With South Africa progressing from Level 5 of the nationwide lockdown to Level 4 on 1 May – which was a public holiday – today (4 May) will officially see many more ICT companies resume operations, albeit still with some restrictions.
The IT channel is one of the beneficiaries of the new regulations gazetted in terms of Section 27 (2) of the Disaster Management Act which allows for the importation and sale of ICT equipment, and the rendering of ICT services during Level 4 lockdown. Retail regulations have also been relaxed and the sale of hardware, components, supplies and personal IT equipment including computers, mobile phones and other home office equipment is now permitted.
Specifically, as IT-Online reported on Friday, all telecommunications services and infrastructure, ICT services for all private and business customers, and postal and courier services for all permitted Level 4 services will be allowed to operate.
Of course, in opening for business, distributors and resellers will still have to adhere to some stringent measures such as limited employee numbers, workplace safety, adequate screening, sanitising and employee movement.
There is no doubt that operating under Level 4 conditions is nowhere near the “back to business as usual” scenario so many would like to see. But it is a step in the right direction as the country tries to revive an ailing economy.
Channelwise asked a number of major players in the channel how they were gearing up to restart their businesses in the “new normal”; how they are assisting their reseller partners; and some of their thoughts on what the coming months may hold in store for the industry.
Craig Brunsden, CEO of Axiz
What conditions will you be operating under in Phase 4 (warehousing, collections, deliveries)?
The current difficulty for IT channel companies and, more specifically, distributors like Axiz is that we have to limit and protect our staff within the confines of the law and our own polices on virus safety. During this period, Axiz will have reduced operational staff coping with the backlogs we’ve experienced, as well as new business. Goods receiving, warehousing, collections and deliveries return to unrestricted service, but with limited people. Our sales teams and other office workers will continue to work from home.
What are reseller partners now allowed to buy?
We will be returning to full product availability from 4 May – all ICT hardware, software and services as per the new regulations published on 29 April. We expect our full product range to be available, but it will take a few weeks for cargo stuck in the supply chains to arrive from the various vendors as airline capacity becomes available.
How are you helping resellers with access to products, finance and logistics?
The single biggest thing we are doing is behind the scenes with our AxizDigital cloud platform. We will launch our market place which will extend product availability from cloud to include hardware products. We’re very excited about this and the development team has done a great job remotely. We will continue to support essential services orders as we have done during lockdown, but now under Level 4 we can supply the full range. Reseller payments are being deferred on a case by case basis where we have relief from vendors. A few global vendors have announced distributor and channel partner payment extensions.
What is your short-term outlook for distribution and your channel partners?
At the moment, it’s so difficult to predict anything other than extremely tough times ahead for all of us. Our short-term outlook is that the demand is there to support the work from home needs and essential technology deployments of our customers.
The longer-term view is increasingly worse as the economic devastation the lockdown has triggered is felt throughout the economy. SAA and Edcon are just two examples of major employers in dire straits and this has to be felt in the IT industry too – at the very least in a lack of general demand. The performance of the rand against the dollar will push prices up by 20% compared to pre-lockdown prices and we’ve never dealt with a price jolt that big before.
On the bright side, the sentiment within the channel is to preserve jobs at the expense of short-term profit and perhaps companies will use this as a time to turn to technology and accelerate plans to digitally transform.
We now expect to live under “Covid conditions” for some time to come and there is no doubt that the tech sector should stand up better than average to the challenges.
Rakesh Parbhoo, CEO of Westcon-Comstor
What conditions will you be operating under in Phase 4 (warehousing, collections, deliveries)?
We will be opening our warehouse, but with a limited staff compliment as per the regulations. Our Health and Safety teams have been onsite getting everything ready and compliant to enable that. We will be able to do deliveries, but will likely keep collections closed in order to limit the number of people entering the environment. Our normal office environment will only be open for our staff to seek critical IT support, but otherwise we are requesting that they continue to work from home, which is something we set up very quickly before the lockdown was introduced.
What are reseller partners now allowed to buy?
Technically, given our enterprise portfolio, we can sell any products we carry so long as our reseller partners’ customers are also open for business. So their customers would need to be essential service providers or those classified under Level 4.
How are you helping resellers with access to products, finance and logistics?
It really is on a case by case basis at this point. Intangible products, licensing and renewals have had minimal impact, and our team is processing and driving this remotely. Physical goods have been challenged as up until now we can only supply resellers with essential services end-customers. We are working with our vendor partners and our reseller partners individually to find solutions to support them through this time.
