Coping with change: Should partners look to transform or exit?

“It's very hard for vendors to help partners because some partners don't actually know what they want and also because some don't have plans and strategies,” says James Davis, Chief Strategy Officer at The TSP Advisory.

Tech partners in the Asia Pacific region have been facing challenges in many areas, especially in adopting to new partner programs announced by vendors. Specifically, smaller partners, especially the smaller ones that cater to specific industries and geographies in the region, want more guidance from vendors.

According to James Davis, Chief Strategy Officer at The TSP Advisory, partners struggle in coping with the changes. The advisory firm that specializes in providing strategy and operational guidance to partners in the region believes that the larger partners are often capable of adopting faster to new incentive programs simply because they have tighter margins and are capable of navigating some sway.

“Large partners have resources dedicated to these. While it's always a disruptor, they can often pivot around that. They’ve got sales engines, and their business models have always been wrapped around it,” said Davis.

However, when it comes to the medium and smaller partners, Davis pointed out that it’s a constant disruptor as they lack the resources to dedicate themselves to understanding the new programs.

“They are already running lean enough that for them to maintain credentials across multiple vendors is really difficult. And for even smaller partners, if you don't have the buying power, it's very hard to navigate how much you're going to get. Is this even worth it? And you're constantly chasing your tail with the vendors and the distributors with this kind of stuff. The smaller and medium partners work differently. Even if they don’t have plans or a clear strategy, they’re playing a long game,” explained Davis.

At the same time, Davis acknowledges that while partners do struggle, there needs to be some responsibility from them as well. He believes partners can do better engaging with some of the vendors and distributors.

“It's very hard for vendors to help partners because some partners don't actually know what they want and also because some don't have plans and strategies. Most of the vendors will find a way to help that partner when they know exactly what they want. The issue is most partners don't know exactly what they want. So, we can only help the ones that want to be helped. And unfortunately, I think most of the partners out there don't actually want to help get help. They're very comfortable in what they're doing and most of them are hoping that they can keep doing what they've always done and just ride out to retirement,” said Davis.

Unfortunately, David pointed out that the challenge with this plan is that the tech industry is very young and immature. There's no there's no well-established practises of how everything operates. On top of that, the tech industry keeps changing and pivoting, so none of it is stable.

Collaborate, transform or exit?

Interestingly, Davis also mentioned that there are an increasing number of partner acquisitions, not just in Asia Pacific but globally as well. Partners that are stronger and well established outside the region are acquiring smaller regional partners as they look to expand their reach.

“The partners that have been around for 20 to 30 years have already gone through some pivots and it's not stopping. It's speeding up. For them, I think what they need to start doing is that if they're not looking to transform, they need to exit. And this is a really great time to exit, because there's so many other partners that are looking to acquire for their gross and feed their transformation,” said Davis.

For the partners that are looking to transform, they have to focus on articulating what the strategy is and doubling down their brand identity. These partners should also look to building a partner network

“Being able to build that ecosystem of specialists and knowing who owns the relationships, building that out and understanding what it looks like is key. Create a sort of transformation plan. You don't even need to plan it over the next 10 years. Look at it from a quarter and head towards a guiding line. You just run with it and that guides more decisions which can open up a completely different mindset,” added Davis.

For Davis, it's all about making that deliberate decision. Partners that want to transform should look to how they can transform and go do something about it.

“If you don’t have the energy, the decision should be I'm going to go work on exit and get help to exit. Go network with others and look out for who’s doing acquisitions. Put yourself out there. There is way more buyers than sellers, so take that opportunity now to take that step,” he said.

“Just create some focus, otherwise you just gambling with all the hard work you have put in. I just don't want to see all these founding generations of owners that have done such an amazing job setting the industry up, helping clients over the past few decades, end up having to do fire sales and unsuccessful exits. It's just not going to be fun, but unfortunately, I think that's going to be the reality for most,” concluded Davis.