by Mario Diaz, VP Consulting Services, Photizo Group
January 30, 2017
The last few years have set a record pace for mergers and acquisitions. According to The Wall Street Journal, the value of mergers and acquisitions globally was over $4.3 trillion in 2015. Consolidation in the IT channel accelerated, as large solution and service providers acquired competitors and firms with strategic assets. The CRN Solution Provider 50, the fifty largest solution providers in North America, collectively executed more than 50 acquisitions in 2015.
Private equity (PE) is rapidly driving consolidation in the channel as PE-owned partners rapidly acquire smaller, regional players, and extend their reach in key geographies and industry verticals. Vendors will find that some of their largest partners are getting larger and gaining more channel power, which will have a significant impact on global and regional sales programs.
Business models in the channel are blurring. Leading solution providers are taking steps to capitalize on the growing demand for cloud services, software and application development, mobile solutions, and security. Innovative channel partners are investing to reduce dependency on declining technology resale margins and to develop higher-margin professional and managed services beyond print to support the SMB and Enterprise markets.
Along with solution providers, distributors, and service providers some vendors are making strategic acquisitions as well. The Apex acquisition of Lexmark adds software, services and an Enterprise focused channel presence to their business. Konica Minolta is aggressively acquiring managed services providers in Europe and North America. These companies provide a portfolio of IT services and related services such as application management, desktop, mobility, communications, hosting, and cloud. Ricoh acquired several leading providers of managed IT, cloud, data center, and professional services to small and mid-sized organizations. These acquisitions are examples of the strategic investment by vendors to expand and deepen their services portfolio to target the global SMB and Enterprise markets.
As the pace of mergers and acquisitions changes the face of imaging technology and solutions delivery to the customer, channel partners will need to take the right steps to be competitive. To help move in the right direction, it is critical to know the real level of performance when measured against the ‘best of breed’ competitors in the industry.
Manufactures will need to know the composition of their channel partners by measuring them using objective, independent measurements (such as the Photizo Leader’s Index) rather than just sales revenue. Sales may be great today if that is the only measurement of success, but what if the partners are the ones who get displaced? Can manufacturers afford to depend on the partner’s subjective perception of how competitive they are?
Finally, Imaging Industry OEMs need to support channel partners by providing the proper tools, training, and high-value sales, marketing and customer success content in real-time. Along with hardware, channel partners are selling more complex software and services to maintain customer engagements as they position their companies as a trusted IT partner to grow revenue.