IT suppliers of all types live in a time of great opportunity. Organizations across industries have accepted that digital transformation has to be an integral part of their business and the channel must step forward and become a leader that helps companies to modernize infrastructure, exploit hybrid cloud capabilities and develop applications faster than ever before. However joint research we conducted in collaboration with CRN UK shows that channel partners in Europe still have work to do: just 22 percent of IT suppliers feel capable of providing a complete service to cater for digital transformations.

Following last year’s study, we decided to carry out new research and provide further insights into the changing dynamics of vendor, partner and customer relationships, the growing competition between these parties, the fear of irrelevance and increasing value of consultancy services, merging technologies and the training and skills wrapped up around them.

We asked 130 IT suppliers across Europe to discuss some of the challenges those channel players are currently dealing with and how they are handling them. Here are some of the key results.

Respondents were asked what they feel are the main challenges for traditional partners going forward. Thirty-eight percent said it was down to business model changes, such as moving from traditional licensing to subscriptions, e.g. SaaS. A further 29 percent feel they lacked the right expertise to compete in a cutthroat market, highlighting the need to keep skills up to date and to keep innovating business strategy. Interestingly 15 percent feel the main challenge partners are facing is vendors keeping them out the loop.

A major decision for every channel player is what skills they believe will be critical for their staff to adopt over the next few years. Overwhelmingly, 61 percent feel technology knowledge and expertise is paramount. This makes sense considering customers look to the channel as their trusted advisors and expect them to know about all the technology they may need to invest in. A further 50 percent feel the ability to embrace new business models and roll these out to customers is vitally important, and 34 percent feel it is the versatility of holding multiple roles that will be important in the future.

When asked what the major areas of investment for their businesses had been in the last 12-18 months, 29 percent said they had invested in expanding their consultancy expertise, 24 percent said they had been investing in emerging technologies, 18 percent said digital training and recruitment, 16 percent said they had been expanding their vendor partner ecosystem, and five percent said they had invested in open source technology.

We also asked which technologies/services customers have been demanding over the past year. Unsurprisingly 69 percent said cloud was their customers’ main demand. Despite cloud being a regular point of conversation for the past eight years, many companies are only just beginning their cloud and digital transformation journeys, and are now beginning to ask about the relevant technologies to help them do so.

The data clearly shows: customers are ready for change. However channel partners will need to adapt quickly and transform themselves, their value proposition, sales approach and go to market at the same time.

Full report can be found here.

Frank Basinski is the senior director of partner programs and enablement for Red Hat EMEA.