Research Preview: 5 Drivers, 5 Inhibitors Impacting the IT Industry

Customer experience is critical to MSP success, but economic concerns and inflation are big challenges, according to new CompTIA research.

State of the Channel 2023Providing the best customer experience is critical to channel success, along with adapting to changing customers demographics and buying patterns, while economic and uncertainty present big challenges, according to CompTIA’s upcoming State of the Channel 2023 research.

“Customers are expecting top-notch service and omni-channel communication now. They want as much reduced friction as possible. The reason they are able to insist on that is they have more choices now. Cloud has really opened up choice for customers, so their experience has become essential,” said Carolyn April, senior director of industry analysis at CompTIA, during a keynote during CompTIA’s Communities & Councils Forum.

April previewed some State of the Channel findings, the full report to be released in the near future, including the top five factors driving success in the channel over the last year:

  • Providing the best customer experience
  • Adapting to customer demographics/buying
  • Improving marketing/branding,
  • Commitment to emerging technologies
  • Specialization

The top two results go hand in hand, April said, as adapting to dynamic customer demands is part of providing an optimal experience.

“What’s also changing is who you sell to and how you sell. Now channel companies are often selling to lines of business at customers. And you’re not talking speeds and feeds to the IT department, you’re having business-level conversations.

Meanwhile, many MSPs are also recognizing the need for more and better marketing and branding in order to gain a competitive advantage.

“Marketing has never really been a strong suite for the channel, but we have seen year-over-year that more marketing resources are being invested in the channel,” April said. “You need to go to market today with your own brand. You’re leading with yourself, your reputation, not your vendors.”

One way that MSPs are improving their brand is by exploring—and committing to—new technologies such as artificial intelligence and internet of things.

“Emerging tech is one of those things where you can’t fit everything into one bucket, but we’re seeing more around enabling technologies that are built into a solution. You’re making a commitment to the next forward-looking thing that will help position your company going forward,” April said.

Finally, survey respondents, which include MSPs, resellers, solution providers, consultants, etc., in the survey said they are looking to become more specialized, seeking for a unique value to take to customers.

“Customers know they can buy tech from online marketplaces or direct from a vendor. They can conduct a transaction on their own, so what is your special sauce? Specialization can be in vertical market, which takes a lot of investment, but in other ways too. It could be into a certain tech discipline, like becoming a cybersecurity specialist, going up the stack beyond antivirus and firewalls. A lot of customers are struggling with security, and they need help,” April said.

Inflation, New Competition Is Stifling Growth

Of course, for all the positive things driving growth in the IT industry there are also challenges. In the survey, MSPs cited these factors as the biggest inhibitors over the last year:

  • Continuing economic slowdown/inflation
  • Growing challenges running a small business
  • Competition from new players
  • Tech layoffs decreasing need for the channel
  • Customers going direct

“People are still dealing with supply chain issues and inflation has been a headache for everybody. We still have to grapple with uncertainty,” April said.

Day-to-day challenges of running a small business have long been a top inhibitor in State of the Channel, now in its 10th year, and 2023 is no different.

“Most channel companies are about $1 million in annual revenue and have about 10 employees. They have basic cash flow challenges, hiring challenges. That keeps coming back,” April said.

In addition, competition from new players in the tech industry is having an impact. Competition isn’t just from a crosstown rival now or rising online marketplaces. Non-traditional competitors such as accounting and law firms are selling their own software.

“There’s a huge playing field right now, but you don’t have to compete with all of them. You can work with them, make it a competitive advantage,” April said.

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