Channel partners

Channel Terms Glossary

Whether you're a long-established managed services provider or new to the IT reseller/IT services channel, you're bound to come across a term, acronym or phrase that's unfamiliar to you. We at ChannelE2E put together this glossary of terms to help you out. Something you don't see here? Send us a note and we'll add it! Email [email protected].

“100% Channel” - In a 100% channel sales model, a vendor does all its business through channel partners. These are affiliate partners (who get a commission on each purchase), resellers, value-added providers (who typically bundle your product with their own), or another entity that doesn't work for the vendor directly. MSPs and MSSPs are also channel partners. If a vendor only sells to or through MSSPs or MSPs, it is considered 100% channel.

Annual Recurring Revenue (ARR) - ARR refers to all ongoing revenue for a product or business projected over one year. Unlike one-off sales, these revenues are predictable, stable and can be counted on to occur at regular intervals going forward with a relatively high degree of certainty.

Channel chief – The top executive at a vendor company responsible for the channel program. This person creates the channel program (incentives, tiers, any processes and programs for how the vendor works together with a channel partner such as a VAR, MSP, or MSSP). This person is responsible for relationships with channel partners. This person often has the marketing budget and the media buying budget, too.

Channel conflict – When a channel partner has identified a client/opportunity but then the vendor of the technology decides to cut the channel partner out of the deal. This is also called “going direct.” This practice messes up the relationship between the vendor and the partner.

Channel partner - a company that serves as a conduit of technology sales and services between a technology vendor and an end-user company. This is also called an indirect sales model. The term channel partner commonly refers to channel partner types such as resellers, VARs, MSPs, MSSPs, SIs, and GSIs.

Cloud Marketplace - An online platform where cloud service providers offer and sell their services to customers through various subscription models.

Co-managed - A partnership model where both the technology vendor and the channel partner actively participate in the management, support, and success of customer engagements.

Co-Sell - A collaborative selling approach where a technology vendor and its channel partner work together to sell products or services, often leveraging each other's strengths.

Cloud services provider (CSP) - A company that offers cloud-based services, including infrastructure, platforms, and software, to businesses or individuals. This is a type of channel partner.

Deal registration – When a channel partner identifies an opportunity with a potential client to resell a technology or service to that end client, the channel partner can “register” that deal with the vendor, ensuring that the channel partner gets credit for the deal and the vendor does not give that deal to an internal sales person or a different channel partner instead. Not all vendors offer deal registration, but those who are serious about the channel do offer it. Deal registration is intended to eliminate channel conflict.

Distributor (DISTI) - A company that purchases technology products from vendors and resells them to channel partners, providing logistics, support, and sometimes additional services. Ingram Micro and TD Synnex are examples of distributors.

Ecosystem - An interconnected network of technology vendors, distributors, partners, and customers collaborating within a specific industry or market.

Gamification - The application of game elements, such as competition, rewards, and achievements, in non-game contexts, like sales or training, to motivate and engage channel partners.

Global Systems Integrator (GSI) - A large-scale systems integration company with a global reach, offering comprehensive IT solutions and services. This is a type of channel partner. Accenture and Deloitte are examples.

Hybrid Business Model - A channel partner business that combines the business models of a few types of different kinds of channel partners, such as a VAR and an MSP. Vendor channel programs are increasingly giving partners credit for business done in multiple business models.

Hyperscaler - A public cloud service provider such as AWS, Microsoft Azure, or Google Cloud.

Incentives - Rewards, benefits, or compensation provided by a technology vendor to channel partners as a motivation for achieving specific sales, marketing, or performance objectives.

Interval Licensing - Interval licenses enable MSPs/MSSPs to choose a particular service at a prescribed number of times a year, rather than a continuous service. Accordingly, intervals allow MSPs to issue out those license credits the way they see fit. Client engagements based on interval licensing let an MSP “dip their toes in,” so to speak.

Independent Software Vendor (ISV) - a software development company that designs, builds and delivers its own software or customizes a vendor's software for customers.

