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Boom in SMB demands requires a new ecosystem approach

Propelled by the surge in SMB digital transformation, resellers are also undergoing a dramatic transformation. From the solutions they offer to how they engage customers and market themselves, channel vendors are evolving to meet the needs and expectations of a booming SMB customer base

According to Paul Emsley-Martin, Vice President of Partners, Sage UK & Ireland, set against broader business challenges such as rising inflation, the channel has had to respond to myriad challenges, while also realising the opportunities available to them to secure future growth.

This shift was made clear in the latest channel research by Sage, which found that in response to SMB demand for cloud-native and automated financial services, resellers have opened up various new channel revenue streams. This includes data analytics and AI enablement, customer and employee experience optimisation and HR service and workforce optimisation. Emsley- Martin said with accelerated digital transformation following the pandemic, SMBs are turning to resellers to support continued digitisation across a huge range of business-critical avenues.

“In fact, resellers told us the demand for such services will grow over the next 18 months, and that is leading many to evaluate how they support SMBs to make the shift to cloud-first strategies and capitalise on this growing opportunity,” he explained, adding: “For example, three in ten resellers are extending their portfolio of cloud-native products to answer this burgeoning demand, but they know that simply offering more solutions is not enough.

“As a result, the channel is undergoing an all-encompassing evolution, requiring resellers to be more responsive, innovative and engaged in channel networks than ever before.”

Plugging the gaps in a new ecosystem
While SMB digital thirst is great news for resellers, it also highlights the gaps in some channel strategies.

“Over half of the UK resellers we surveyed said they do not have all the services and solutions they need to support new SMB revenue streams. Just as SMBs are looking to the channel to facilitate their digital transformation journeys, resellers are also looking increasingly to partners in their ecosystem to ensure they meet shifting SMB demand,” Emsley-Martin said.

In today’s landscape, resellers know it is all about added value, which Emsley- Martin says comes through working with partners to deliver holistic digital services to SMB customers. New channel entrants such as ISVs, app developers and IP builders contribute to reseller success.

“The change in dynamic is also reflected in the fact that many in the channel are dropping terms like VAR in favour of ‘business automation’ and ‘digital solutions’ – reflecting the consumer-grade culture of today’s digital transformation,” he noted.

Vendors, too, have a crucial role to play in this new culture. Half of the resellers who identified gaps in their approach are now prioritising building their channel partnerships, with a quarter of those surveyed saying that they rely on vendors to provide access to partner communities. “Resellers are clear that vendors are essential to successful evolution, helping them reach new markets and provide market intelligence and customer insights to ensure they keep pace with the changing marketplace,” Emsley-Martin explained.

Resellers are not just looking outwardly for support to navigate changing demands. Internal skills are increasingly vital. However, resellers struggle to hire talent with the required skills in cloud,

AI, machine learning and Blockchain and HR and finance. From experienced executives and director-level roles to skilled entry-level talent, the channel is experiencing encompassing recruitment challenges.

To tackle this, nearly a third are investing in training for current staff, while others are considering M & amp;A or ‘acqui-hiring’ to fill skills gaps. But vendors also play an essential role in closing skills gaps; over 30 per cent rely on vendors for new digital capabilities such as ecommerce and payment services and support for emerging technologies such as AI and ML.

“With huge shifts in customer demands, the channel is evolving,” Emsley-Martin said. “Those with their sights set on the future are investing in innovative channel partnerships, securing vital talent, and seeking enhanced vendor support. All of this is happening against inflation and other macro trends that pose myriad challenges but also massive opportunities. The old channel models may be dead, but an exciting new ecosystem is emerging, where community is key. The message is clear: the VAR of the past has faded, but with the right strategy, resellers can enjoy a bright future,” he concluded.