25 - Partner Ecosystems: Fueled by Hyperscalers, Sold in Marketplaces, Delivered via the Channel - Rob Spee, Vince Menzione

This production is brought to you by Magentrix. Magentrix is a pioneer in platforms for partner ecosystem management and partner relationship management. This is Partner Relationship Management, the ultimate channel sales podcast. Hey, Paul, Vince, buddies, how you doing? Doing well. So good to be here, my friend. This is the friend chat of the channels. Getting back together again on the Channel Journeys platform this time. We're kind of bouncing around, but really happy to be back with you guys. And let's just have a fun conversation. Thought we'd talk about ecosystems and hyperscalers this time. So we'll see where that takes us. We can talk about anything. There are no rules on this show today. Perfect. It's great to be back and great not to be asking the questions today. Same here. And so good to see you too. Like, this is a lot of fun. It is a lot of fun, Vince. You've been busy, Paul. I know you've been busy. We've all been super busy. Who isn't these days? A lot going on. A lot of fun things happening in the partnering world that we're all getting engaged in. So we can just kind of chat about that and see where it's going. So we're all heavily involved in the ecosystems. Hyperscalers are playing a big role in that. I'm curious first, Paul, from your perspective, at Magentrix, what impact this is having that you're seeing on your business, your partnerships? Well, I think what we're seeing when it comes to new people coming and evaluating Magentrix is that the one-size-fits-all model of the past is really no longer applicable. They're now looking at how do they work with different personas? How do they involve multiple touch points within an individual sale? The multiple points of value, as Jay always talks about, are influence, but also involving customers. So they need to find an ecosystem that not only caters to transactional partners, but then the co-innovation partners. I did a podcast with Tim over at Red Hat on this. But then also to be able to bring in the customer experience as well so they can kind of do a full loop on the CSAT scores and everything when it comes to the customer benefit of all of this. And that's a challenge to find a platform that can handle all of it. Fortunately, Magentrix, that's exactly what we've been doing. We've been at it for 12 years now. But it's a take I haven't seen in the last seven years. And this is really being driven by the age of the ecosystem. I was trying to explain this at my company, kind of what's different, right? We've always had resellers, VAR, VAD, service delivery partners, GSIs. Hyperscalers have even been around quite a while. Vince, what do you think is really different now than before? So first off, I think that certainly in the last few years, right? Since COVID, there's been an acceleration in our lives, in the way we buy things, in terms of the technology. The adoption rate is off the charts. And buying behaviors have also changed dramatically. So that it's not the IT shop that's only making the decision. It's the line of business owner. And those people are making a decision like they purchase a car, right? Jay likes to talk about the seven seats at the table and that influence strategy. So I think that's a big part of it. conference came up first. So right after Inspired, the day after, we're going to host a companion event, Winning with Ecosystems. It will actually feature executives from Microsoft. We're going to have several, both fireside chats and panel discussions. And we're going to take what Microsoft just said the day before and apply it to helping partners land Microsoft, make it more relevant to their strategies so they can be successful in 2024. And this is a digital event. It is a digital event. I did want to do a live event. Transparency was there was no location that made sense given travel budgets and timing for this year. But stay tuned. We're going to do more. I thought you were going to say there's no venue big enough to hold the crowd that's going to come to you. Well, I think it's a topic that people really need to be listening to. And I think your timing of this announcement is key because I still think that there is a large segment of the. I think there's a large segment, at least in the technology sector, that doesn't fully understand and appreciate the how the ecosystem is going to change and evolve their business. And, you know, it becomes a catchphrase that people are looking at and they don't really fully understand and appreciate it. So I think that coming off an Inspire conference, if you can actually educate and give real actionable items, you know, a live event would have been great because hearing you speak is fantastic. But really, even a digital event will enable a lot of people. So if they haven't signed up for it, I recommend that they do. We'll put a link in the show notes, right? Absolutely, Vince. Absolutely. Yeah. And when is that? It is July 20th. July 20th. Let's see. Yes, I'm still in town. Good, good. Well, we'd love to have you there. And you have been to one of my events before, Rob. It was fantastic. Yeah, it was very. We're amping that up. So some of the same players, some more executive level people from Microsoft, very senior people at Microsoft are going to be part of this. Yeah. I think it's fascinating. And, you know, I think it's going to be interesting. I think it's going to be interesting. Yeah. And, you know, a lot of people are just kind of getting into this, but there's so much that can be done. And we were at the executive briefing center of one of our partners recently, and we were talking about co-selling, of course, and that's kind of what people first go to. But there's so much more that can be done on the