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Why rapid channel growth is delivering poor revenue streams

by TIM SANDLE March 29, 2021

A new survey from Model N considers the growth of the revenue management market in the high technology and semiconductor industries. This reveals that most executives think that more can be done within their firms to boots revenue management.

New research indicates that 97 percent of high technology leaders admit they are facing significant revenue management challenges. This is according to new data from Model N’s annual State of Revenue 2021 Report. For the report, 300 C-level executives were questioned for the period January-February 2021.The report identifies the top three trends that are impacting upon channel revenue.

Against a backdrop of rapid channel growth, the findings suggest that new revenue models, a lack of visibility, and a stubborn reliance on legacy manual processes, 56 percent of semiconductors or electronic component manufacturers and 80 percent of high technology executives think their industry could do better at revenue management.

In terms of the major trends having the greatest impact on high technology revenue, these are:

Artificial Intelligence

AI has topped the list again as the top trend impacting the way companies manage revenue for the past two years with 74 percent of high technology executives suggesting they currently use, or have plans to use, AI or machine learning to help with revenue management.

Consolidation of Channel Functions

This indicates it is important to have consolidated channel functions to engage channels, manage communications and marketing, automate key processes and provide resources to manage it and create a unified channel experience with 58 percent saying obtaining accurate partner data is a challenge.

Better Financial Controls Focused on the Channel

The report suggests that into 2021, there has been a vast increase in high tech companies seeking to improve their channel partner strategies, programs and ecosystem to sustain revenue growth but a key challenge to streamlining the channel experience and the fragmentation in the channel. The lack of visibility and manual processes are causing more audit, compliance and control issues. In fact, the survey estimates some companies over pay channels to the tune of about 7 percent of their incentive budgets. In particular, 93 percent of firms struggle with financial control of their channel, especially with their partners’ data.

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