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How telecom operators can expand their partner channel for IT/digital growth in B2B

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Executive summary

Telecom operators have been expanding their offerings to capitalize on the region’s large IT/digital services market, worth around US$52 billion in the Middle East and Africa in 2020, according to IDC. A major challenge for telecom operators is that their traditional sales channel mix does not position them well for this market. Account managers responsible for large corporate accounts lack the product knowledge and consultative selling skills needed for the more complex field of IT/digital services. Telecom operators’ legacy business-to-business (B2B) sales channels for small and medium-sized enterprises (SMEs), such as door-to-door (D2D) sellers and telesales, are similarly unsuitable.

Thanks to their extensive ecosystem of local technology services partners, leading cloud service providers and independent hardware/software vendors have built the scale and valuations often envied by telecom operators. To grasp the IT/digital opportunity, telecom operators need similar broad-based partner channels. They need to take a structured approach by developing and maintaining productive relationships with an extensive range of specialized local IT/digital partners, including system integrators, consultants, managed service providers, resellers, and distributors.

A successful IT/digital partner channel program would lead to substantial gains in the SME segment. It would also help telecom operators generate a 10 percent to 25 percent increase in their IT/digital sales to large enterprises. 

Telecom operators must make several critical decisions about this channel. First, they should determine which customer segments, products, and services they want their partners to prioritize and what roles partners should play. Second, they should identify the right channel partners for each product and define an appealing value proposition to win these partners’ attention and commitment. Third, they must determine the design of key program components, such as benefits, partner tiers, and qualification requirements. Fourth, telecom operators need the right enablers to ensure seamless collaboration with partners.

A changing B2B channel mix

Telecom operators in the Middle East face a gradual slowdown in the B2B market. Consequently, they are seeking to expand into the adjacent IT/digital services market, which has been growing at much higher rates ( see Exhibit ). The IT/digital market covers an expanding range of services and products, including traditional IT services, cloud computing, the internet of things (IoT), big data, and emerging technology services. Penetrating this market is proving to be more difficult than telecom operators had anticipated. One of the main issues is that telecom operators’ sales channels are not well suited to the complexity of the IT/digital market.

IT/digital is driving growth in the business-to-business ICT market in the Middle East and Africa
Value (US$ billions), CAGR %

IT/digital is driving growth in the business-to-business ICT market in the Middle East and Africa

Account managers are not familiar with IT/digital products and services, and lack the consultative selling skills required to develop such opportunities. Legacy channels for SMEs, such as D2D sellers and telesales, are not appropriate for IT/digital services either. Such channels are highly transactional in nature and the economics of selling IT/digital products through them are not sustainable. Sales conversion rates are not as high due to the lower penetration of IT/digital products, while the complexity and necessary customer education involved in IT/digital services lead to more interactions, and therefore higher cost, than traditional telecom sales.

Telecom operators need to follow the path set by major technology vendors and global cloud providers, such as Microsoft, Dell, Cisco, Amazon Web Services, and Azure, whose extensive partnership networks have been a major contributor to their overall success. Of course, telecom operators should also retain direct face-to-face and virtual relationships. However, when it comes to SMEs, the IT/digital partner channel is the most attractive for telecom operators because it provides wider reach and greater opportunities to extract maximum potential from existing accounts. Telecom operators should seek to collaborate with partners across various customer segments, except perhaps in those select, often very large, accounts in which they are already strongly positioned to sell IT/digital services directly without external assistance.

The IT/digital partner channel uses the existing sales forces of partners that offer complementary services to their established enterprise customer base. This spreads the partners’ sales cost over a wider range of services, providing economies of scale and thus more profitable sales.

The prize can be substantial ( see Exhibit ). The IT/digital partner channel has the potential to account for more than 70 percent of overall IT/digital sales to SMEs, even when using an extensive channel mix involving virtual account managers and digital sales. The IT/digital partner channel can also account for 10 to 20 percent of IT/digital sales to large enterprises. This figure could be even higher for telecom operators with relatively poor access to large enterprise accounts. The COVID-19 pandemic offers an additional reason to build the IT/digital partner channel. Partners, with their already established relationships, can help telecom operators overcome the impediments imposed by the COVID-19 pandemic in forging new ties.

A well-developed IT/digital partner channel can contribute over 70% to SME segment sales
Channel mix by segment

The ICT partner channel is complex, encompassing a variety of potential partners

The IT/digital partner channel should be diverse. It should encompass a broad variety of IT and digital-centric partners, such as system integrators, consultants, and resellers and distributors.

The ICT partner channel is complex, encompassing a variety of potential partners
 

Whereas telecom operators in the Middle East are accustomed to B2B sales partners such as D2D and value-added resellers (VARs), they have yet to expand their partner channels in such a broad-based manner. Globally, a few leading telecom operators have set examples of this type of channel. Telstra Business in Australia revamped its channel program in 2016. It switched the focus of its existing partners to IT/digital services, and attracted new partners with specializations such as security, infrastructure as a service (IaaS), software as a service (SaaS), and digital transformation. Following the acquisition of AlienVault in 2018, AT&T in the U.S. inherited a partner program focused on cybersecurity, with two separate value propositions targeting managed security service providers (MSSPs) and solutions providers. These programs complement AT&T’s existing Partner Alliance and Partner Exchange programs, which encompass mostly network-centric partners.

Building strong and sustainable relationships with IT/digital sales partners is difficult. Telecom operators face competition for their partners’ sales attention from other suitors, such as tech vendors and global cloud providers. As such, developing the channel requires focus and investment.

 

Conclusion

Telecom operators in the Middle East need partner channels that use wide-ranging roles to achieve growth. By building diverse channels and strong relationships systematically, telecom operators can seize the considerable opportunities in the fast-growing IT/digital market.

Contact us

Jad Hajj

Jad Hajj

Partner, Strategy& Middle East

Chady Smayra

Chady Smayra

Partner, Strategy& Middle East

Achilles Drettas

Achilles Drettas

Partner, Strategy& Middle East

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