Gartner defines a channel partner as “a company – such as a reseller, service provider, vendor, retailer or agent – that partners with another organization to market or sell their services, products or technologies.” Canada’s channel partner system supports its strong tech infrastructure via collaborations and relationships between technology vendors, distributors, resellers, and other intermediaries – and plays a crucial role in the distribution, marketing, and sales of technology products and services.
Canada has over 45,000 companies in its information and communications technology (ICT) sector, with an overwhelming majority (over 40,000) falling within the software and computer services industries, as per the 2021 Canadian Information and Communications Technologies (ICT) Sector Profile. The Canadian ICT sector consists mainly of small companies, with most (roughly 38,270) employing fewer than 10 people. The industry does have 123 large companies employing over 500 individuals, including subsidiaries of foreign multinational corporations. Value added resellers (VARs) comprise a large portion of the channel partner ecosystem, followed by managed service providers, IT consultants, cloud service providers, and systems integrators.
In The Critical Importance of Strategic Channel Partnerships in the Canadian Tech Landscape, International Data Corporation Canada (IDC) provides several channel partner trends that have unfolded in the tech industry since 2015. These trends are increasing profitability, driving revenue, and adding value to channel partner clients. A few of the trends mentioned in the article include a shift to cloud services, a move from a competitive mindset to more of a connected ecosystem, and an increase in merger and acquisition activities within the channel so client needs are better met.
The IDC report found that the transition to the as-a-service consumption model is a dominant trend in the channel today. Increasingly, customers are demanding that they be able to consume offerings – from media content to technology infrastructure and enterprise software solutions – in a scalable and secure manner. Technology companies are quickly moving into the more complex territory of selling ‘solutions,’ a combination of hardware, software, and services. Advances in cloud-based computing have also increased both the feasibility and the attractiveness of hosted solutions. These trends are quickly changing the nature of offerings that companies bring to the market, allowing customers to choose where, how, and how much they consume and pay for.
IDC’s report also found that while this transition is creating new channel opportunities, it also involves major (and potentially expensive) changes to partners’ channel strategies and sales models, requiring more support from the vendor community. While Canada’s vendor partnerships with channel members and customers are numerous, many of these (85% according to IDC’s estimates) are under the table and not discussed publicly.
In 2022, Canadian IT online news and channel blog Channel Buzz.ca featured an article stating that the as-a-service consumption model is a major focus for manufacturers, and that channel partners are now more likely to provide digital transformation solutions rather than the resale of hardware and software. As per Channel Buzz, 36% of channel partners have a vertical specialization serving 20 different industries including distribution and services, finance, infrastructure, manufacturing, resources, and public sectors.
Recently, Channel Buzz Canada highlighted the role of channel partners in the small- and medium-sized business (SMB) market. Important metrics from the research indicate that the majority of technology resellers in the U.S. (59%) and Canada (52%) have shifted their focus toward providing strategic advice and services, aiming to improve SMBs’ ability to swiftly adapt to market shifts, new technological breakthroughs, and evolving customer demands. In Canada, channel leaders attribute the shift to the need to keep up with shifting customer demands (56%) and building stronger customer relationships (53%).
The IDC Canada website has more information about events and on-demand opportunities to hear insights from IDC analysts and industry experts. Channel Buzz Canada also provides current information and trends within the Canadian channel partner community. Companies may access the IDC Channel Partner Ecosystem database for an in-depth view of channel partners and IT vendors worldwide.
The channel partner ecosystem in Canada continues to expand and evolve. Understanding the current channel partnership trends in the tech landscape can provide growth opportunities for software companies expanding to Canada.
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