Is it Twilight or a New Day for the Technology Advisory Channel?

Technology advisory firm Sumo Communications founder Bret Hickenlooper started to envision his exit five years ago.

Hickenlooper, sitting in the lobby of the Great America hotel in Salt Lake City, seems at peace. He cracks a smile, happy to be back around colleagues and friends at the Telarus Partner Summit. It’s nice to be back in the business after his short retirement, he tells Channel Futures.

Hickenlooper launched the agency in 2002. Like many partners in the channel, he formed his agency after working in sales at a carrier. And like other agents, his firm rode a wave of growth as the advisory model gained traction over direct sales as the preferred way to buy technology. But the same generation is now facing a crossroads as they enter the twilight of their careers.

“There are a lot of people like me in the channel who started their business 20 years ago and are now thinking, ‘What’s my exit strategy?’ Hickenlooper told Channel Futures at last week’s Summit.

A Crossroads

As many agents consider retiring, outside investors are entering the space en masse and offering a valid financial option. At the same time, many partners that remain are addressing the validity of the broker model and coming to the conclusion that they need more than recurring commissions to stay solvent. Moreover, those that want to grow their businesses feel pressure to add revenue streams and services.

“We get to a certain point where we’re like, ‘How do we get bigger?'” Hickenlooper said. “Scale is really difficult to do. You’re just trying to outpace churn and babysit your base, and no matter how much you sell every year, there’s still potential tucked in your base that’s eroding. It’s really a puzzle.”

In the meantime, the technology service distribution (TSD) market is consolidating at a breakneck pace. In the last three months, PlanetOne and TCG have joined forces with larger players. The leaders of these combined firms cast a vision of a procurement model that outperforms direct sales and also beats the world’s biggest systems integrators for enterprise customers.

Telarus’ Patrick Oborn

“That’s a lot of money for a lot of people out there,” Telarus chief product officer Patrick Oborn told Channel Futures. “We would prefer to pull that money away from Accenture and Deloitte and those folks, and put it in the hands of people that work with the big TSBs and work in this industry.”

But will this partner model achieve this vision, and what will victory require?

A Strategic Partner

Jim Glackin, Nitel‘s executive vice president of channel sales, echoed a comment that leaders of some of the larger agencies have been saying: Partners need to position themselves as strategic business advisers.

Even though agents are adopting more advanced technologies, Glackin said many of them focus too much on transactional, product-based selling. And that’s also the case with traditional VARs, he said.

“How do you help the partners to go into their meetings thinking more broadly and not narrowly focused on selling UCaaS or circuits?” Glackin said.

Jim Glackin

Years ago, Glackin (who at the time worked for a large carrier) met with the CIO of a major retailer. A partner of his had already established a strong relationship with the CEO, and that had resulted in a $400,000 MPLS contract. But the CIO didn’t seem to feel the same way, Glackin said. They had been scheduled for an hourlong meeting, but when Glackin arrived, he learned it was now a 20-minute meeting. Network simply wasn’t important to them.

The disinterest from the CIO seemed to envelop the room in the opening minutes of the meeting. It was at that point Glackin, who owned some of the retailer’s consumer products, started asking about …

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