When the adoption of cloud technologies began to rise at an exponential rate during the last decade, many thought it was the beginning of the end for the traditional software distribution channel. The channel—a network of resellers, distributors and systems integrators—played a prominent role in the marketing, sale and distribution of IT products, and it seemed like subscription-based cloud services would change that.
However, it’s been just the opposite. Subscription-based cloud services have been reinforcing, reviving, augmenting and expanding the channel—and ushering in a new “golden age.” There are four key developments that are helping propel the channel to a position of even greater prominence:
#1: Rising customer acquisition costs
For many small to medium SaaS companies, obtaining customers on their own is getting more costly. Customer acquisition costs (CAC)—which includes costs for marketing, advertising and sales—have risen almost 50% in the last five years.
#2: Industry consolidation
In this changing global landscape, there's an increase in consolidation across the verticals of cybersecurity, enterprise collaboration, business application and multi-cloud. Large tech firms are acquiring and merging smaller tech firms. For smaller businesses, this consolidation means a driving up of costs of—and a narrowing of access to— integral technologies.
#3: The Covid-19 pandemic
At the onset of the coronavirus, businesses who were already on a steady marathon toward digital transformation found themselves forced into a mad sprint. Work-from-home demands across industries are sending businesses scrambling to ramp up their use of cloud and adopt new cloud strategies. At the same time, the pandemic’s devastating economic fallout are sending the best and brightest small tech companies to their doom, and thinning out the quantity of cutting-edge tech solutions.
#4: Increased interdependency
There has been an increase in how ecosystem players depend on each other. Small vendors are depending on large channel distributors to grow—mainly through the investment and support distributors provided to these vendors. Small vendors are also finding themselves using the free trials, compensation and credit that have been extended to them.
Start creating more cloud awesomeness for your business
Read more about these trends and how the channel is responding—and emerging—as a solution. In your free copy of Cloud Technology: The State of the Channel Report, you’ll discover how to tackle today’s challenges head-on. Get valuable insight to help you navigate the channel in the year ahead. And make all the right moves for your cloud business in this half a trillion-dollar market.