A “channel apocalypse” is underway thanks to AI, and unlike the changes brought about by digital transformation, cloud, and the customer journey, this is a seismic shift requiring “an urgent call to action,’’ according to Anurag Agrawal, founder and chief global analyst of Techaisle, a global SMB and midmarket IT market research and industry analyst organization.
Cloud gave MSPs “a long runway,’’ because there was time for the channel to understand its benefits, adopt it, and offer services to customers, Agrawal explains in an interview with MSP Success. AI is not going to give them the same level of runway.
“It’s not going to be forgiving” because already, 95% of customers are adopting AI and increasing their spending, whereas only 46% of channel partners are offering AI solutions to those customers, he says.
Further, of that 46%, only 12% of channel firms have some level of expertise in AI. “When you have such a huge gap … it is nothing short of an apocalypse,” Agrawal says, adding that “this is kind of disastrous for the channel partner.”
Nine of out 10 conversations Agrawal has with partners are about how they can stand out and what they need to do to build their expertise, he explains. The answer, he says, is to build their skillsets around data science, data management, or data capabilities.
Partners also need to think about the types of customer engagements they have—are they transactional or value driven? Customers are becoming cognizant of the types of partners they need to work with, he adds.
The vast majority are now looking for shared-risk partnerships. They are not interested in getting a fixed price but rather, finding a partner who is willing to “price my projects differently.” However, because the ROI isn’t fully known, channel partners don’t know how to price AI projects, Agrawal maintains.
10 Trends Reshaping the Channel
In a recent blog post, Agrawal cited 10 trends he believes will reshape the channel. Those who do not shift their business “will find themselves on the precipice of irrelevance,’’ he wrote. They are:
- AI will be a double-edged sword for channel partners, reshaping value and disruption.
- The channel will likely pivot in the AI era from vendor dependency to buyer value.
- The channel will offer outcomes in shared-risk engagements.
- The channel will focus on specialization as deep, real-project skills and not paper chases will win the modern customer.
- The channel will rethink the funnel and will drive targeting before buyers decide in a diverse purchase journey.
- Partners will move from mass to somewhat bespoke by tailoring solutions in a fluid customer landscape.
- MDFs will see continued decline, shaking up the vendor incentives playbook.
- AI assessment and cloud cost optimization will be the new gold rush for consulting.
- The channel will rewire its partnerships and shift from channel push to ecosystem pull.
- Marketplaces and partners will become allies in the quest for agility, control, and buyer empowerment.
Where to Focus First: Start with AI Internally
While they should heed all 10, partners should start by understanding their skillsets and what they can capitalize on first, Agrawal advises. It’s important to get their CRO, chief sales officer, and other key staff in one room and ask which trends the firm can act upon now, which ones can be deployed in 90 days, and which they should start to plan for after 90 days.
“They need to start to utilize AI within their own organization,’’ he stresses. “You can’t offer AI to end customers without understanding what AI can do for your own company. You need to understand what the business processes are.’’ Partners should almost build a matrix to see which processes will have the maximum impact on their business, and which are the easiest to deploy, Agrawal suggests.
Adopting a shared-risk engagement model is a fundamental change, he points out. This means finding a way to price projects so that the partner gets some upfront fee, but also payment at the end of the deployment.
Partners should also focus on specialization. This is critical, Agrawal says, because customers are not looking at certifications or partner tiers. “They are qualifying partners based on the specialization they have.”
This is an important time for the channel, Agrawal says. AI requires partners to identify their skillsets, “not from a shiny toy perspective,’’ but so they can decide whether it makes financial sense to invest in a particular AI competency.
“That is the key message,’’ he says. “You have to keep in mind that if you don’t invest now, you’ll be sure to be left behind.”
