Mark Carrel - stock.adobe.com
In our second look back over the last year it's time to focus the lens more on what happened in the channel. Although there was growth and digital transformation projects gave reasons for customers to invest in IT there were challenges out there as well, with some of them lasting most of the year.
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The biggest issues for the channel
Craig Joseph, COO at intY, identifies price erosion as a major issue for the channel. He alleges that an increasing number of new entrants to the market are selling cloud services at a lower cost, without providing the levels of service critical to support customers as they move to the cloud. “Service comes at a cost and of course reseller and partners need to make margin, but we may come to a point when less service-focused resellers can just sell on price alone and not deliver the customer what they need,” he argues. This could include neglecting after-sales assistance and technical support. Customers are price conscious, so if resellers sell cheap without adding the value of dedicated customer service, “it may become increasingly challenging for those who prioritise top-quality customer support to compete”.
According to Andy Brown, technical services director at Azlan UK, “the biggest challenge the channel faced in 2017 was a lack of IT architects and engineers with specialist cloud skills. With many organisations undergoing digital transformation a lack of skills is impeding progress. While this has been a challenge for the channel it is also an opportunity as user organisations look to business partners for cloud skills in the year ahead”.
He believes the onus is on channel services organisations to invest early and help channel partners compete in new areas without prior investment.
Justin Sutton-Parker, partner director for Northern Europe at Citrix, agrees that skills are an issue: “The majority of feedback I’ve received this year has been centred upon re-training sales staff. There has been a clear shift from selling ‘items’ to selling services that deliver a business outcome.” He reveals that many Citrix partners “have introduced millennials into senior sales teams to help drive the concept of a cloud service, without questioning if perhaps there are more traditional ways of approaching the customer’s needs”. From a business perspective, “the move from revenue to bookings, associated with a shift from on premise hardware sales to in the cloud services, has proven a transition that required careful financial management”.
David Darmon, EMEA VP for sales at CTERA Networks, says partners faced the challenge of meeting a growing demand for hybrid architectures in 2017. The advantage they have is the overview partners have across many solution areas, “which isn’t necessarily the case for vendors, who are often specialised”. This means they are “in a unique position to provide guidance to users on key IT decisions, which are more and more shifting towards multiple integrations, hybrid and multi-cloud infrastructures”.
2017: Good, bad or indifferent?
The reviews for 2017 are rolling in and, for the most part, they’re positive. Fujitsu UK & Ireland director of channel sales Paul McLean acknowledges that as the market has moved to become service based, “traditional product areas for some organisations has been lower than in previous years. That’s not been the case for us at Fujitsu, where we’ve seen strong growth across our product and security portfolios, additionally we’ve certainly seen rapid growth in demand for security and other software solutions”.
Rob Billington, UK country manager at macmon, believes 2017 “has been a good year for the channel”. Consolidation among distributors and resellers “has allowed a new wave of focused specialists to gain a foothold and start to challenge some of the traditional ideas". He predicts that “2018 will throw up some wonderful challenges and I know that the channel will continue to respond with some equally wonderful solutions”.
Joseph at intY describes 2017 as “a very good year”. The overwhelming trend has been the growth in cloud computing, which has given partners the opportunity to move away from their traditional markets of primarily hardware sales backed up by the occasional software package, to a more profitable, subscription-based ‘cloud-first’ business model. “We conducted a survey at our Cloud Fest event earlier this year, which showed the growing recognition among the channel of the value that cloud services can offer, with 51% agreeing that cloud services had given them a competitive edge in the market,” he adds.
Over at Citrix, Sutton-Parker goes further, labelling 2017 as “a great year. We grew, our partners grew and the shift towards the cloud certainly happened at an exciting and manageable pace”.
Brown at Azlan also describes 2017 as a “great year for the channel with new technologies, vendors and a relentless demand for organisations to reduce costs while improving efficiency. No different in many ways to previous years, just with a feeling of more urgency and possibility, through advances in technology”.