Partners are investing in their businesses. The question is whether vendors are presenting a return equation strong enough to justify shifting that investment toward their platforms.
By Larry Walsh
A recurring theme sweeping across the channel among vendors and their partnership teams is that partners aren't doing enough: They're not evolving with sufficient speed; they're not taking on new capabilities at the pace of change; they're not investing in their businesses to meet shifting market demands.
The premise is true, but "enough" is relative. Partners aren’t evolving fast enough for you. They’re not changing relative to you.
It’s an important distinction, and one we’ve seen before.
Vendors are racing to get ahead of the technology innovation curve. At the same time, they’re looking to protect and expand their revenue streams and valuations. In many cases, they’re doing this by adopting platform models — or something akin to them.
In the traditional sense, platforms are foundational technology layers a company creates for core functions and resources. On top of those layers, other companies — typically independent software and hardware vendors — build complementary products that extend functionality and value. Think Microsoft Windows and the thousands of applications built on its architecture.
The contemporary definition of platforms positions them as consolidated collections of applications that allow extensibility through ISVs and IHVs but function more as one-stop shops for partners and customers. By creating these modern platforms, vendors lock in users through high switching costs. Once partners and customers adopt a platform, with all its sprawling functionality, the cost of switching to alternative offerings rises. This preserves revenue flow and supports valuations.
The challenge is getting partners to adopt the full breadth of the platform and, by extension, persuading their customers to do the same. That’s not easy. It leads to the perception that partners aren’t digitally transforming, adopting new technologies, or optimizing their business operations.
The quarterly Channelnomics Partner Confidence Index (PCI) finds that partners are investing — and investing materially. The Q1 2026 report shows that 90% of North American solution providers, and 96% of those in Europe, are reinvesting in their businesses to develop new capabilities and evolve their value propositions. On the average, partners allocate up to 25% of net profits to business development.
The notion that partners are falling behind in artificial intelligence is also overstated. Half of European partners and 38% of those in North America report that implementing AI to streamline and optimize operations is their top strategic priority in 2026. They’re also investing in new vendor relationships, expanding technical and service capacity, and increasing sales head count.
Through the myopic lens of an individual vendor, however, partners may not appear to be investing in themselves or adopting new technologies because those investments aren't centered on that vendor’s products or platforms.
Getting partners to move faster and in your direction isn’t a mystery. Every vendor has return-on-investment standards by which it evaluates potential investments and spending plans against expected operational efficiency gains or revenue growth. In indirect models, Channelnomics calls this return on channel investment (ROCI), which typically ranges from 1:12.5 to 1:20.
Partners apply the same logic to both the vendor and the downstream market. It’s called return on partner investment (ROPI) or return on vendor investment (ROVI). Partners want to know how much it will cost to adopt a vendor’s business model or technology, how long it will take to acquire the necessary skills, and how long it will take to recoup that investment and turn the relationship profitable.
A vendor recently told Channelnomics about its new partner program designed to drive sales across an increasingly broad and diverse product catalog. Today, most of its partners specialize in one or two product categories rather than the entire portfolio. The new program rewards partners that acquire the skills to sell the full catalog — a tall order given its diversity and complexity. The vendor acknowledged that it could take two or three quarters for a partner to skill up and become proficient. That estimate doesn't account for the time and effort required to build a pipeline and prime sales.
For argument’s sake, assume it takes a partner a year to meet the vendor’s expectations and recoup its sunk costs before generating positive returns. That’s a year of direct costs — new hires, training, time out of the office, and diverted resources from existing business lines. Depending on the partner’s size, the investment can range from tens to hundreds of thousands of dollars before ROPI materializes. That’s significant for relatively small businesses that already have productive relationships and profitable models.
In similar situations, a handful of early adopters — typically large organizations or GSIs — sign on first, often supported by concessions or special incentives. The broader partner base moves more deliberately, recognizing the high cost and uncertain return relative to business already in motion.
Partners are more inclined to double down on proven relationships and lines of business where there's established equity in the ROPI equation. That alignment also creates definable and equitable value in the vendor’s ROCI. When those lines intersect, the result is a positive-sum equation in which risk and reward are balanced enough to justify investment on both sides.
Too often, vendors don’t see it that way. They have products that must be sold. Sales and channel teams must hit revenue targets to achieve compensation goals. Getting as many partners as possible to execute against a product becomes the primary objective. Insufficient consideration is given to the total economic impact — positive, neutral, or negative — on the partner.
Channelnomics has developed methodologies to help vendors assign attribution across the go-to-market process, calculate total economic impact and partner risk exposure, define ROCI and ROPI outcomes, and build data-backed narratives that equate risk and reward. The objective is to show partners how they win while ensuring the vendor wins as well.
Vendors need to stop viewing the go-to-market equation solely from their side of the ledger. Partners are responsible for their own profitability, but they're acutely aware of their risk exposure. It's incumbent on vendors to understand those exposures, run the math, create balance and equity, and then make the investment case. In the experience of Channelnomics, the process moves more smoothly when both sides see the numbers clearly.
For more information about Channelnomics economic impact services and to schedule a free consultation, send e-mail to info@channelnomics.com.
**************************************************************
Larry Walsh is the CEO, chief analyst, and founder of Channelnomics. He’s an expert on the development and execution of channel programs, disruptive sales models, and growth strategies for companies worldwide.
