Nearly 8 in 10 channel firms are feeling good about the business year ahead. Yes, almost 80%. Let’s just sit with that sentiment for a moment, shall we?
There’s still a pandemic. Supply chain issues have not been resolved. And the trials and tribulations of the last two years have taken a toll. Yet here we are, seeing a slow return to optimism revealed in the thoughts, minds, and actions of tech industry practitioners. While still sporting a healthy dose of caution, today’s business owners, sales reps, marketing professionals, technical engineers, and IT workers are seeing light at the end of the tunnel as they enter the new business year. It’s refreshing and relieving to witness.
Looking ahead to 2022, firms that manage to thrive will be hiring again, making investments in skills training, expanding their market reach to new customers and verticals, partnering with competitors, and embracing emerging tech. For many, that means getting out of their comfort zone and resuming strategic decision-making versus tactical dam-plugging. Many say they are ready to do so. After nearly two years of stasis and economic uncertainty, signs now point to investment, increased budgets, and the pursuit of technical and business innovation that pairs well with the direction the industry is heading.
Let’s consider growth and budget expectations, and some other wrinkles. CompTIA’s IT Industry Outlook 2022 findings point out the following:
Revenue positivity. In 2020, 62% of firms said COVID-19 had had a net-negative effect on their business vs. 48% that said so in 2021. This is a significant improvement, obviously. What’s more, nearly 6 in 10 (58%) of channel companies expect revenue growth in 2022 to either eclipse what they saw in 2020 and 2021, or, even better, erase losses from those two years and return to growth levels seen in pre-pandemic 2019.
Growth factors. When it comes to driving positive revenue growth in 2022, channel firms are all about landing new customers and exploring new business models/technologies. While 2021 understandably placed the focus on maintaining existing business, the outlook for this year is more aggressive. It’s back to sales hunting behavior, if you will. And one of the top targets for the channel will be the legion of SaaS applications players in the market. Building relationships with that ecosystem will require investments to transition from more traditional channel recruitment, sales, compensation, and management models to the elements that resonate with the cloud-first crowd.
Budget boosts. Allocations for tech-related spending are also up. Compared with 2021, when a quarter of channel firms predicted budgets to be somewhat higher than the previous year, in 2022, 40% expect them to be so. And 13% said their 2022 tech budget will be much higher than 2021’s compared with just 3% that said the same the year prior. This means more spending internally – think doubling down on cybersecurity and/or digital transformation tools, or, for MSPs, adopting automation and AI software. It also means expanding the types of technologies sold and investing in non-transactional business lines around consulting services.
Inhibitors? Because it makes sense not to get too cocky, channel firms don’t discount that growth could be stymied in 2022 for a number of events mainly outside of their control: continued COVID impact; customers postponing purchases; natural calamity (i.e. weather, financial crisis); and/or a difficult hiring environment. The key here is to build on a foundation of resilience and best practices so that unforeseen crises can be weathered.
Online marketplaces: friend or foe? How customers buy and consume technology has significantly shifted in the cloud age. For the channel, it has meant seeing more business flow direct to online marketplaces. In fact, 7 in 10 channel firms say their customers are self-procuring technology from one or more of the marketplace behemoths today. But rather than see this as a competitive threat, smart channel firms are exploiting the services and consulting opportunities that surround a marketplace purchase: helping customers vet what to buy; advising them on security, compliance and integration concerns; providing ongoing management of solutions. The pendulum has swung toward more direct tech-buying, but it does not have to leave channel firms behind – especially those who see the value in non-transactional business consulting services.
It’s been a trying couple of years. Many firms sidelined their broader strategic initiatives and goals to stay afloat. Tactical mode ruled: Keep the lights on, pay your people, hold onto your customers, and, at minimum, maintain status quo revenue intake. But it is looking like bunker mode is ending in 2022 and channel firms are starting to climb out to eye emerging technologies, consulting opportunities and digital transformation.
Let’s hope a return to strategy truly takes hold.
Carolyn April is senior director of industry Analysis at CompTIA.
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