A Look Back at 2018: SMB Resellers Focus on Managed Services and Hybrid Cloud for Recurring Revenue Previous item Cybersecurity in 2018... Next item A Look Back at 2018...

As a part of our series on 2018 Year in Review, the EDGE360 editorial team is reaching out to our regular contributors to get their thoughts on the year. In this look back, we spoke with David McNicholas, director of strategic business development for North America for Comstor/Synnex, about the small- to medium-sized business reseller space.

McNicholas, who has been a longtime contributor to EDGE360, created an Executive Relevance Selling (ERS) approach. ERS is a formal, comprehensive way for resellers to sell profitable solutions into sophisticated, competitive markets, growing revenues and profits by 20%+ through investment-centric quantifiable business outcome assessments.

His focus on business outcomes has led him to advocate for value-added resellers (VARs) to move to managed services and create recurring revenue streams, and he says that those areas finally got some traction in 2018. Here’s what he had to say:

EDGE360: What was the biggest trend you saw in the SMB space for 2018?

McNicholas: SMB resellers are making meaningful, genuine movement toward recurring revenue offerings, such as hybrid cloud. At a base level, I am hearing from many that they are offering AWS, Google, and Azure. For the first time in 4-5 years, I am seeing a level of interest and attention paid to managed services that I haven’t seen before, and hybrid cloud plays into that, obviously. This is a big deal, because managed services is so much stickier, creates a more intimate relationship with customers, and it is much more integrated and consultatively collaborative.

Now that SMB VARs have realized its value, they must figure out how to compete with all of these bigger resellers. Creating a managed services practice is so engaging, that if you are the one providing it, you know that customer’s enterprise, architecture, what technology they have, where it is, how it works, and all the organizational context around it. You also know all of the people you work with to support those things. Frankly, because of that, the customer wants to buy all new gear from the partner bringing them their managed services, because that reseller knows their end customers’ business and the entire architecture down to release levels. The partner bringing the managed services also is monitoring, creating updates and patches, and offering quarterly business reviews. The end customer knows that if they add equipment from a different company, they still need to engage the partner providing them managed services to manage integration, explain the system to the new technology provider, and add that new tech into the system they are already managing. Frankly, if an SMB VAR isn’t in managed services, then they are destined to be a low-level fulfillment provider.

EDGE360: Were there any new technologies or other changes that changed the way a VAR approaches the SMB space?

McNicholas: As I mentioned, there is a lot of focus on hybrid cloud and the recurring revenue it creates. Because we know that not everything can go in the cloud, and, concurrently, it is not the best business solution to have everything on premises, SMB reseller organizations are literally setting up practices around this. I also am seeing many in the SMB space beginning to lean in and try to better understand the customer experience and focus on lifetime experience management to maximize customer lifetime value. Last, but not least, is that as technology gets more and more complex, with AI, machine learning, hyper-converged infrastructure (HCI), hybrid cloud, etc., SMB folks are starting to realize they need to become specialized in a specific area or two and focus on that. Technology has forced them to realize they can’t be everything to everybody. From those who focus on data center solutions to those who choose a vertical market upon which to focus, this is a move I have watched throughout 2018.

EDGE360: How would you define 2018 – finish this sentence: 2018 was the year of…

McNicholas: It was the year of understanding what you need to do, how to get there, and staying the course. I also saw a revitalized interest in business-outcome selling. If you think about it, hybrid cloud and cloud and services is a 100-percent business solution, not a technology solution. That is the driver.