The term “networking” has two meanings. In the one we in the industry use most often, it means the process of building connectivity. In the other, the “connect” root translates into “connections”, meaning interpersonal or inter-company relationships. It may be time, in order to pursue progress in the first sense of the term, we accept we have to rethink the second sense.
There are a lot of relationships involved in creating a successful company. You have customer relationships, supplier relationships, partner/channel relationships, press and analyst relationships…you get the picture. Many of these have changed over the last couple decades, evolving based on the changes in how buyers and sellers relate to each other and how they user intermediary players. Some haven’t changed enough, and the one that has perhaps changed the least, and surely the least successfully, is that of partner/channel.
Most of the vendors I’ve dealt with in my career had channel programs, and most of these programs were aimed at providing an alternative to direct sales. In most cases, the channel programs were “distribution” programs, meaning ways of getting product to customers too small to justify independent sales initiatives. In others, the programs were aimed at getting to markets that had needs too specialized—verticals where special sales skills were needed. For half a century, tech vendors have had some variation on the theme of “product” and “industry” marketing. Finally, there are some relationships based on the fact that a vendor’s technology had to be combined with other stuff to create something that could actually solve a business problem; this is the classic “integrator” mission.
The truly classic integrator mission, the one that still dominates, is one that’s simply a process of assembling stuff. Network integrators sold a range of products that were used to build networks, at a time when it was common for vendors to specialize in a single product category. Over time, as network vendors broadened, the role of the integrator did the same, extending out of the domain of network products to related domains, things like management systems, even computers. I don’t recall any major network vendor who doesn’t work with integrators. They know them well, and maybe that’s the cause of the current problem. What is that? It’s a variant on the “familiarity breeds contempt” thing. The trend I’ve seen over the last couple decades has been to treat “channels” increasingly as flavors of the same essential drink, as a second product conduit. In the past, that was justified. Not any longer.
There is no divine mandate to buy network products, or technology products. There has to be a reason, a justification. For consumers, that justification can relate to something objective like improved quality of life, or something subjective like looking good to your peers. For businesses, the justification is almost always related to ROI, to the idea that the purchase will pay back at an acceptable rate. Channel programs can provide a conduit for product introduction into validated business cases. That’s the old mission. For “integrator” channels, the new mission is making those business cases in the first place.
It’s hard to get good data on this, but going back through over 400 enterprise discussions over the last year, it appears to me that buyers are just as stuck on what I’d call the old model of integrator as sellers may be. For example, buyers have been pretty consistent in saying that “integration” was something to be avoided, and that it was avoided by moving to a single-vendor approach. Thus, “integration” is (like “networking”) a term with multiple meanings. Buyers and sellers have both gotten more tactical, and that’s narrowed the way the term is used.
There are buyers who don’t see it that way, though. For example, verticals like government, manufacturing/industrial, gas and oil, and so forth, tend to see “integrators” as companies who combine multiple technologies and not multiple product sources, which makes them solution providers, and that’s what’s important now, as long as we focus on what “solution” means in the modern world. It means functionality in general, and business functionality in particular.
Hardware isn’t functionality, at least not at the business level. If you combine any sort of hardware into a package, you get a platform to run something, connect something, or both. What you don’t get is a solution, because you have to take the result of your combination into the business domain, the functional domain…the software domain. Logic of any sort, these days, is software. Thus, the best integrators, perhaps the only kind that matter today, are integrators who have developed software or are prepared to develop it. This class of integrator, also called a “value-added reseller” or VAR, builds the link between the business case and the product, and that’s the current missing link. A software integrator is the most important channel of all, these days. There’s a qualifier, of course. An “if”. If you can develop a strategy that can utilize integrators properly, and that can be complicated. There are two broad classes of complications to be considered here. The first is the problem of coherence, and the second the problem of monetization.
All channel programs face constant “channel conflict” problems. Everyone wants to make money, and making money means selling more stuff to more buyers. When you spread your sales out to channel resources, you risk losing coherence at two levels. First you can have a bunch of independent players all competing for the same customers, which results in dissatisfied customers and frustrated salespeople Second, all these different players may tell very different stories about the products, or even talk about different products to solve the same problems. More of the same dissatisfaction.
Companies control their own sales interactions to prevent having salespeople stepping on each other, but that’s very difficult when dealing with third parties. The most effective way to handle this is by managing leads. If you give leads to specific partners, those partners will exploit the leads. That not only leaves them happy, it also regulates collisions, at least a bit. Lead generation necessarily means marketing programs, and marketing programs can create a unified vision that the channel resources would have to work to get around, and probably wouldn’t bother. But while marketing isn’t totally a lost art these days, it’s surely one that’s gotten splattered with debris, particularly when you’re trying to support a software integrator channel.
One dimension goes back to coherence. Software can be classified as “horizontal” or “vertical”, meaning applicable across multiple industries or specialized. The problem with the horizontal stuff is that it’s difficult to find a horizontal target that can make a business case and hasn’t been long-exploited. The problem with the vertical stuff is that every vertical has its own language, its own issues, it’s own software tools. How do you market to the entire known world?
Another dimension leads to monetization. Once you start marketing, you open the gates to others to counterpunch you. If you grab up some software integrators, they grab up their own. How do you win, then? Immediately, you face a competitive barrage. The answer is that you jump out with a compelling asset to play.
Remember my earlier blog, where I listed companies who could perhaps launch a big IT spending cycle? Apple, Broadcom, HPE, IBM, Nokia. Apple has the asset of market credibility, where “market” means the buyer community and the stock market. Broadcom has chips and a virtualization platform, as well as a channel strategy they’re tuning to their own needs. HPE has channel partners, Juniper, and Juniper’s AI and data center virtualization. Nokia has metaverse and digital twin. Any of these companies could step out and change things radically with a software integrator strategy.
AI isn’t central to all of these players, but it’s arguably important to several of them. The reason AI is popular is that it creates what’s effectively a new horizontal opportunity. Something that makes AI digestible as a technology, makes it susceptible to application development in some recognizable form, can then be used to create stuff that can be directly be applied to business problems, business cases.
IBM has started already. Their just-announced deal with Wipro that links their technology services with IBM’s watsonx AI. Recall that watsonx is the AI framework that has actually gotten the most real enterprise application support of any out there. Wipro Enterprise Artificial Intelligence (AI)-Ready Platform, as the result is called, is just what the name says, a platform. It’s designed to build AI applications from the ground up, something that enterprises are surely interested in. So, of course, are software integrators, including Wipro. And consider the following quote: “The Platform will also support specialized industry use cases for banking, retail, health, energy, and manufacturing, providing conversational AI for customer support, customized marketing, customer feedback analysis, content generation and design optimization, thereby enhancing value for clients.” Verticals, and use cases equal business cases.
Everything doesn’t have to be AI, but AI as a platform is a smart story given how much in love with AI the media has become. But should the others on my list buck IBM’s move or try to slide around it? That’s the big question that they’ll have to answer, not the question of whether a software integrator strategy is critical. Even if they don’t find my logic compelling, IBM has answered that one for them.
