Digital disruption

Cloud, social, mobile and big data are enabling new entrants in virtually every industry to disrupt the incumbents. “Being Ubered” was the popular term, but based on Uber’s recent behaviour, “being Ubered” is starting to mean something entirely different!! Gartner has called it the Nexus of Forces. Forrester calls it Digital Disruption. IDC calls it the 3rd platform (the 1st being the mainframe, 2nd was client-server). Whatever you call it, it is coming to an industry near you. If you are in the music, film or print industry it has already hit you. But no industry is safe.

Company after company in industry after industry is struggling to respond to the competition from small agile startups who do not have the baggage of legacy infrastructure, organisation and supply chains. And their customers do not seem to mind giving (some of) their business to an unheard startup who can offer a great customer experience at a compelling price point. And as many startups are geared to be able to scale quickly – because the heart of their business is digital – they are able to take more and more business away from the market leaders as they prove themselves in the market.

Customer experience #fail

If the existing companies were delivering exceptional customer service then the startups would not have a chance. But they are not. The incumbents are difficult to do business with and are slow to embrace the new digital world. This is not because they don’t recognised the new demands or know what needs to be done to change. It is just that they don’t want to change. They are hooked on their current profitable model. So why go through the pain and anguish that transformative change requires? And more importantly, when is the time when they REALLY need to change. Things aren’t that bad. In fact things are still going well. So when is the tipping point? This is beautifully described by Charles Handy in his Sigmoid Curve. This is described in this blog.

Companies are being disrupted. Their vendors are being disrupted. But there is another group of far smaller companies that are also being disrupted. The partners of the vendors; in the world of tech that is the ISVs, resellers and implementation consultants. Their world is being turned upside down. They are the bridge between the customer and vendors, both of whom are trying to make sense of this new world.

Partners – a critical resource or collateral damage?

But partners are looking to their vendor’s partner programs for help. Currently the partner programs are lagging behind the change curve – for all the Sigmoid Curve reasons. But for many (most?) vendors, partners are a critical resource for revenue and delivery. So a high priority MUST be to rethink and reengineer their partner program; What sort of partners are required? How can the partner program help them be successful? How do you do all this at scale?

This was the subject of a long discussion I facilitated at the IDC Channels Summit. It was attended by the leaders of channel and partner programs from the largest IT vendors in the world. It was a very uncomfortable afternoon for some. Many had their heads in their hands at some point. Revolution, not evolution is required. You cannot evolve across an discontinuity. Evolution is not a step change. And this is what is required for most of their programs. And their partners are bleeding to death- it is just that some of them don’t realize yet. They don’t have the cash flow or reserves to do this alone. They desperately need help.

Microsoft’s 7 years of pain

Interestingly, I was on Microsoft’s WorldWide Partner Advisory Council from 2007-2011 for their cloud strategy. It was a very painful time. Transforming Microsoft’s 70,000 employees and 600,000 partners to embrace and exploit the cloud was, and still is, incredibly hard. In fact Microsoft has taken a lot of flak by the press and analysts for their mis-steps over the last 7 years. But they have kept at it and have emerged with a great set of cloud offerings and one of the best partner programs in the industry. It has taken 7 years and a pile of cash. Which is pretty scary for some vendors who are ONLY JUST starting to invest in it seriously.

Back in 2008 I was on stage at Microsoft’s World Partner Conference. My key message from the keynote was “The (cloud) train is leaving. You need to be on it”. It seems that none of the attendees of last week’s IDC Summit were in the 12,000 person audience. They know they need to get on the train, but there will need to be a lot of running to catch it. Better get going.


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