CV_Winter_21

on business viability, especially in the case of additional lockdowns, or other unexpected factors such as natural disasters or an unforeseen, non-COVID-related financial crisis. Channel firms worry that custom- ers could slow down spending, which typically correlates to overall market conditions. The effect COVID-19 has had on business in the channel is undeniable, with roughly half of the companies reporting some downside impact. Smaller firms are more likely to have been affected, given their customer bases also tend to be in the SMB space, a demographic most negatively impacted by business lockdowns and restrictions on capacity. But a recent study by McKinsey shows the pandemic has acceler- ated digitalization efforts by many companies, especially as they relate to interactions with customers. This phenomenon, along with the need to support the shift to remote work, provides clear avenues of opportuni- ty for the channel to assist customers in these efforts. Setting a Budget One key question heading into 2021 was how to budget. Given the volatility of 2020, annual budgeting is a top-of-mind issue for much of the channel, as firms attempt to forecast sales, ponder new markets or fight to keep their businesses afloat. The approach taken to budgeting for 2021 falls into the cautious-optimism category. Four in 10 anticipate keeping funding at 2020 levels, with a quarter predicting somewhat higher allocation and 13 percent somewhat lower. On the far extremes – much higher or much lower – the percentages are only in single digits. It seems many firms are playing it safe. Budgets, after all, can be adjusted depending on circumstances. Another sign of the uncertain times, when the CompTIA study was completed, 14 percent of companies were unsure about their budget projec- tions for 2021, indicating the difficulty of forecasting accurately. Sales, marketing, and tech support rate highest as areas being slightly underfunded. Marketing is an obvious one; for many channel firms it always has lagged in resources and general attention. Few channel firms employ a full-time marketing staffer, and the discipline itself often is overlooked. Interestingly, 31 percent of channel firms feel the budget for tech support within their organization is too low. CompTIA finds this puzzling given these are technology firms whose presumed mission is to provide support, technical advice, and consult- ing to customers. Help Wanted Along with budgeting comes the human factor: staffing, skills gaps, etc. Despite current pandemic condi- tions, many channel firms are on the hunt for new employees, particularly those with skills in certain areas such as emerging tech (IoT, AI, etc.) as well as business acumen for sales and marketing. Nearly four in 10 firms report having current openings they are looking to fill in technology roles, while 15 percent want to strengthen their business- related employee base. Twenty-eight percent are fully staffed, while 13 percent said they are in a hiring freeze directly related to COVID-19’s impact. The business model, technol- ogy focus and type of customers served will influence the staffing needs of companies in the channel. Other firms are expected to use their financial base and positive cash flow to dive into new markets and grow during this uncertain time. o CHANNEL MANAGEMENT Budget Allocations to Functional Areas Much too low Slightly too low About right Slightly too high Much too high Don’t know Sales 10% 25% 44% 5% 1% 15% Marketing 12% 31% 37% 5% 1% 15% Operations 5% 18% 55% 10% 2% 11% Finance 4% 6% 71% 6% 0% 13% Tech support 5% 26% 51% 7% 0% 11% Source: CompTIA Expect to grow revenue in 2021 over 2020/2019 Expect to remain stable with 2020 Expect to recoup 2020 losses and return to 2019 levels Cannot predict at this point Factors Driving Positive Growth in 2021 Pickup in existing customer business Reaching new customer segments Improving internal operations/efficency Selling new business lines/products Improving sales/marketing efforts Return to normal commerce patterns Successful vaccine development for COVID-19 Positive government action (i.e. deregulation) 59% 47% 45% 44% 43% 37% 35% 30% Actions to Support Workforce in 2021 Educate on best practices for remote work Invest in communications/collaboration Migrate more applications to cloud Invest in remote connectivity Educate managers with remote employees Improve laptop distribution Improve smart phone distribution 14% 34% 34% 38% 39% 48% 58% We don’t plan t We are evalu We a We are not evaluating We are developing We have de Source: TM Forum Bandwidth req Source: ITIF 180 160 140 120 100 80 60 40 20 0 Zoom S Provisioned U.S. Broadba Source: OpenVault Broadban >10 M 5.81 10-20 Mbps 19.89% 10-20 Mbps 9.42% 10-20 Mbps 3.59% 37% 25% 23% 15% Source: CompTIA 50 CHANNEL V ISION | January - February, 2021