How did 2016 fall short of our expectations at the beginning of the year? What trends emerged that were surprises, and what maybe didn't come to the fruition we expected? And with all of the change going on in the channel, what should we expect from 2017? As we close out the year, we sat down with Kim King, vice president of Global Partners and Channels for Progress Software, to get her take on how the channel developed this year and what she predicts the next 12 months will bring. 

TVG: 2016 was going to be the year of cloud. But some studies have shown partners' confidence in cloud being a benefit to their business dropped since 2015. Do you think we're coming out of our love affair with cloud?

King: That's a great question. I do think that we are coming out of the love affair with cloud. I think it's really moving into a different sort of paradigm from just 'everything gets hosted.' I think companies are starting to go into that mode of almost like we saw, I want to say, 15 years ago where they would outsource everything and then bring it back in house. I think companies are starting to feel the same way--like they don't have control of their own destinies and that really more of their brand, their brand equity and how they expand their global go-to-market strategies is different. So now they're looking for what we're seeing as 'services partners' to help them in more of a vertical play, less than a commodity around cloud.

It's very interesting that you said that. I've been looking at this a lot lately. We've had a lot of partners that say cloud just isn’t that interesting to them. It's more about the adoption of their solutions and how they get into really focused and vertical market.

TVG: Speaking of, verticalization is a hot topic lately. I've been hearing a lot of conversations about the need for partners to develop deep expertise within a particular vertical in order to prime themselves for success. Is that something that you were seeing already in 2015?

King: Not really. This is really a new challenge for a lot of us. I think we were thinking that the verticalization support would come from large system integrators, as well as cloud providers, but what we're really seeing is that it's completely different. A lot of it stems from the Internet of Things. What you're seeing are these amazing services companies that [for example] have an agricultural-type background--they understand agriculture and crops and how they work, and then they're working with these IoT companies that are building product that these farmers can use, but the farmers and the IoT companies don't speak the same language. So it's the channel partner who has to take the conversation down to that level of 'interesting, how do you make that work?' It's almost as if we're seeing these specialized channels going in reverse.

So there I think we're going to see that reemergence of the services and the key VARs out there in the market that already have those great relationships. There's a ton of them out there that have those really deep specialties, and they're already trusted advisors to a lot of businesses. I think they're going to start to bridge the gap as well because they understand the vertical, they understand emerging technology and they can speak both languages. Where at one time I would have said they're a dying breed, I think we're going to see a reemergence of the VAR if they can figure out how to bridge the gap between those two companies and how to get them to work. They're going to be an important piece of the channel coming in the next year.

TVG: There are so many emerging business models within the channel. It isn't just resellers and service providers anymore. In particular in your world, we've got this growing powerhouse of independent software vendors. Do people realize how vital ISVs are to the future channel?

Listen to King's response below.

TVG: With all of the new technology that's coming, one of the things I've heard more and more talk about lately are partner-to-partner alliances. Do you see more of that coming in 2017 or do you think it's still going to take a couple of years before we're there?

King: No. I think we're there. We're right on the cusp of that and we're seeing more and more companies, we're seeing it happen every day in even our own business where we have a hosting service provider that has specialized vertical and they're looking for other partners that will go on site and do implementations. They're also looking for digital agencies that help them drive the solution or help with the overall branding or marketing. We're seeing that ecosystem collaboration today, but I think you're going to see it accelerate next year definitely.

TVG: When do we think that IOT is going to go from the theoretical into the realm of the practical where smaller channel partners can actually see how they can make money off of that technology?

Listen to King's response below.

TVG: Alright, I'm just going to open it up to you. What changes do you see coming in 2017?

Listen to King's response below.