charged for more of our services, but what the heck we had ample margins on the products we were selling.
Sure, it was hard, and we changed a little growing up, however, our core beliefs are still intact - change is hard and we only move to another place when the pain is excruciating, and we have no other choice but to change.
We are a bit shaken but remain unfazed even though the Ghost of Christmas Past did open our eyes to the facts, yet we chose to believe this will all affect someone else’s business.
The Ghost of Christmas Present
You are a little grayer and show some deep age lines but running a legacy business feels good and the outlook could not be better – we are still growing!
So why is The Ghost of Christmas Present, sitting at your side painting a picture that you just cannot believe? It’s an image of doom and gloom.
The Ghost shows you an image of the world steadily evolving to subscription-based solutions and is outlining the hard facts of how those who have embraced the proper business model, cloud, and digital services are experiencing exponential growth.
The vision shows V.A. Reseller's clients moving to hyper-scalers and cloud-ready competitors who are eating into the traditional spend that is key to your core business.
VAR had heard many times from your strategic vendors and industry prognosticators that the cloud computing era was upon us, but you believed that you would be the exception to the rule and move along unaffected…
The Ghost shows your vendor and distributors walking slowly away from what you have all built together. They are talking about new ways of partnering, becoming a subscription-ready entity, and offering every. ng-as-a-service. The images unfold so quickly it is overwhelming.
Now V.A. Reseller is becoming angry and bitter; how can my customers be researching and consuming monthly services that solve their business problems without me? This cannot be possible, but the Ghost assures V.A. Reseller it is real and happening more each day.
Don’t my customers know I’m their trusted advisor? I worked so hard to earn that self-imposed position – customers are supposed to call me when they are contemplating any move.
“What is that Ghost of Christmas Ghost Present, there is more?” Many of my clients are bypassing me totally because we do not look like an onramp to the cloud and digital services and that is where the world is heading. I thought it would take so much longer for my clients to even entertain transforming. I thought retirement was around the corner and that I would have sold the business for an incredible multiple before any of this would have taken root. “Bah humbug!”
“Take me from the present Sprit, I do not want to see any more” ...
The Ghost of Christmas Yet to Come
V.A. Reseller is truly rattled, but it is all right. The premonitions of the Ghosts of Christmas Past and Present were just providing more of the same old crap I have been hearing for a few years now. It will be all right.
Business has never been better, other than our profitability pools are shrinking…
“What, who is that?” The Ghost of Christmas Future, you must be kidding me. “You want to show me what things will look like in the next year or two?” No, no, no I do not want to see what is to come!
The Spirit takes V.A. Reseller to a Partner gathering and he does not recognize a single face. The participants are talking about channel ecosystems, transacting versus non-transacting partners, marketplaces, and value chains that drive business outcomes.
The group is regaling in the notion that they do not sell products like in the old days, rather, they leverage the power of the multiplier to drive solutions business that delivers $2, $5, $7, and more for every dollar of their strategic vendors' offerings that get sold to the end customer.
They speak of partnering with others to capture the entire solution-stack to meet the clients’ needs – they are describing a level of margin expansion that is foreign to me and unimaginable based on our current business model.
“Wait, why is my old laptop and scally cap sitting on that empty chair?” First, these changes took out Tiny Tim Enterprises, and now I am next. This cannot be happening!
The Ghost of Christmas Future continues to show V.A. Reseller the shrunken figures that were once the muscular hulks of your transaction-based cohorts.
V.A. Reseller is like many who thought the Subscription Economy, digital transformation, and the cloud era were just a bunch of hooey.
Or even worse, they thought they could make the transition quickly if they were forced to - only to find that it is an 8 to 12-month journey and they did not have the will, stamina, or cash to take on the challenge.
V.A. Reseller cannot bear to look at the hungry competitors that he has never heard of pick through the business that was once his pride and joy…
“Take me away from all this Ghost – it is just too painful to watch” …
The Morning After
V.A. Reseller wakes from the nightmare, but he knows it was all too real. He runs to the window and opens the sash and yells down to the energetic, born in the cloud millennial “what day is it?”
She responds, “Why it’s Christmas 2021!”. Thank heavens V.A. Reseller exclaims – I have not missed the window needed to change my future.
I can commit, assess, plan, and begin the journey towards adding a truly solid and profitable subscription-based recurring revenue component to my overall business mix today.
V.A. Reseller thanks the young born in the cloud millennial and throws down a fully loaded Starbuck’s Gift Card and wishes her well.
The Sprits kept on repeating that there are innovative organizations standing at the ready to help channel ecosystem partners cross the subscription chasm.
They told me about trailblazers like CompTIA, Salesforce, Microsoft, TD SYNNEX, Zuora, and Jay McBain who has clearly identified today’s trends but more importantly looks out into the future to give us all a view of what is to come so vendors, distributors, and channel ecosystem partners can prepare to deal with the volatile and ever-changing technology landscape.
The predominant legacy technology vendors are also rapidly looking to adapt to the Subscription Economy and are creating ecosystems that help their partners adapt and make the move to a subscription-based recurring revenue-friendly business model.
V.A Reseller is sure there is still ample legacy business out there for the taking, but the growth levels are in decline and profit is constantly being removed from the equation.
V.A Reseller has begun to embrace change and remembers, he still needs his legacy run-rate business to thrive, however, he does need to create a new and profitable growth engine...
That growth engine lies in subscription offerings, the cloud, digital services, and transformation.
V.A Reseller looks to create a hybrid approach that will help him strengthen his core business, while at the same time bringing digital and subscription capabilities into the mix to develop net-new revenue streams with thicker blended margins.
VAR jumps up, gets dressed, and heads to the kitchen table with the newfound conviction and the bullheaded determination it takes to claim his organization's fair of this multi-billion-dollar opportunity that exists today.
In the end, V.A Reseller was not too late and woke up in just enough time to write his own subscription ecosystem story instead of being written out of someone else’s…
V.A Reseller has clearly seen the light at last and has summoned the spirit that exists inside that finally causes one to take on new challenges and make the changes necessary to thrive.
V.A. Reseller wishes you all much luck on your journey to the Subscription Economy – it is worth the trip! Happy Holiday's from KloudReadiness!