Most of 2023 has been a guessing game about the direction of the global economy. Will stubborn inflation and world events spiral us into recession? Or will we luck out with a “soft landing” that saves the day as some in the economics’ chattering class predict?
Right now, it’s looking more like the latter. The Fed is signaling that it will reduce interest rates, providing a massive shot of adrenaline to a lackluster stock market and credit seekers of all stripes. Inflation has shown signs of abating. Consumer spending remains surprisingly robust despite still-valid concerns about the price of everyday goods. As for the workforce? Holding steady even in the face of high-profile tech industry layoffs and jitters about the potential artificial intelligence (AI) has regarding job replacement.
So here we are. It’s safe to say, as we enter 2024, that economic uncertainty will continue to simmer but that it is down from a full-blown boil. Business success in the year ahead will largely be defined by how companies embrace innovation, drive operational efficiency and take chances balanced against prudent risk assessment. That’s especially true for businesses in today’s IT channel as they enter 2024 with opportunities and challenges related to AI and cybersecurity, customers buying patterns, new competitors and more.
The good news is that most channel firms say they are up to the task. In fact, nearly 7 in 10 of them take a positive view of their business prospects in the year ahead, according to the recently published CompTIA IT Industry Outlook 2024 research. Forty-four percent expect to eclipse 2023 revenue and profit numbers, while 43% expect stability in those two categories year-over-year, based on the same study. While there are plenty of caveats to counter an overly rosy outlook (economic news can turn on a dime), the channel is adopting the right attitude.
In addition to gauging general sentiment among channel practitioners, the Industry Outlook also identifies several trends that will impact the channel this year. Let’s look at a few of those trends from two important vantage points: Strategic and tactical approach.
Artificial Intelligence: Strategically speaking, channel firms in 2024 will continue to mull the big questions about AI and the implications for their businesses. It’s clear that while most are moving cautiously with AI, few are ignoring this tsunami of tech development altogether. So even if they aren’t selling AI-based products and solutions today, the majority (56%) say they are kicking the tires on solutions and use cases they hope will eventually drive future revenue opportunities.
Tactically speaking, it’s another story, however. The channel is moving full steam ahead deploying AI tools inside their organizations to become more efficient, automate repetitive tasks, improve customer support and elevate marketing efforts. The experiences they gain from using AI tools internally to tweak operations and functions will position them well to sell to and implement these tools for customers as part of a larger goals.
Cybersecurity: Strategically speaking, channel firms have come to the realization that a little bit of cybersecurity acumen isn’t enough today. The increasingly sophisticated threat landscape coupled with the high-wire act of managing IT across cloud and on-premises environments is pushing tech providers to stretch far beyond the basics of antivirus and firewall point products. The big picture push in 2024 then is for channel firms to increase cybersecurity fluency across their organization. That includes not only ensuring aptitude among tech-related employees, but also those in sales and marketing roles.
Tactically speaking, this is manifesting in the hunt for skills to meet today’s myriad cybersecurity needs. Skills include those that focus on helping customers apply a zero trust approach to data and network protection; reflect mastery of higher-level security products, services and techniques such as penetration testing, risk assessment; and embrace adjacent lines of business such as cybersecurity insurance. Not such an easy task. More than 52% of channel firms said they are experiencing a shortage of workers today and that they face a specific challenge finding candidates with the necessary cybersecurity skills. Addressing this gap is going to take more than hiring. Nearly half (45%) are taking a holistic approach and increasing overall spending in 2024 on all cybersecurity-related areas in the company. Others are taking the worker piece head on, with 43% providing training to existing employees to upskill them and another 38% looking outside to hire cybersecurity specialists.
Go-to-Market Activities: Strategically speaking, the traditional channel’s relationships to others in the ecosystem is and has been changing over the past few years. One area is in how channel firms promote themselves to potential customers: Today, leading with your own brand and reputation is paramount to tying fortunes to the profile of any individual vendor, for example. Whether that’s through the myriad marketing options in today’s digital world or by using old friends like distribution companies to generate an e-commerce presence, the IT channel must embrace professional business development and marketing to build brand.
Tactically speaking, that comes down to investments in marketing, long an underfunded line item of a typical channel firm’s annual budget. The good news is that 4 in 10 channel firms in this year’s Outlook report described their marketing efforts as “strategic,” with a formal plan, dedicated employees and routine metrics. Half of respondents plan to spend between 11% and 20% of total revenue (not including vendor MDF dollars) on marketing activities, which is also an increase from the norm. That spending is happening across a range of tactical activities from social media and search engine advertising to email campaigns and industry events.
Simultaneously, many channel firms are turning to distribution for help with establishing an online presence for e-commerce. They are using the big aggregator’s cloud marketplaces and/or platforms to build multivendor solutions more easily for customers or to create a white-label storefront to sell services.
These are just a few of the trends that will feature prominently in the channel’s year ahead and beyond. For a full list, in addition to a view into trends impacting IT professionals and the industry as a whole, take a look at the full IT Industry Outlook 2024 report.
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