What is your short-term outlook for distribution and your channel partners?
I think it’s going to be very tough in the short-term. While we may be able to trade, not all of our resellers’ customers will be open and, depending on which sector they operate in, will have different limitations. We are going to have to work hard to support each other in the next few months until the “new normal” sets in.
Innovation often thrives in tough times and I am certain we will see some innovative solutions or approaches coming through. We are definitely working on some!
Tim Humphreys-Davies, CEO of Pinnacle
What conditions will you be operating under in Phase 4 (warehousing, collections, deliveries)?
Pinnacle will be operating under the government prescribed level 4 regulations. We will be providing personal ICT hardware for home use, networking and as per the regulations. If this definition changes, then we will follow these changes. We will be offering delivery services and collections. Full pre-sales, sales and product assistance is currently being provided and will continue to be provided.
What are reseller partners now allowed to buy?
Resellers that have Level 4 essential services licences will be allowed to purchase from us. Things are a little fluid at the moment, but I suspect by the time you go to press we will know more. As we stand right now (28 April), we will probably need to keep a record of all resellers’ CIPRO licence numbers and for them to inform us that the ICT hardware is destined for home use. This, of course, may change.
How are you helping resellers with access to products, finance and logistics?
All of our normal services such as sales, pre-sales, finance, product queries and pricing have been functioning as normal since lockdown on 27 March and will continue to do so. Logistics and assemblies will be at our offices from 1 May, operating at the prescribed 30% number of staff level.
What is your short-term outlook for distribution and your channel partners?
I think the outlook in the short-term looks positive. Demand is high in certain segments such as client devices and video conferencing for obvious reasons, We are cautiously optimistic that this will continue in the short-term.
Mark Lu, CEO of Corex
What conditions will you be operating under in Phase 4 (warehousing, collections, deliveries)?
Corex is able to operate under both Level 5 and Level 4 of the lockdown and will have all services available from 4 May. Based on the information released to date from the Ministry of Trade and Industries, we will be able to mobilise our full workforce, however, Corex will observe the policy that those able to work from home will continue to do so and those required to be on-site will be there. All departments will be available.
What are reseller partners now allowed to buy?
Per the Level 4 regulations that have been put in place, our entire portfolio is available at Level 4: All telecommunication services and infrastructure; ICT services for all private and business customers; and personal ICT equipment including computers, mobile telephones and other home office equipment.
Should we go back to Level 5, the entire portfolio remains available, but who can buy and who it can be provided to becomes restricted again to essential service providers and essential services only.
How are you helping resellers with access to products, finance and logistics?
The announcement of the lockdown was sudden and unexpected for most, creating a sudden need for support across all sectors. Corex maintains a very robust supply chain and shipping dates were adjusted to ensure stock availability once the lockdown was relaxed or lifted. Our finance team has been available and assisting our clients throughout the lockdown with various programmes, and we will continue to work with our clients on an ongoing basis in the coming months. Our logistics operations will remain fully-functional to ensure the timely availability of product for all of our customers.
What is your short-term outlook for distribution and your channel partners?
The Covid-19 epidemic and resulting lockdown have had a detrimental impact on the business and the economy as a whole, and spending habits are going to change. We expect that business will recover, but that recovery will take time. In line with expectations of a contraction of the economy, we similarly expect a contraction and further consolidation in the channel and for distribution, but we are confident we will be able to work and prosper within the confines of the “new normal”.
Debbie Abrahall, CEO of First Distribution
What conditions will you be operating under in Phase 4 (warehousing, collections, deliveries)?
Since the inception of the lockdown we have been fully operational and will continue to be so under Level 4. Given that we are not a traditional “stock and sell” commoditised distributor but more geared towards projects, cloud and enterprise-based business solutions, logistics and warehousing has not had much of an impact on us other than delays getting equipment into the country due to space restrictions on cargo flights. We expect normal operations to continue, however, with some delays still expected in shipping.
What are reseller partners now allowed to buy?
Everything that we sell – server, storage, cybersecurity, thermal screening solutions, cloud solutions – provided the end user is in a sector that is allowed to operate under Level 4.
How are you helping resellers with access to products, finance and logistics?
We believe the single biggest challenge facing our resellers in the current environment is liquidity. In a few instances, our vendors have extended our payment terms which is allowing us to cope during this time where resellers might be unable to pay us. Furthermore, we have some innovative finance solutions that are in place to make it easier for both our resellers and their customers to acquire both hardware and software products. Otherwise, we are attempting to operate business as usual as much as possible.
