We’re quite familiar with the story by now: workers are more often remote, customer and supply-chain interactions are increasingly digital, and the channel continues to grow. Even so, it’s still staggering to reckon with just how much the landscape of global software sales has evolved in 12 months.
A chief protagonist of this ongoing evolution is the ecosystem. The rise of the ecosystem – networks of interconnected players fulfilling a variety of different needs in one integrated experience – has been propelled by the remote work trend. Remote work required more businesses to integrate new services to remain in operation, which in turn meant businesses needed to tap into ecosystems such as marketplaces and the channel. Ecosystems have thus taken center stage in this digital transformation revolution—and the pace of change shows no sign of slowing.
Companies whose dominant business models are ecosystem driven experienced revenue growth approximately 27 percent higher than the average for their industries, and had profit margins 20 percent above the average for their industries, according to MIT Sloan Management Review. Given this trend, it’s no wonder that three out of four CEOs agree that current business models will be unrecognizable in the next 5 years—with ecosystems the main change agent. Meanwhile, almost half of business executives are actively seeking ecosystems and new business models.
Let’s take a closer look at the boom in ecosystems following one year of lockdowns and what this means for channel providers.
New Normal, New Expectations
Today’s channel users have vastly different expectations than yesterday’s, and this is true from IP owners to providers to end customers. The fact is that business buyers are increasingly looking like regular online consumers, and this is the result of sweeping changes brought about by the pandemic.
For example, standalone products were favored in the old world, but this has quickly given way to integrated bundled solutions. Customers are searching for more holistic solutions, while at the same time hoping not to have to deal with an increasing number of service providers. Instead, they want to deal with one point person for everything; hence the rise of ecosystems. In a similar vein, one time transactions have fallen away in favor of the subscription model. Not only does this offer recurring revenue for the provider, but it gives them the chance to know their customers and keep them both happy and loyal.
Meanwhile, rather than several touchpoints, customers now prefer a simplified purchase journey, and a personalized one at that. The trend moves away from a general offering to a custom approach that speaks directly to the individual. One size no longer fits all.
As a result of this rapid evolution, channel providers like Managed Service Providers (MSPs) are shifting to better meet the world’s digital-first expectations and increasingly adopting an ecosystem mentality.
The Complexities Of Ecosystems
At the same time, though, perfecting an ecosystem approach is by no means easy. Channel providers often struggle with their strategic intent and goals for the ecosystem. What is the vision? What are the innovation opportunities? What smart pivots need to happen to cultivate value? Accenture reports that 84 percent of executives say ecosystems are important to their strategy of disruption, but 37 percent are unable to balance the current business while exploring the new. Ecosystems require new mindsets and resource allocation.
For example, one of the chief complexities for channel providers is target customer visibility. Forrester predicts that hundreds, if not thousands, of marketplaces with sustainable business models will emerge over the next five years. Therefore, being seen in the right marketplace is of the utmost importance.
At the same time, the ability to sell effectively across not just one but multiple marketplaces, as well as automate and scale integrations, increases the difficulty for ecosystem participants. For example, monetizing bundle solutions and multi-partner offerings in an automated way, across different channels with different pricing options, is a necessity. If this is not automated, the manual process will be a huge headache. Evidently, ecosystem success is easier said than done, and it is vital that any channel leader heading in this direction knows the answers to these questions.
Orchestrating Ecosystems, Managing Digital Supply Chains
The good news is that providers today are getting smarter. They know that in order to succeed in this digital transformation revolution, especially in today’s accelerated climate, they have to move towards the as-a-service economy. But, they’re realizing now more than ever that any misstep in this process will ultimately lead to slow time to market, and they can’t afford to take that chance.
CloudBlue came to life as an answer to these obstacles. In our mission to be the facilitator of infinite ecosystems, CloudBlue built a single platform for orchestrating ecosystems and managing the digital supply chains—both by aggregating the upstream (the suppliers) and the downstream (the channels).
At a time when older business models are quickly becoming obsolete, it’s more important than ever to not only adapt but to do so at the speed of change. CloudBlue brings customers an unparalleled set of tools and solutions —together with our global vendor ecosystem and our experience with billions of dollars in transactional revenue — to keep them at the forefront of ecosystem orchestration and ahead of the competition.
