Navigating the subscription economy: What’s the opportunity for partners?

By Rakesh Parbhoo, Global CTO and Senior Vice President, Westcon-Comstor MEA

In the past few years, we’ve seen big changes in how customers purchase and consume technology. Convenience and flexibility are now top of the agenda for customers buying technology, and this is evident in two major trends: the continued growth of subscription-based services, and the rapid growth of online marketplaces.

The same is true for how businesses procure technology, post-pandemic. Tech buyers want to streamline their procurement processes and see improved efficiency and speed through self-service capabilities such as automated quoting and ordering, buying online and managing their purchases digitally.

This naturally has significant implications for the IT channel. It impacts how products and solutions are bought and sold and pushes channel partners to consider new sales models and alternative ways to deliver value.

Amid all these changes we have seen the phenomenal growth of online B2B marketplaces. It’s predicted that cloud marketplaces will grow to more than $45 billion by 2025, representing an 84% CAGR. The reason? Organisations are attracted to the convenience, speed, and agility they experience when making technology purchases via an online or cloud marketplace.

They also enable new technologies and use cases for a variety of builds, from applications to security solutions. Buyers today are looking to procure a set of building blocks from a single location. And integration is key: the average company reportedly uses 254 SaaS apps, and buyers across all industries no longer view software or services as standalone solutions. When purchasing, they expect systems to integrate with other systems out of the box.

At the same time, some vendors are reporting a huge triple-figure sales spike via this channel – especially in areas such as cybersecurity.

So what do those high-level figures mean for the channel? Despite obvious concerns that customers are cutting channel partners out of the sales equation, there are revenue-boosting opportunities to be derived from online marketplaces.

In fact, as more complex technologies are consumed via marketplaces, customers are turning to trusted partners to help them discover, procure and manage their purchases. By 2025, analyst Canalys conservatively forecasts that almost a third of marketplace procurement will be done via channel partners on behalf of their end customers.

Distributor marketplaces delivering partner value

Aside from the obvious opportunities to build out new revenue streams, the B2B marketplace model can provide a host of other benefits to partners. We’re already seeing distributor marketplaces delivering a great deal of value to partners. In our channel research report, Navigating the shift: The role of distributor marketplaces in Partner Success, we found marketplaces can help partners access the data and tools they need to be successful and grow profitable business with subscriptions and recurring revenue.

One of the ways in which they do this is by simplifying today’s increasingly complex IT ecosystem of products and solutions. The research found that partners today are challenged with managing a multivendor portfolio of products. When asked what the key benefits of a distributor marketplace would be, most partners (51%) said access to multiple vendors is key.

This directly responds to their primary challenge in the shift to subscription and recurring revenue models – which is managing multivendor product portfolios. Sixty percent believe that a single platform to buy hardware and software will help accelerate their shift to subscriptions.

At the same time, ease of transactions is critical to partner transformation. It is no surprise that subscription management, self-service quotes and orders, and simplified sales processes were also all identified as advantages of distributor marketplaces.

The good news is that partners are already starting to benefit from these features: almost half (49%) are already using distributor marketplaces, according to our survey.

They cite self-serve stock availability (49%), online ordering (49%) and pricing (42%) as the biggest advantages and are looking for better access to customer data (55%), market data (39%), and customer success training (46%).

Instant access to data insights and enablement tools

Distributor marketplaces can be invaluable tools that partners leverage to drive their efficiency through simplified transactional capabilities. However, there is an opportunity for them to offer an even richer set of services and capabilities beyond what is being provided today.

Access to data will become an increasingly valuable tool for partners. So while marketplaces can still offer simplified transactions that drive efficiency, productivity and better customer service, partners can also have access to data insights and enablement tools to help them realise business growth.

For example, distributor platforms such as PartnerCentral give partners access to robust reporting and insights, which allow them to track their engagements with customers and evaluate wider industry trends that can help identify new business opportunities.

This means partners get the latest in self-serve technologies and cutting-edge automation, while still benefitting from the added value and expertise for which distribution has always been known. The perfect balance.