What is your short-term outlook for distribution and your channel partners?
If it wasn’t tough enough already given the economic situation of South Africa, Covid-19 has definitely exacerbated conditions.
Short-term trading conditions are going to remain incredibly difficult with the single biggest issue being one of liquidity in the channel with end users holding back on payments and reducing their own IT spend given a slowdown in their own consumer spend.
What is apparent is that digital transformation is playing a more important role and those customers that have embarked on this journey have managed to remain fully operational during this time. We are seeing accelerated growth of cloud-based offerings that circumvent any logistical or supply chain issues.
Anton Jacobsz, CEO of Networks Unlimited
What conditions will you be operating under in Phase 4 (warehousing, collections, deliveries)?
NU is an approved essential services company and we have been operating since lockdown began. All departments and services have been running from home, together with essential services deliveries dependant on stock availability.
NU will be fully operational under the rules for Level 4 ( warehousing, collections and deliveries). Non-essential staff, including sales, finance and admin will still be working from home.
What are reseller partners now allowed to buy?
Our full product portfolio is available to reseller partners. We are putting strong focus on licence-based options to minimise logistics and delivery time to speed up sales. Licences are delivered via email and delivery, support and billing is instant. We’re also focusing strongly on renewals and maintenance.
How are you helping resellers with access to products, finance and logistics?
Product: Web-based product info and key messaging. Online training to address specific sales or go to market drives on products. Driving free training across certain technical courses which we usually charge for and which have been very well attended. Something that has proved immensely popular is that we have held a number of Zoom-based braai’s together with partners and customers to drive product knowledge and training while having a bit of fun.
Finance: No matter how we package product or position messaging there is still a serious economic impact on both partner and customer business due to the Covid-19 pandemic and subsequent economic collapse, together with financial markets and ROE. So financial issues are always top of mind. Customer needs to pay partner, partner needs to pay us and we need to pay vendor. If one defaults the rest of the value/logistics chain collapses.
Cashflow is king and all projects are being reprioritised at the moment. We need to be very close to our customers to ensure we understand their priorities and assist them to achieve their goals. We can negotiate payment terms on a deal by deal basis depending on the partner, customer and deal size, but even then we are all under pressure to cover overheads. It feels like we are playing Jenga – one wrong move and the whole lot comes tumbling down.
Obviously ROE and forward cover is the best way to protect pricing on deals.
Logistics: There was initially an impact at the beginning of lockdown with the grounding of flights and the lockdown on ports. But with the opening of ports a week ago we are seeing inflow of stock again and we are resuming our logistics service for partners with only slight delays from overseas.
What is your short-term outlook for distribution and your channel partners?
Very tough: Self-preservation is having a big impact on the decisions we are making every day and we need businesses to survive. Spend will move from the more common industries that we are accustomed to, to those that have a stronger profile or focus under Covid-19 such as telco, education, health and government sectors.
A strong focus on cyber resiliency and cloud can be expected to cater for work from home and moving apps to the cloud for easier access.
We are concerned about our partners. Many will need to pivot their business to focus on new challenges to continue trading. This is a time for strong leadership under a constantly changing situation.
Asgar Mahomed, MD of Esquire
What conditions will you be operating under in Phase 4 (warehousing, collections, deliveries)?
We have taken the stance of erring on the side of caution on several fronts. Once staff return to work on 1 May, we will work on a skeleton staff of around 25% at all branches to reduce risk and follow social distancing. A thermometer will also be introduced at the entrance of the premises to test all clients temperatures before entering the premises.
Our drivers will be equipped with the necessary PPE and will also be trained to practice social distancing upon delivering goods to clients.
We have been supplying essential products to essential service clients for the last two weeks, so we have already introduced safety measures.
We have also issued a notification that it will be compulsory for every visitor to any of our branches to wear a mask at all times and have their hands sanitised at the entrance.
What are reseller partners now allowed to buy?
Resellers are permitted to buy all regular IT and Communication products. We are also a supplier of a large range of Personal Protective Equipment (PPE) such as masks, thermometers, sanitisers, coveralls and more.
How are you helping resellers with access to products, finance and logistics?
We have always prided ourselves on having the best market pricing regardless of the market situation and in that spirit, we are passing on pricing that is below the current market value on a whole range of products.
We have a delivery system which is nationwide and can deliver to any client within 48-hours.
What is your short-term outlook for distribution and your channel partners?
I don’t think anyone can accurately predict the outcome or timeline of this pandemic – we can only hope that the “new normal” will be sustainable and that we are flexible enough to be able to adapt to any new challenges we are faced with.
