These are dramatic times for technology resellers. Market forces are putting new pressures on channel partners to move beyond the traditional reseller business to the model of solution providers. But in many cases, the changes required are not easy for channel partners that have been doing business in a certain way for many years.

Similarly, the move from transactional licensing to SAAS, PAAS and other recurring revenue structures has turned business models upside-down. Add to this fact that many channel partners are also developing their own solutions in “Co-opetition” with their Vendor partners, while master distributors are merging and it is clear that the landscape has been significantly disrupted. Check guide to Vendor Compliance at Vendor Insight. Many channel partners have no choice but to grow their businesses from product sales to more comprehensive solutions built on a richer set of services and recurring revenue models.

What is the technology reseller to do? What are current best-practices in business transformation, especially as they apply to the technology reseller? Most of the writing on this topic to date has focused on the operational execution of a transformation program. However, for resellers that are significantly transforming their business this is far too simplistic. Research from the Boston Consulting Group confirms that the formulation of Vision and Strategy which drives the transformation must be addressed before tactical execution.

Technology Vendors must share the blame in this. While most have produced content and programs to help resellers transform their business, these programs have been entirely tactical in emphasis and their message is typically “instead of selling this product, start selling this one”. Such a simplistic approach is an abdication of their responsibility to support their reseller’s success. It is time for more enlightened Vendors to step forward and provide a leadership role in their reseller’s transformation strategies for mutual benefit.

This article from the Channel Institute is designed to answer these questions and provide insights to help the reseller successfully envision, adapt and transform their business to align with their brave new world.

Business Transformation: What Is It?

Transformation is often broken down into three distinct categories:

• Operational – doing what you are currently doing, better, faster, or cheaper. Many companies that are “going digital” fit in this category, they are using new technologies to solve old problems.
• Core – doing what you are currently doing in a fundamentally different way. For example, Netflix shifting from sending DVDs through the mail to streaming video content through the Web.
• Strategic – changing the very essence of a company.

The typical technology channel partner would fall into the latter two categories, and it is this level of “strategic transformation” on which this paper will focus. This is also the reason why this paper focuses so heavily on the strategic necessities of transformation as opposed to the majority of writing on this topic.

Vision before Strategy

The Boston Consultancy Group’s research into business transformations identified two common trajectories dictating success or failure in business transformation programs.

While both trajectories involved initial cost-cutting and “Operational Transformation”, the true differentiator between long-term success and failure came down to Vision and Innovation.

A review of Vendor (and Master Distributor) programs to support channel partner business transformation reveals common themes:

• “Understand the new market opportunity and cloud offerings”
• “Tell a different story to your clients”
• “Identify the impact on your cash flow and bottom line”
• “Adapt your sales process”
• “Leverage our assets to adapt your Go-to-Market strategy”

All of these fall entirely within the sphere of “Operational Transformation”. While they are important in the short term, they are a nonsense for the channel partner seeking long-term success. Worse, they lead the channel partner to believe that they are undertaking true transformation, while in reality they are simply tinkering around the edges.

Having successfully completed a channel sales training course, most channel sales managers and their channel partners have a good understanding of their current “Mission”. They know what they want to do over the next three years. But the High Performers are already looking (and investing) way beyond that horizon. They have a clear understanding of their Company Vision and Values and they use these as the basis for deciding the direction and focus of their business transformation.

Strategy development is the key to long-term success and profitability. While “operational transformation” enables the channel partner to adapt to new products and pricing models, strategic transformation is how High Performers change the game entirely. Strategic transformation requires the leadership team of High Performance channel partner’s to decide where they will play to win in the medium to long term, and what strategic investments in resources are required to get them there.

As the diagram shows, the High Performers know exactly where they want to go. High Performers understand and commit to their “True North”. They may not know exactly how they will get there yet, but they have taken the time to paint a picture of what they want their company and their world to look like in seven, ten or twenty years’ time. Most importantly, they consistently invest to build the resources that will transform their business to successfully achieve this goal.

Of course, transformation cannot be an internally-only focused goal. It must be aligned with customer needs and it must provide the company with a compelling value proposition to win new business far into the future.