Part 1 of the Tercera 30 survey blog series
Software companies and their services partners aren’t immune to today’s economic uncertainties, including the ongoing impacts of AI, inflation and shifting global markets.
However, the majority of the 269 technology services firms we surveyed claim to be doing well, and say demand for their partners’ products has increased over the last 12 months.
This year’s survey was fielded in August 2024 as part of our Tercera 30 research. Respondents were primarily CEOs and managing partners from middle market technology services firms, and weighed in on everything from company performance, to perceptions on their partner ecosystems, to the adoption of AI.
More information on the survey and the respondents can be found at the end of this blog, and a full copy of the Tercera 30 report is available here.
When asked to estimate 2024 revenue performance compared to 2023, the vast majority of survey respondents said they had grown over the last year, with a median growth rate of 16.5%. Only 5% of respondents reported a revenue decline over the previous year. Lower middle market firms (those with annual revenue between $20 million to $50 million) reported better growth on average than those in lower or higher ranges of revenue.
Lower middle market firms (those with annual revenue between $20 million to $50 million) reported better growth on average than those in lower or higher ranges of revenue.
Sound too good to be true? We wondered the same, especially given what we’re witnessing across the larger services landscape and the first half performance of the publicly traded Global Systems Integrators (although that seems to be stabilizing.)
To validate our numbers, we triangulated the survey findings against LinkedIn headcount growth data across 140 technology services firms of various sizes. Using the headcount numbers as a proxy for growth, we found that most firms were indeed growing, and that growth rates were directionally in line with what survey respondents said.
The self-reported growth from survey respondents may be a touch high when you compare it to employee growth, however, it could be a sign that companies are finding they truly can do more with less (perhaps using AI and automation to make consultants more productive). It may also reflect the growing optimism we’re seeing across the tech services market.
Where is growth happening?
Trying to understand where growth was the highest and lowest wasn’t easy, as high growth and low growth firms existed in virtually every segment and ecosystem.
Some ecosystems, like the hyperscalers, did seem to afford more opportunities to partners. Partners in these ecosystems tended to report higher growth on average than those in other ecosystems reported.
However, growth appeared more correlated to firms being hyper focused on the customers they serve and the business problems they solve.
Perhaps this is why the vast majority (57%) of survey respondents position themselves as a Solutions Expert rather than an Ecosystem Expert (20%).
Top tier firms cite growing demand for partners’ products, high satisfaction
Most firms we surveyed said demand for their primary software vendor’s products is increasing. The majority are also likely to recommend their primary software vendor to a friend or colleague; overall, we found a net promoter score (NPS) of +55.
The majority of services firms are likely to recommend their primary software vendor to a friend or colleague; overall, we found a net promoter score (NPS) of +55.
Most respondents also feel that a healthy deal flow relationship exists with their partners; with half of firms reporting a fair balance of trade, signaling a mutually rewarding give and take relationship.
There appears to be a strong correlation between how positive these perceptions are, and what level of partnership the firm reports with their primary vendor.
Of the services firms we surveyed, a third reported being at the highest tier of their primary partners’ program.
Partners at the two highest tiers of partnership are at least twice as likely as lower level partners to say demand for their primary partner’s product has increased in the last 12 months.
The same correlation holds true when it comes to a steadier flow of deals. Top tier partners are nearly twice as likely as the lowest tier partners to say their partner brings them the majority of their deals. Conversely, partners in the lowest tiers are significantly more likely to say that they are the party responsible for bringing the leads, that they are on their own or that they are competing with the software vendor’s internal team for deals.
Top tier partners are nearly twice as likely as the lowest tier partners to say their partner brings them the majority of their deals.
With these stats, it’s no surprise that service firms put so much investment into climbing the ranks of these partner programs.
Interested in which partner programs are the most popular and the sweet spot for number of strategic partner relationships? If so, check out part 2 of our Tercera 30 survey blog series here. You can also check out which partners won our 2024 People’s Choice award here. Hint: Data and AI players saw the love.
More about the technology services firms we surveyed
Tercera surveyed 269 leaders of technology services firms to gain insights to inform our selection of the Tercera 30. We recruited the respondents with the help of an external research partner and assistance from G2 and 3Seven. Respondents completed the online survey between late June and the end of August 2024.