The tragedy is that many smaller or medium-sized resellers may not make it through this crisis. There is no silver bullet to solve this and I don’t believe that we will get back to the same “normal” of six months ago. We can only hope that we move beyond Level 4 and that we can begin to revitalise the market.
Simon Campbell-Young, CEO of MyCyberCare
What conditions will you be operating under in Phase 4 (warehousing, collections, deliveries)?
It’s “business as usual” for us in the security software and digital insurance space – much the same as it has been for the entire lockdown period. All our solutions eveolve around digital delivery. Our staff have been operating very efficiently from home over the past four-plus weeks, so no major changes are expected.
What are reseller partners now allowed to buy?
From our standpoint, no limitations for resellers.
How are you helping resellers with access to products, finance and logistics?
We are generally running promotional pricing over this period as a method to keep commerce and activity ticking through our books. This, in turn, allows our resellers to offer the same discounts to end users. It’s tough for all financially, so we need to work effectively to make our products continuously affordable.
What is your short-term outlook for distribution and your channel partners?
To be honest, we see more and more opportunity. While there will be logical contractions in the market, the digital adoption and digital comfort factor is high. In this regard, cost of customer acquisition and digital distribution make the overall cost of acquisition highly appealing. Our channel partners will see the same benefits.
Ryan Martyn, Co-founder of Syntech
What conditions will you be operating under in Phase 4 (warehousing, collections, deliveries)?
We will be operational from 4 May with 30% of our workforce in Cape Town and Midrand branches. Most of our team is fully functional and will be working remotely. We are encouraging customers to place orders for delivery or courier to prevent unnecessary contact at our offices. Collections will be possible by prior arrangement.
What are reseller partners now allowed to buy?
The majority of our product range is available based on our understanding of government regulations.
How are you helping resellers with access to products, finance and logistics?
We have expanded our product offering to include PPE and believe many resellers can pivot their sales processes to assist with the immediate market demand. We hope this will help our resellers to generate revenue and start to recover from the impact of lockdown.
It’s important that we work together to rebuild markets and our accounts team is working to support resellers as far as possible in line with the guidelines from CGIC.
What is your short-term outlook for distribution and your channel partners?
We feel that the real economic impact of the lockdown will come into effect over the next two months. The next quarter will be very difficult, with significant decline in most markets and B2C products suffering the most.
Many companies have avoided obligations and making difficult decisions during the lockdown, but they cannot continue to do so. The combination of lost revenue, overdue accounts and exhausted capital reserves will put most businesses under huge financial strain.
Channel partners and distributors may need to accept extended payment plans from debtors to avoid bad debt.
Innovation and taking steps to quickly adapt to the “new normal” will be essential for companies to make up for lost revenue.
Brian Andrew, MD of RS Components SA
What conditions will you be operating under in Phase 4 (warehousing, collections, deliveries)?
RS obtained its CIPC permit to operate during the lockdown and have been supporting customers in the essential services sector with skeleton staff in warehousing and deliveries since the 27 March. In Phase 4 we will continue with operating our warehouse and delivering to customers. It’s unlikely that we will allow collections at this stage as we want to minimise contact between individuals and continue to keep our staff and customers safe. We have put additional measures in place to protect those working in our warehouse and our courier partner has done the same.
What are reseller partners now allowed to buy?
Initially, we could only provide essential products, tools and components to our customers that either provide an essential service or play a vital role in essential service customers’ supply chains. In Phase 4 we will be able to provide industrial and electronic items to customers in all the manufacturing sectors outlined in the government guidelines for this phase. Furthermore, customers will also be able to purchase ICT equipment and peripherals.
How are you helping resellers with access to products, finance and logistics?
Our complete range of over 500 000 products across 2 500 global brands is available online, making it easy to access and to check realtime stock availability. Many of our customers have 30-day accounts to assist them with cash flow. We also use a third-party courier to deliver goods directly to our customers premises so there’s no hassle to collect. Our service offering is convenient and safe – customers can shop, pay online and receive their goods without ever leaving their office. They can also arrange to have goods delivered directly to their customers.
What is your short-term outlook for distribution and your channel partners?
We hold a substantial depth of inventory worldwide in our various distribution centres. We have been in contact with all our suppliers to confirm the availability of stock and we are currently in a strong position. Our challenge in South Africa is global travel restrictions that have impacted air freight and caused delays with receiving stock. In the short-term this may result in supply delays to customers should stock items need to be sourced from one of our global distribution centres.