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2021 review: The main channel themes
A look back over the past 12 months, focusing on the top 10 themes that have affected the channel
The curtain is coming down on 2021, a year where the three C’s dominated, with consolidation, component shortages and Covid all playing a role. Beyond that, there were other themes that were worth picking out in MicroScope’s top 10 roundup of the past 12 months in the channel.
The appetite for private equity players to invest in the channel was clear from some of the action in January, with the likes of August Equity picking up a couple of managed service providers (MSPs) in that month alone. Redstone, Sapphire and Keysource were also buying – or, in the latter’s case, dreaming of a big future after a managment buyout.
All levels of the channel saw action, with Nuvias snapping up Cloud Distribution in March, and Exertis sealing its largest ever acquisition in December as it picked up Almo Corporation in the US.
The list of deals struck this year is long, underlining the fact that investors are now fully aware of the value the channel can offer.
Sadly, the year is ending in much the same way as it began, with the advice being to work from home as infection levels rise.
The constant presence of coronavirus meant the industry again had to hold its partner events virtually. Despite fears of Zoom fatigue and video burnout, the levels of engagement online remained high. One channel manager at a major vendor commented that he had been able to talk to 10 partners a day and be more effective as a result of being on video. Others shared attendance figures of their events that showed increased participation.
“We hold training events for partners that are usually capped at 30, because that’s what the room holds. Online we have been having 100-plus tuning in,” said one vendor impressed by the ongoing appetite for valuable content.
3. Component shortages
Shortages were a constant during the year and look set to continue in 2022. The channel is skilled in logistics and supply, and hence managed to do its best to counter the challenges, but many were left to rue the impact of supply problems in their financial results.
Proact summed things up for many when it revealed in mid-December that its fourth-quarter numbers would be negatively affected by shortages. “There has been a fast change in the supply chain during this quarter, which will have a short-term impact on our results. However, as a leading IT partner in Europe, we have a very good relationship with our suppliers, which gives Proact’s customers the highest possible priority,” said CEO Jonas Hasselberg.
The consensus seems to be that shortages will continue to be a problem for the first half of 2022 before starting to ease in the second half. Many will be hoping that’s the case.
4. Strong performance
Despite component shortages, the channel had a good year. Results from the public giants Computacenter, Softact and Bytes were positive, and most found themselves busy trying to solve customer problems. Conversations with channel leaders around their expectations for the year ahead suggest things are expected to continue in the same vein.
“As things started to get a little bit more normal, the acceleration that we saw in new customer meetings with our partners [meant] things really felt very bullish. As we look ahead, we don’t see that changing – our partners are feeling optimistic as well,” said Barracuda CEO Hatem Naguib earlier this month.
Those views are echoed by many who hope that life will continue to get back to a more normal footing.
5. Hybrid working
The channel likes it when customers are transforming, particularly digitally, and the lasting legacy of Covid looks like being the changes it will make to working practices. Whether it’s the 3:2 model, once a week or month, or even fully remote, customers and channel businesses are emerging from the past 18 months with a different approach to work.
And this is only the start. As Steve Brazier, president and CEO of Canalys, warned at the analyst firm’s EMEA Channel Forum in October, the risks are high for those that get it wrong. Reports of the “great resignation” wave that started in the US has added to the pressure for everyone to get the balance right around this issue.
Last month, Riverbed Technology shared research that showed 83% of business and IT decision-makers felt that 25% of their workforces would remain working flexibly. The last time the vendor asked that question in 2020, that number was 30%, showing an increase in the number of firms planning for hybrid working.
6. As a service
One of the themes of the year was the further development and roll-out of as-a-service propositions from vendors and distributors. It might still be early days for services like desktop as a service (DaaS) and disaster recovery as a service (DRaaS), but it’s clear where things are going and vendors of all sizes have been getting things ready for greater customer take-up. Examples of that in action came from Dell, with its Apex offering, and HPE, which continued to add more depth to GreenLake.
Distribution was also busy, with the Global Technology Distribution Council declaring at the start of the year that its members were ready for everything as a service (XaaS) to take off. What that looked like in action included Exclusive Networks adding more depth to its XOD platform and Arrow adding more vendors to ArrowSphere.
In the first few days of the year, there were stories about the extended detection and response (XDR) opportunity and Kaspersky was warning about endpoint risk. That tempo kept up throughout the year as threats continued to rise.
Managed service providers also became increasingly aware that they were in the sights of cyber criminals as weak links in supply chains were targeted. A sense of what that could mean was all too clear when Kaseya was the target of a ransomware attack. The MSP tools specialist conceded that some of the channel partners it worked with and their customers had been affected. It became the quoted example of many when talking about the dangers that exist in the market.
It’s no surprise, then, that when Dell did some research last month to find out what user priorities were, security was at the top of the pile.
8. Managed services
There can’t be many vendors that have not enhanced, launched or talked about plans to support and work with more managed service providers. Subscription models are all the rage and the transition of the channel towards managed services has continued apace in 2021. The were examples aplenty this year, with Maintel, Six Degrees and Apalo extending managed service options in just one week.
Research shared on MSP Day in May revealed that although the MSP model was growing in popularity, there was still plenty of room for further growth. Barracuda found that 59% of respondents expected services to account for 50% or more of their revenues this year, with 39% saying they expected to generate up to 50% of their overall business through services.
With regards to carbon neutrality, emissions and efforts to have a net-zero supply chain were increasingly common in 2021. Firms across the channel started to share their green ambitions and that trend is set to continue.
No longer seen as a “good to do” or “nice to have”, the importance of a coherent environmental strategy would determine the fate of some deals. One anecdote shared at the Canalys Channel Forum in October was of business lost because the competitor could boast of having an electric van fleet.
The COP26 climate conference in Glasgow focused many minds, but this topic is for the long term – we could already add this to the roundup for next year as a guaranteed topic for 2022.
10. The next generation
The final area to focus on is where the next wave of channel personnel will come from. In August, an A-level student asked the industry why he should consider a career in the channel. The answers included the chance to travel, meet interesting people and solve customer problems. But there was also a sense that this is a world that can be inspirational.
One of my favourite quotes of the year came from Rob Billington, channel manager for Europe, the Middle East and Africa at Netwrix: “Working in the channel starts as a job, becomes a career, and ends as a network of people that you trust and enjoy working with. I consider myself lucky to have tried a few things before coming into the channel – cricket, acting, I’m a qualified chef, dabbled with the idea of being a lawyer, worked as part of, and leading, direct sales teams, but the channel is where I feel most at home. Every day is a challenge and every day is different. My go bag and laptop bag are always ready by the door with my passport in the front pocket.”