co-marketing side, but also on the co-innovation side. And you talked about the technology advances of the hyperscalers and what they've built. And there are so many ways that I hadn't even thought of that other ISVs can actually tack onto that and accelerate innovation. Yeah. Absolutely. That's what I'm saying with regards to gen AI. It's taking, first of all, the time to get to market. I know Paul has a point of view on this as well from what Magentrix has done, but it's going to accelerate time to market. It's going to accelerate a lot of things that we haven't even thought about yet in terms of the relationship between the ISV and their solution set and the hyperscalers capabilities broadly. You know, when marketplaces came out, you know, they were like, oh, we're going to do this. We're going to do this. And a couple of parties were really fearful of this taking over their business and pushing them out. First, the resellers and partners. What are you seeing, Paul, in your customer community on that front? Well, you know, you talk about the change in technology just as it applies to hyperscalers in the last short period of time. And now we are in the infancy of generative AI. I think back, and in 2000, which is, my God, 23 years ago, I got my first BlackBerry. It ran on a AA battery. It was the greatest device I had ever had in the world. Now, fast forward 20 plus years later, not only is that also just completely out of date and irrelevant anymore, but how far we've come when it comes to mobile computing. So let's take this same and apply it to now what OpenAI, what Microsoft is doing, what Google's doing with BARD. What is this going to look like in two years from now, five years from now, 20 years from now? This is going to change our landscape. And if the technology is evolving as quick as if chat GPT or any generative AI evolves at the same rate as technology, which I don't think it will, I think it'll be a lot faster. This is going to change our entire landscape in a very short period of time, well within our lifetimes. So from a Magentrix perspective, we were the first ones to integrate OpenAI into our PRM. And first thing we did is that this is an easy one. Nobody wants to partner portal anymore. So you know what? Just copy it on the conversation that you're going to have with the channel manager. Chat GPT will go grab everything, register the deal on your behalf and just send you a confirmation that it's done with a link to it. And that's been working fantastic. Now we're evaluating what else can we do with this? How can we enable partner ecosystems to leverage this as almost digital labor, you know, offering predictive, you know, deep analytics to historical opportunities and then prompt the partner with the right collateral at the right point in the sales cycle. Follow up with the partner in the ecosystem to say, have you made any progress? Find that X number of days go by and you start losing your opportunity to close the deal. What else can we leverage this for? And again, we're in the NC. It hasn't even been out six, well, it's been at what, seven months so far. And I think that we're just seeing the very early on application. But it is an exciting point to be involved in this, uh, this vertical and seeing how this is going to affect our lives. I think it's going to be in a positive way. Yeah. It's who knows. I mean, it's just, it's frightening and exciting of what could potentially come in the next couple of years with this, right? Vince. Yes. And one of the sessions we're going to have is on generative AI. Are you at the event yet? We have Microsoft coming into the room, both the business applications and the modern work team together to talk about this future of co-pilot and just generative AI and what it can do to streamline, you know, as Paul is just discussing here with, with his application, but think about all the things we do from a single plant pane of glass. Yeah. Business applications like CRM or office 365 and what all the things that we can do with AI layered on top of that. Yeah. I was, I was wondering Vince with all the time you're spending with these hyperscalers, are you getting a sense of where they're going? Not just in developing the technology, which, which they're all doing, but using the technology, you know, other folks are figuring out ways to use this like Paul, but what are the hyperscalers planning to do with it? Well, I was at Google's event just back last month. I got to speak at their ISV forum and I got to hear directly from Google's leadership on the AI side about some of the innovation going on. And, you know, they were sort of in the shadows of this chat GBT thing, right? And maybe people thought they missed the mark, but they are coming on really strong. I've heard a lot from them. I like them both, but Google came from search. They came from machine learning and AI. Yeah. And so they've got a lot to share. They're also laying her into their business applications, their strategies, their vertical approaches, you know, across financial services, healthcare and the like. So they're not sleeping at the wheel. I'm sure it's been interesting as AWS has been a little quiet. I haven't heard much from them yet, but everything that the retail side of the house is built on is really machine learning and AI. So interesting. Yeah. It is very interesting. You wonder where it's going to take us. Hey, Vince, have you tried using chat GBT yet to write your show notes? I have. I have. I would say to a limited success, not too bad. Like I'll take some things out of it. I have used it more for LinkedIn posts. Have you? Yeah. And you know what I did today? I had a thought on my ride, my bike ride this morning and I came back and I said, write me an article about this subject. And it wrote, I haven't read it yet, but it's, it wrote a really