Jay McBain, Global Advisor at Channel Mechanics, joins me, Jen Spencer to discuss shadow channels and the shift from IT buying power, verticalization (or hyperfocused vectorization), the future of the channel and more on this episode of The Allbound Podcast.
Would you say that this concept of influencing the channel is just as strong in the evolution of where the channel is going? Is it even more important than ever?
Some of the things I wrote about later last year, I call shadow channels. I’ve got this personal belief that your average vendor, their channel program is going to grow by at least 5X in the next three or four years. And the reason really goes back to the customer buy-in journey, and people at HubSpot know this very, very well. But 90% of all IT decisions 10 years ago were made in the IT department. Makes sense, CIO. And today, it’s flipped completely where 72% of all decisions are made outside of the IT department. It’s now the VP of sales and marketing, operations, and finance, and HR, and all the way down the line that are making big technology decisions that are business decisions. And what’s happening to traditional vendors is sometimes they’re not in the room. Well, most cases, they’re not in the room. And so, if you’re a traditional vendor spending all your time trying to recruit MSPs and solution providers and VARs from days gone by, guess what? You just missed out of a technology decision because your influence isn’t in the room when it was made.
Now put yourself in the shoes of a VP of marketing and let’s talk ambulatory care for a healthcare clinic, midsized, 50 doctors, in the Northeast U.S. And in the room with that VP of marketing, again, it’s probably that person from Marketo, HubSpot, Pardot, whatever it is, Eloqua, probably somebody that is an expert in healthcare driving leads for midsized clinics who’s had success in the past, with five other clinics of the same size and scope. But these five people are different five people than what the IT department would have in the room. And so, you’re not talking about routers and PCs, and you’re not talking about, traditional licensing and everything else. You’re talking about driving more leads or you’re talking about a marketing problem.
And to be relevant, vendors either a) need to train their current channels to be valuable to the VP of marketing in the clinic, which is less likely to happen. It’s more likely that they then have to go and recruit and nurture these five other types of partners, and you call them alliances. You can call them whatever you want but the incentive is different, the way you manage them and measure them is different. The entire relationship is different. But the point is, there’s so many more rooms that you have to be influencing now that your channel program is just invariably going to grow.
You call these “shadow channels”, and when I think about shadow marketing, shadow IT, usually, there’s a negative connotation to it. There’s work going on that’s outside of your viewpoint, that is in most cases negatively-impacting whatever the core function is. But what you just described doesn’t sound negative, right? So are these shadow channels the future? Is this a good thing for these organizations?
Well, there’s good and bad. And depending on the audience that I talk to, is which one I’ll start with. The good news is businesspeople are now making business decisions around technology. All companies are becoming technology companies and all other professional organizations and industry, association, everything else, are becoming technology-based just because that’s the way world works. All 27 industries now are pretty much 27 tech industries; agriculture, fisheries, or whatever they do. The world has changed.
And the reason it was called shadow IT or rogue IT back in the day; 10%, and then it became 20%, and then 30% of decisions were made by these people who had no idea what’s going on with technology and didn’t understand security and didn’t understand backups and disaster recovery. And so they were rogue, they needed to be stumped.
Well, the fact of the matter is – and these are Gardener numbers – 72% of all the decisions today are now made outside of IT, so it’s no longer rogue or shadow. It is literally the new normal. And the prediction is by 2020 that 90% of all decisions will be made outside of IT. So in 10 years, there’s been a 180-degree turn in terms of where the decisions are made. And this isn’t changing. Businesspeople are making business technology decisions and that’s the way the world should work. It’s been a big boom for SaaS companies. And it’s been pretty hard for technology companies and hardware companies, specifically, because they’re trying to still find their place in these conversations when these decisions are being made outside of their normal feasibility.
You have said that verticalization is being replaced by hyperfocused vectorization. So I’m hoping you can clarify what you mean by that. And then, I want to explore, what today’s executive needs to consider as he or she is scooping out plans to grow through channel over the next 5 years. What do they need to know from this new vectorization perspective?
Let’s go back to the healthcare VP marketing in a midsized clinic. And you’re looking at the 5 people in the room and 10 years ago, for an IT provider, it was okay to say, “Hey, I moved from being a generalist to a specialist.” “Well, what are you going to do?” “Hey, well, I’m going to specialize in healthcare.” “Well, that’s fantastic.” So they go out and read HIPAA and HITECH, and they get a couple people certified, and they can talk their way out of a paper bag when it comes to patient records and compliancy and even some legal. But again, the world in this journey has changed things for them.
So if you’re that VP of marketing at a midsized clinic and you have somebody in your office that knows a lot about healthcare, that’s great. That’s one of the vectors. What would be even better is if they knew not only healthcare but midsized clinics, so the sub-industry. The fact that they put in a solution for a 500-doctor firm probably doesn’t have a ton of relevance to me because I don’t have those resources.
The fact that you installed in Colorado may not be as relevant as it is in New York because of the different statewide bureaucracy and everything else. There are 50 different systems in 50 different states.
So if you start asking these questions, there’s actually five vectors. And as a VP of marketing in a midsized clinic, you’re not going to ever get that perfect person who has all five. So you think if somebody knows healthcare that’s better than not knowing healthcare. But that’s one vector. So, flipping it aside, “I want somebody who knows my business. I want somebody who’s been successful in my sub-industry. I want to know somebody who’s been successful in marketing. I don’t care if you put in an accounting app, or I don’t care if you put in an IT solution. I need to drive leads. I need you to be focused on my line of business. I need you to be focused on my sub-industry. I need you to focus on my region.” So these are the types of things that you push back on. And if you can get two or three out of five, it’s much better than just getting that generalist in the room who might have one out of five, or none out of five.
To learn more about shadow channels and the shift from IT buying power, verticalization (or hyperfocused vectorization), the future of the channel and more, tune in to episode 22 of The Allbound Podcast.