Bytes navigates challenges in H1

Bytes Technology Group (BTG) has delivered a half-yearly update, indicating it has been able to get through macroeconomic challenges and adapt to Microsoft partner programme changes.

The channel player delivered a 9.1% increase in gross invoiced income, generating £1.34m for the six months ended 31 August. That included 8.9% growth in software and 15.1% in services.

Gross profit improved by 0.4%, with that part of the business demonstrating the impact of Microsoft partner programme changes that have changed the way rewards are earned by its channel. The public sector was hit by the vendor partner’s programme changes, and grew by 1.6%, with corporate down by 0.6%. The 5% decrease in software gross profit was more than offset by the 40% increase on the services side of the business.

The channel player also increased headcount by 12% year-on-year, to 1,266.

Bytes CEO Sam Mudd said the business had successfully navigated a challenging first half and was on track to meet expectations for the full year.

“We delivered a resilient performance, building positive momentum through the period as we settled into our new corporate sales structure. Despite the challenging economic climate, and our internal and industry changes over the past six months, we have maintained our share of wallet amongst our existing customers as they continue to invest in their IT needs, and we have continued to expand our client base in both the public and corporate sectors,” she said.

Mudd said Bytes had adapted to the Microsoft partner programme changes and had been able to gain the benefits from moving in the direction the vendor was pushing partners and customers.

“We are also pleased with how our teams adapted to the changes to Microsoft’s partner incentives for enterprise agreements, successfully transitioning corporate customers to the higher-margin Microsoft Cloud Solution Provider programme, broadening our software portfolio and doubling down on services across the business, again providing solid foundations for future growth,” she said.

Mudd added that the foundations of the business were strong, and it was well-positioned for a good second half.

“Our passionate, talented and experienced staff continue to position BTG to provide high-quality licensing advice, technical enablement and support to meet our customers’ needs. This differentiates us from the competition and underpins our confidence for the remainder of the year,” she said.

The Microsoft partner programme changes have caused some friction across its channel, as the industry adapted to a scheme that rewarded lifecycle management rather than transactions.

The topic of partner programmes took centre stage at last week’s Canalys Channel Forum, with Microsoft attending the partner get-together and senior executives defending its decision to change its approach.

Allison West Hughes, corporate vice-president of global SMB at Microsoft, said the company had made changes to adapt to customer demands and was shifting its rewards to recognise specialisations and involvement with initiatives such as its marketplace offering.

“Our customers’ expectations of Microsoft sellers and our community have changed. They want deeper expertise, they want relevance, and they want success after implementation and after purchase. We have redesigned our partner programme to better embrace partners that provide that depth of expertise that mirrors the transformation we’re going through internally,” she said.