fabulous piece taking into consideration the whole topic matter. I was like, wow, that was actually scary to see. It is scary. I keep forgetting to use it. I don't know about you guys. You know, I hope that we can, as we evolve with the, you know, and begin to interact with these types of, of tasking components like generative AI and chat GPT, that we also start to learn from them as well. Because there was a book I read, a few years ago by a gentleman by the name of Tim Hudson called Think Better. And it really challenged you to go beyond your initial thought process to get your brain working. And one of the examples he's had is, you know what, pick a topic, give me 10 things, 10, your top 10 thoughts, top 10 colors, go ahead and pick 10. And then after you're done the 10, do 10 more. Now, if we ask chat GPT to it, it can start running off thousands in a row. But for, for us, after we get to 10, it becomes a little bit more difficult. We actually have to think. So what I'm hoping as the technology evolves, that not only will it make some of the more mundane tasks a little easier, but educate us to become more knowledgeable about specific subjects and not just do it for us. So that'll be interesting to see how it plays out. I know that at Magentrix, as we're looking to automate this, we really want to make the partner account manager's job easier. But at the same time, we want to educate people using a chat GPT to provide them the insights and the analytics that are more than just what you would see on the surface. So it, again, I think it's going to be an interesting time to see how we do it. And I use it all the time. I use it. I think it's great for creating a framework, but then I will always go and tweak the information. I haven't done my show notes on with chat GPT, but I do end up, you know, if I've got a, want to phrase an idea in an email or within a presentational little bit better. I'll run it through ChatGPT, ask it to make it easier to understand. And it does a great job of doing what I ask it to. Yeah. And I think that's a really good hope that it makes us smarter, not dumber, right? That we just kind of lean on and let it do all the thinking for us. Exactly. You know, I'm always brought back to the conversations we were having when the web first started up, right? When the internet first became a thing and everybody started putting up a website and a homepage and a sales page and saying that sales was going to go away and it never did, right? It just, it enabled sellers to become more effective at what they were doing, right? Yeah. And I hope that's the case here. And I believe it is. You know, my daughter is a senior copywriter for a fintech company and I think it's going to make her job easier, but it's not going to replace her job because there's still, first of all, there's the human element that it doesn't have. Yeah. It doesn't necessarily show that human emotion. Plus again, like Paul, it's a way to frame up maybe a topic, but not complete it, not to do it on your behalf. Yeah. Well, let's pivot. I want to talk about distribution and hyperscalers because that is definitely a kind of a collision point right now from what I'm seeing, you know, in the marketplace and distributors seem to be pivoting a bit and positioning themselves as the ecosystem orchestrator. But what does that mean and what is their role versus the marketplace and how do they, can they coexist? This is a loaded question. I don't know. I don't know the answer. And what I will say is I do believe there's a level of reinvention that is going to continue to have to happen for the distribution where they, of course, you know, it was credit. It was delivery, uh, describing that compact computer. They had it on the shelf and they could send it to Paul. That's what, and the value was that they could provide credit to you. And that's the way it started out in the day, right? They were aggregators. The cloud has, what they've been to the hyperscalers has been the scale element, the long tail. I like to refer to it as right. So who are the hundreds of thousands of, we used to call VARs, MSPs, you know, systems and everyone down the chain, down to the customer in Sheboygan and activating them on technology and activating them on incentives and so on and so on. But does that change with marketplace? That's the question. Do they have a vital role in aggregating marketplace, hard to say? It's hard to say for me at this point. Yeah, well, maybe not in the North American market, but maybe in the APAC, uh, you know, other regions, they could play a role, but they like all business, they have to evolve. If we go back 20 years ago, when you start talking about the evolution of the internet, if you weren't prepared to acquire your own domain name, nevermind, put up a website, uh, you got forgotten about pretty quickly, you know, in the age of e-commerce, if you were to go to a website and you were to go to a website and you were to go to a website and you weren't prepared to go from moving things from the store shelf to now drop shipping them, you know, either directly or through someone like Amazon, you got forgotten about pretty quickly. So I think what the age we're in now is that distribution has been tremendously valuable over the last 25, 30 years, and they're going to need to evolve again to be a continue, uh, continue to be part of value, whether they're an orchestrator, whether they're providing more regional support, uh, you know, throughout different global markets. And there could be that still credit game, the still access to capital that, uh, that they may play a part of as well. So, uh, they'll evolve. I'm they're not going away anytime soon. Yeah. And I think they are what I'm seeing. We have a two-tier distribution strategy, beyond trust and are leaning very heavily on the VADs, but