Managed Service Provider (MSP) - A company that remotely manages and supports IT infrastructure and/or end-user systems on behalf of its clients, typically on a subscription basis. MSPs sell services and not products and are valued as acquisition targets by private equity because of their monthly or annual recurring revenues. In other words, their revenues are predictable. MSP revenues, in general, are lower than the revenues of VARs, but MSPs have higher profit margins. This is a type of channel partner.

Managed Security Service Provider (MSSP) - A service provider that delivers managed security services, including monitoring, threat detection, and response. These companies generally only provide managed security services. They also don’t usually provide managed IT services. This is a type of channel partner.

Multitenancy - Multitenancy is a reference to the mode of operation of software where multiple applications operate in a shared environment (i.e. the cloud). Multitenancy occurs when several different cloud customers are accessing the same computing resources, such as when several different companies are storing data on the same physical server. Managed services software is also multi-tenant in that it can serve multiple end customers with just a single license and implementation of the software application. Think of it as a house versus an apartment building. One family lives in a house, but many families live in an apartment building. The families in the apartment building all live separately from each other, but in the same building that shares utilities and services. The families, in this case, are the end-user customer companies. The buildings are the software. Enterprise software is a house. Managed services software is an apartment building.

Partner Program - A structured initiative or set of guidelines established by a technology vendor to engage, support, and incentivize channel partners in promoting and selling their products or services.

Partner Portal - An online platform provided by a technology vendor to its channel partners, offering resources, tools, and information to support collaboration, sales, and marketing efforts.

Partner Tiers - A hierarchical structure within a partner program that categorizes channel partners based on their performance, sales volume, or level of engagement, often with associated benefits.

Point Solutions - Typically integrated within the larger technology stack, a point solution is a tool, product, or service that aims to deliver on one singular value proposition.

Professional Services Automation (PSA) - One of two key tools used by MSPs to operate their businesses. PSA is the software that MSPs use to track their customers’ services, send invoices, reconcile accounts receivable and other key business functions in dealing with end customers. The other key tool for MSPs is RMM.

Route to Market - The strategy or approach used by a technology vendor to bring products or services to the end customer, often involving various channels and partners.

Remote Monitoring and Management (RMM) - One of two key tools used by MSPs to operate their businesses. RMM allows MSPs to monitor and manage their clients’ IT estates. The other key tool for MSPs is PSA.

Software as a Service (SaaS) - SaaS is a way of delivering applications over the internet as a service. Instead of installing and maintaining software, you simply access it via the internet, freeing yourself from complex software and hardware management. For example, a cloud provider will host applications and make them available to end users over the internet.

Sell-to vs. Sell-through (in managed services) - “Sell-to” is selling a tool to a service provider that the service provider uses to run or manage their business. Examples are RMM and PSA. “Sell-through” are products or services from a vendor that the MSP or other channel partner resells to an end customer. An example is Microsoft 365.

Systems Integrator (SI) - A company that specializes in combining different technology components into a unified system to meet specific business requirements. This is a type of channel partner.

Special Performance Incentive Funds (Spif) - Spifs are financial incentives provided to channel partners for achieving specific sales targets or objectives within a defined timeframe.

Value-Added Reseller (VAR) - A company that adds value to a product or service before reselling it, often by incorporating additional features, customization, or integration. VARs usually have higher revenues than MSPs but lower profit margins. Their revenues are less predictable than the revenues of MSPs. This is a type of channel partner.

Verticals - Vertical markets, or "verticals," are business niches where vendors serve a specific audience and their set of needs. Once an MSP or MSSP verticalizes, it can advance up the IT/business value chain, gaining expertise in that area and increasing the value it might provide to its customers. When an MSP climbs the stack, they begin to communicate with clients in their language. Clients begin to regard MSPs as trusted advisers rather than just third-party vendors, and they are more inclined to pay for their services because they have confidence in the MSP to maintain the security and functionality of their companies.

White-Label Reporting - White-label reporting is when a detailed report by an MSP is completed and then saved as a basic template, which is intended to be rebranded and used by other companies. A white-label MSSP is one that provides security services through another business, such as an MSP, which “white labels” that service to the end customer client. The MSSP doesn’t use its own name for the services provided. Instead, the service comes with the MSP business' branding.

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