There is no greater channel maxim than compensation drives behavior. This age-old rule applies to all jobs in all industries, but in the channel it is absolutely sacrosanct.
While the pandemic has accelerated the blockchain’s shift to everything as a service (XaaS), some vendors are stuck in pre-pandemic mode with compensation models that haven’t kept pace with demand. These vendor channel programs and compensation models drive direct sales and hinder the Everything as a Service model.
In this model, customers expect mission-critical service providers to issue a single monthly bill where they only pay for what they use across their entire hybrid IT estate, including public cloud.
Ironically, public cloud providers top the list of vendors holding back the Everything-as-a-Service model with their online marketplaces. The problem is that, in many cases, these public cloud provider marketplaces have not built ISV models that take into account the solution power of mission-critical service providers.
Public cloud providers have developed revenue-sharing models with ISVs, but in many cases have failed to develop compensation models that reward strategic service providers delivering everything as a service. They have bluntly ignored the scale and power of the solutions that mission-critical service providers are bringing to the game. One reason is certainly the huge profit and high profit margins that these public cloud providers are making quarter after quarter.
But here’s a message for them: those profits and margins would be even higher with the full weight of the strategic service provider model behind their markets.
However, it’s not just public cloud providers that are holding back the Everything-as-a-Service model. Many ISVs and Software-as-a-Service providers stick to the old subscription model and refuse to let partners provide a one-time bill.
A heated market with uncontrollable demand from customers looking to accelerate their digital transformation amid supply constraints is also fueling the failure to incentivize strategic service providers with appropriate compensation models.
The other side of the compensation conundrum is that many vendors have direct sales models in place that incentivize vendor sales reps to opt into direct selling. It’s a model that has failed time and time again. It’s basic economics. Go alone, you lose. Create a scalable channel model and you set up a force multiplier that generates huge growth.
The channel model has driven every major technological change since the PC boom. Vendors that leverage the channel always end up taking market share from vendors that sideline it.
In summary: Vendors that implement compensation models that incentivize partners to drive the All-as-a-Service revolution by working hand-in-hand with their direct sales teams will see significant market share gains. Those who don’t will find themselves on the fringes of what is, by any measure, the greatest market opportunity of our time.
This article originally appeared on crn.com