more on from a customer success perspective, meaning the services element of it. And so they're really stepping up and providing a scale, both in partner service, partner enablement and service partner certifications, but also actual service delivery, you know, either going out and doing the projects directly or being bench extensions to the partners. That's the big, big role that they're evolving to for us. And marketplaces obviously can't fulfill that. Maybe they'll, maybe that's a role they'll get into hyperscalers in the future, but today that's not their role. Another role they might carry on behalf of the hyperscalers is the, at least in the public sector space is owning some of the contract vehicles. Oh yeah. So hyperscalers in general will not have a direct contract with the U S department of defense or the state of Wisconsin or, you know, local agencies, but aggregating that and being the transactional engine for that for the hyperscaler, it might be an interesting play for them as well. Yeah, I think so. You know, another big, big thing that's happening at hyperscalers this year and end of last year were layoffs fence, you know, a lot of big layoffs in those hyperscalers. What are you kind of hearing and seeing any, any impact from that? Yeah, it's, it's a very interesting time, Rob. Microsoft laid off about 10,000 people. A lot of them came out of the partner side of the business. We did see, by the way, I think a inordinate number of people that were on the layoff side were either in marketing or partnership related roles, right across. I think, and I think that goes back to the old mindset of a CEO and a CRO that says, if I can't touch it and feel it, it ain't so right with the channel people get, or, you know, one, one step removed from the customer in their minds, which I don't believe to be true, by the way, what it's, what it means is that we all need to do more with less. The hyperscalers have, if you're working with the hyperscalers, you're getting less support. You're getting less people supporting you. You're not going to get that nurturing that you maybe thought you were going to get before. And then within your own organization, you might have less resources as well. So you've got to be smarter in your execution. I think you need to triage. You know, I look across some of my clients that I advise, maybe there's relationships that they have that maybe are not necessarily productive or bearing fruit. And maybe you need to look at your business a little harder and say, who are the 20% that are producing the 80% and lean in heavily there. And I think that's true for everybody today. I've seen the same thing, Rob. I've seen channel programs where they've either drastically reduced the head count or canceled it all the altogether because it's easier to attribute the sale to directly to from a direct seller to the end user. I think it's a little bit short-sighted because I think it limits their growth at scale. I think it limits their growth to a single vertical market. I don't think it allows them to expand globally, but I think it's a result of the current market conditions. And at the same time, though, I've surprisingly, I've seen organizations that have decided, you know what, these are the market conditions. We're going entirely through channel and we're going to teach our direct reps now to sell through channel. And that's a transition. That's a transition to go from a direct sales person now to a channel manager. I'm also seeing it happen in reverse as well. So it's encouraging. Yeah. I don't know if there's any like Jay McBain meter channel meter that measures the sentiment of pro channel versus, you know, con channel. Do you have a sense? Do you feel like it's more pro today? I think from what I've seen, I've seen more people that are working on the direct side of things only because of the pullback I've seen from people that are going through channel. And I think that is because we've had this, this tough economic time and people are, a lot of the investment firms are, we'll say a little reluctant to take risk and invest in new technology companies. I think as the economy rebounds in the coming months or, you know, into next year, and we see that investment back in, into the technology vertical, then I think we'll also see the growth of channel programs, partner ecosystems at the same time. Yeah. What I'm seeing, it's interesting is, you know, it's always hard at the beginning of the year, end of this year, whatever, making targets, right? Of how much business are we going to do and how much through the channel and everything. And we're not growing as fast as in terms of business through the traditional channel as I had, as I had planned for, but where we're growing faster is the business with the ecosystem. So, you know, the engagement of our technology alignments, Alliance partners, the engagement of service delivery partners, engagement with the hyperscalers, that's what's growing at a much faster rate and really boosting if you consider the total partner business. For sure. And I think one of the things we're also seeing is because there is this kind of little bit of reduction in headcount within people managing the ecosystem, that the importance of automation, the importance of a, an enhanced personalized partner experience is really the way for you to grow your ecosystem with less people, less headcount managing it, you know, create that, that experience of value, you know, give people a reason to engage with your, with your technology platform, with your, you know, your marketplace listing. That really is what I think is going to, to help people separate themselves and make them, you know, a step ahead of their competitors is creating that, that perfect partner experience, whether that's in a PRM or a partner ecosystem management