This writer cites a thought-provoking leadership case study showing how mergers and acquisitions can disrupt tech industries despite passing regulatory scrutiny

Technology providers and channel partners often come together like an orchestra. Technology providers conduct the “performance”, ensuring that each channel partner comes in at the right time to “add their own tune to the ecosystem’s melody”.

Yet, the recent acquisition of VMware by Broadcom has sent shockwaves across the industry. The aftershocks still being felt across the Asia-Pacific and Japan (APJ) region, casting uncertainty over the delicate balance and health of partnerships and customer relationships.

Han Chon, Managing Director (SEATHK), Nutanix

With the potential domino effect of problems expected to reverberate throughout the entire industry, what could the consequences on the channel partner ecosystem be, and what could be the way forward?

Hindered by dissonance

In today’s hyperconnected world, the business-to-business (B2B) technology space thrives on interoperability and seamless integration of solutions. To deliver seamless digital experiences, regional businesses are grappling with the rapid increase in data and applications, in addition to rising cost concerns. Channel partners have been instrumental in supporting end-customers on these fronts, but the abovementioned acquisition has, in my opinion, disrupted to balance of the ecosystem.

    • First, the sudden shift in ownership and potential changes in strategy could introduce compatibility issues. At the same time, other post-acquisition challenges including layoffs of R&D and customer support staff at VMware could further hinder channel partners from delivering and improving upon uninterrupted services.
    • The uncertainty introduced by such a significant market disruption can also stifle productivity and result in sticker shock. This creates a trickle-down effect, placing more burdens on partners that must now navigate a landscape fraught with uncertainty and technical challenges, potentially diverting resources from innovation and customer-centric initiatives.
    • Repercussions extend to end-customers as well: those that rely on a stable, financially affordable, and well-supported technology stack to drive their businesses forward. Disruptions in the partner ecosystem may thus cause end-customers to face delays in service, increased costs, and a loss of confidence in the solutions they have invested in.
    • Disruption from the acquisition has also directly impacted channel partners, and it is putting their business at risk. For starters, having confused and disgruntled end-customers translates to poorer customer experience and decreased satisfaction, causing channel partners to bear the brunt of damage to brand reputation and loyalty. With Broadcom shifting VMware to a subscription model, many partners now find themselves facing revenue fluctuations, as they can no longer rely on the larger upfront payments that come with perpetual licenses. This strains financial stability, affecting cash flow, liquidity, and potentially the viability of operating a resale business.
    • Broadcom is also affecting the delicate and interconnected equilibrium of the channel partner ecosystem by changing the rules of the game. First, the transition to Broadcom’s new channel partner programme has resulted in diminishing partner support, with some channel partners completely left in the lurch. Broadcom has also cut some partners out of the equation completely by taking around 2,000 of VMware’s top customers direct.

Preserving trust as a guiding beacon

Partnerships are the lifeblood of our industry. When disruptions occur in the channel partner ecosystem, end-customers are often left to fend for themselves. This drives them to seek alternatives to ensure their businesses can survive. 

To preserve customer trust and relationships, channel partners will need to position themselves as trusted advisors that are “in it for the long haul”, and clearly demonstrate how they will support end-customers in migrating away from disruption and towards stability and success.

Partners therefore need to opt for software platforms that promise long-term support and stability after migration while aligning with the evolving business needs of their customers and themselves.

Ultimately, a harmonious channel partner ecosystem is critical for B2B value creation. This case study is an opportunity for channel partners to re-write the score and “evolve the symphony” — offering alternatives for customers that help everyone — to emerge stronger, more agile, and better equipped to meet the marketplace’s evolving demands seamlessly.