Executive Summary
Quocirca State of the Channel Study 2020
Key Findings
The channel was already facing major digital disruption, which has been reinforced by COVID-19. However, many of the channel are optimistic that they will bounce back, seeing the crisis as an opportunity to make significant changes to their business. Agile business models and investment in IT and software expertise in areas such as cloud and cyber security will be fundamental to the channel’s resilience and survival.
1. Growing MPS maturity drives the need for adjacent services, with UK the leading light
The majority of respondents (63%) have been offering MPS for over 3 years, with almost a third having offered it for over 5 years. However, regional variations reveal that the USA is most likely to be newer to MPS than other regions, with 64% reporting they have been offering MPS for less than 3 years. Overall, 34% indicate that MPS has created new opportunities for providing value added services, this rising to 54% in the UK. Opportunities continue to emerge in the managed IT service space. Today, the UK leads with 50% reporting they are offering managed IT services compared to just 16% in Germany. Just under 30% overall indicate that they are offering print security services or cloud print services.
2. COVID-19 has severely impacted office print volumes
Overall, 45% of channel respondents indicate that customer print volumes have fallen, rising to 62% in the UK and 64% in the USA. Just 24% of French respondents report a decline in print volumes. Smaller channel partners are more likely to have seen a bigger decline in customer print volumes. 59% of channel respondents from the smaller companies report a decline, compared to 39% of larger channel partners.
3. Despite uncertainty, the channel shows optimism and resilience
While half of channel partner respondents expect their 2020 revenue to decline in comparison to 2019, 66% expect revenue to bounce back in 2021 despite the economic uncertainty. Over half (53%) report a negative impact on business with 25% indicating that the crisis has had a positive impact. Revenue expectations for 2020 compared to 2019 are mixed. Although overall, 50% expect revenue to fall in 2020 compared to the previous year, 31% are optimistic that revenue will still increase. The majority of channel partners expect a bounce back in 2021 with two thirds expecting an increase in revenue.
4. Channel programmes show mixed performance
Training and support for app development (3.63 out of 5) and MDF (3.6) are viewed as the most important criteria for a channel programme. This rises to 4.04 and 3.93 respectively in the UK. In contrast, USA and German respondents rated app development training of lower importance at 3.46, with the USA placing margin retention as the highest importance (3.7). This perhaps reflects the differing MPS maturity in this study between the regions. UK respondents also rated financial support from the vendors important (3.76) compared to their French equivalents (3.39). UK channel partners are dissatisfied across several areas, particularly across their top-rated criteria – training and support for app development – with giving their lowest average satisfaction score at 3.52. Certainly, this area is one of the ones showing the largest satisfaction gap, pointing to the need for manufacturers to provide more support in this area.
5. Cloud is viewed as the leading opportunity, followed by home printing services.
Cloud continues to be viewed as the leading opportunity with 31% ranking this in the top 3 areas for growth between 2020 and 2022. Cloud print services enable customers to reduce the cost and IT burden associated with managing an on-premises print infrastructure. With more cloud print service offerings emerging from both print manufacturers and ISVs, channel partners have a broad choice of platforms and solutions to evaluate. Notable growth in opportunity is also seen in home printing services (17% to 30%) and contactless printing (20% to 29%). The channel is less positive about MPS with 18% viewing it as an opportunity in the next two years, down from 27% in 2020. This could be misplaced as MPS, while commoditised, is a platform for providing broader adjacent services. As such there will still be opportunities for next generation MPS which is cloud and digital workflow enabled.