tool, whether it's the direct engagement, partner, or partner experience now has to be a core focus of anyone that is growing their program through an ecosystem model. Yeah. And I think Vince, you nailed it. People have to work smarter, right? And that's leveraging the tools and technologies that you're talking about, Paul, it's not being complacent. We've got to be really, we've got to be a players. We've got to be on our game, right. And do more with what we've got. I still think we need to bring the East, the, I'm sorry, we need to bring the C-suite. on board in a big way. I mentioned earlier, I was at the Supernode event last week and Bob Moore, who's the CEO of Crossbeam, had a terrific presentation on ecosystem-led growth and the importance of it. But he said emphatically that we've only brought around maybe 6% to 8% of organizations across the C-suite get ecosystem-led growth. We've got to bring the rest of them on board. I don't want to put you on the spot, Rob. Obviously, you work within an organization where ecosystem is important. What do you see from your side? Well, that has been my drumbeat since I got in the company. I have made a really concerted effort. That was my mandate when I joined, was to build this ecosystem. I don't think they knew exactly what that meant and what it could do, but they knew it was the right path. It's been a journey and we've all been working together to figure out what can it do for us. In fact, I was just presenting at our monthly company update that we do in the company. I got a chance to spend six minutes saying, hey, here's a. The story I gave was that, okay, when I first joined, the mission was to build the ecosystem. Great news, we've done that. Now what we're doing is what we call intelligent channeling. And that is orchestrating the ecosystem and applying it in very smart ways of leveraging the different strengths of partners. So do we need one partner in the account, two, three, four, whatever it takes to surround the customer with everything that they need to be successful throughout the buyer's journey. And I've been preaching this and educating myself and educating the ELT and the C-suite to keep them coming along board the journey. And now we're at a phase of, okay, how do we start leveraging it for the innovation? That's the next step. So intelligent channeling and then innovation is the next place to go. So I feel like we've made a lot of progress and do have good C-suite understanding and collaboration, but it's not easy. It takes a lot of dedicated effort to do that. You're looking at the client executive as that point of orchestration. Where do you see the orchestration happening? Boy, I don't know if there's any single point. We talked about the distributors, the orchestrator, the channel account manager plays a big role in that because each sales rep has a channel manager that they can go to to help them say, who do I need to do service delivery? Who do I need to put this deal through? Who has contacts? Who has the service or the security clearance that can go through there? So the cams play a really big role, but we're trying to educate the reps to where they can do it themselves. And we used to say, hey, every rep should have his own little team of sellers out in the channel. Right. Now I think every rep should have their own little ecosystem and understand who those players are. Have your go-to people that get the job done. Big fan of that. Yeah. So I like turning the tables, Vince. You asked me a question. Any other questions for me? I liked asking you a question. What are the biggest challenges you're seeing as a chief ecosystem officer in a major ISV? What are the things that are keeping you up at night? You know, I get asked that a lot. And I think certainly change management is tough, right? And we talked about that. Educating the seller, educating even our channel team and getting them up to speed on this new motion, the whole motion of the ecosystem. So I think change management is number one. That's the second biggest one. And sometimes it's even the highest one is just getting systems to be to catch up with the rate of change, right? We're driving change and transformation faster than our systems can keep up. Because how do you track all of this? How do you track influence? How do you track six partners in a deal? How do you track and compensate people? It's not easy. So there, I think you have to be able to do that. You have to be able to do that. You touched on this too, Paul. Systems weren't set up to do this. So that's a big, big challenge. And I think it's also how do you preserve the mindshare? There is with so many different players inside of a single deal, everyone has to be looking in the same direction. So how do you preserve that mindshare? And a lot of it is about enablement, empowering people. I was actually talking to somebody in an event last week that has created these kind of short, you know, two minute like episodes like you would see on Netflix, that really tell a story about a brand, about an effort and using that kind of micro learning, but through really engaging episode content in order to drive behavior. Now, the focus he was working on was really about employee retention. And at that point, they had reduced employee churn, I believe by 18%. But, you know, employee retention, partner onboarding, partner retention, it's all the same mechanism. So, you know, being able to create, I thought it was a great idea having kind of a very well engineered content that partners can create, or that brands can create for their partners. Does that keep everyone looking in the same direction? So we can maintain mindshare. All right, guys, thank you for listening to the ultimate channel sales podcast. Please don't forget to join us next time. 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