Traditionally, publications kick-off their first editions of the year with a predictions feature, gathering comment from their specific captains of industry on how they see the forthcoming year playing out.
And traditionally, specifically in the channel, those executives polled have expressed pretty standard thoughts: Tough market conditions; the impact of a see-sawing currency; continued consolidation; seizing opportunities as new technology trends emerge; and, above all, a sense of resiliency.
Almost a year ago, however, any thought of rational predictions was turned on its head by the Covid-19 pandemic and its resultant global lockdowns and restrictions. And 2021, despite the glimmer of hope raised by the potential rollout of vaccines and the building of national ‘herd immunities’, looks set to follow a similar pattern to its predecessor.
‘Challenging’ is a word used often in channel circles today. And it’s probably the most apt description of an industry facing its own unique challenges, but one that has a key role to play in fulfilling the digitisation needs of its customers as they scramble for their own survival. And, in an industry that is well acquainted with the vagaries of rollercoaster ‘boom and bust’ cycles, there is little doubt that this year is going to be another when the steely resilience the local channel is so renowned for is going to, once again, have to come to the fore.
For Pierre Spies, CEO of South Africa’s largest distribution group, Alviva, the glass is always half-full. Never half-empty. As an admitted eternal optimist, he will always see opportunity where others see adversity; the brighter side when others see only gloom. And those that know him, know that he relishes a challenge, be it on the golf course or in the boardroom.
And, even though he admits that the Covid-19 pandemic that has gripped the globe over the past year has been one of the most devastating developments in modern times, he views its consequences as just a number of new business challenges to be tackled and overcome. On how the pandemic has affected the channel – and the Alviva group companies themselves – and how it has adapted to tha changing market conditions, he is equally stoic.
“This has been – and remains – a very challenging market,” Spies says. “But we are fortunate enough to be in an industry that formed a critical part of working in the ‘New Normal’.
“When lockdown and subsequent restrictions were introduced, our first goal – and that of many others in the channel – was to enable staff to be able to work remotely. We then had to adapt to a new way of selling and, frankly, trying to sell anything on a virtual platform as opposed to face-to-face continues to be a challenge for distributors and resellers alike.
“It became clear that people, strangely, were less accessible for meetings,” he says. “They had their own challenges within their own environments sitting in virtual meetings for most of the day, every day.
“It became a bit of an ‘adapt or die’ type scenario and the industry did experience a surge as businesses frantically rushed for products to enable their teams to work remotely. The local channel has always been resilient and many of them capitalized on the work from anywhere opportunities that arose. We have seen a major increase in activity on notebook, networking and other remote working products, and it has also been gratifying to see a lot of resellers become trusted advisors to end user customers during this period.
“Certainly more so today than we have seen in years gone by,” he says.
“Working remotely has brought its own set of challenges, though, and companies are finding it increasingly more difficult to build on their internal company cultures and go to market,” he adds. “Our market and the world has changed dramatically, but we need to remain agile. Most resellers adapted and re-aligned their short-term goals. It was back to basics in certain cases on how to sell, what to sell and where to look for opportunities. I would think that the medium-term goals are similar at this stage.”
When the virus was first identified in Wuhan, China, one of the biggest fears of the channel was the affect this would have on the supply chain. Inevitably, this came to pass, but even with China opening up once again, subsequent global lockdowns and restrictions have played havoc with logistics.
“The market is currently impacted by severe worldwide component shortages and the disruption in supply chain due to the pandemic,” explains Spies “The shortages started impacting our market in October 2020 and the indications are that the supply might only be back to normal from June this year onwards.
“This would indicate that the market will remain under pressure for the time being.”
The work from home (WFH) phenomenon spurred by lockdowns looks set to become standard practice for many businesses going into the future and Spies says that while hardware requirements might have been fulfilled, there are still significant opportunities for the channel. Especially when it comes to security and cloud services.
“Cybersecurity remains top of mind for almost every company and issues such as ransomware have taken the world by storm,” he says. “Cybersecurity is one of the fastest growing sectors in the industry – and presents an opportunity that will fortunately or unfortunately, depending on your viewpoint, be around for many years as hackers continue to evolve their tactics .
“There are most definitely still opportunities for the channel in the market and we have seen a marked increase in activity levels and tenders for cloud services, infrastructure and software products,” he says. “Yes, the selling cycles remain long, but we need to be patient as there are numerous opportunities.”
Spies remains cautiously optimistic that this year, with the promise of vaccine rollouts, for example, that some semblance of normality will return to the world – and the market. It may be the “New Normal” that many predict, but he’s sure that the IT industry and the channel will still have a vital role to play.
“The long-term goals of vendors, distributors and resellers seem to have remained unchanged,” he says. “Yes, we have had to adapt our short- and medium-term goals, but the IT market is here to stay. The growth in cloud offerings and online purchases have given the market a massive boost and continues to grow exponentially. It would be remiss of us not to include these options into our offerings.
“The IT market continues, as it always does, to evolve and remains challenging, but focus remains key,” Spies advises. “You need to identify the opportunities that best suit your offerings, pick your battles and go hell for leather!”
Hein Engelbrecht, MD of Mustek, says the channel, just like most other industries, was caught by surprise when the national lockdown was imposed.
“The channel took the same pain as everyone else at the time and digitisation was forced upon them in order for them to remain relevant,” he says. “And, like all other industries, some reacted much quicker than others. The smart players figured out work from home (WFH) and its requirements quickly, and made themselves the ‘go to’ companies for customers’ solutions.”
Selling solutions, he adds, is the new way forward for the channel.
“I think that in the coming months you are going to see distributors and resellers really driving solution sales,” Engelbrecht continues. “It’s all going to be about what value they add in a very competitive environment. The constrained supply of parts and components will obviously impact deliveries, so the channel has to have additional revenue streams to compensate for business disruptions.
“This means that they should be looking at and investing in cloud solutions that they can tailor as their own in the medium-term,” he says. “Cybersecurity fears and the lack of skills around this in South Africa will also need to be addressed, so the channel has to be ready to meet these new demands. In the short-term, I think the secret to success is to be as flexible as possible in order to service the market.
“The big deals which are still out there are great to chase, but don’t forget to service your usual base – your bread and butter,” he says. “Assist where you can in the transformation to digital. POPIA going live mid-year, for example, is another huge opportunity – invest in areas that will make you relevant to customers. In this case, it is those businesses that have ignored POPIA until the last minute and are about to hit the panic button.”
And what measures does Engelbrecht feel need to be put in place to ensure survival in the coming year?
“Short of government protection measures it is inevitable that globalisation is going to impact the local channel,” he says. “Global cloud vendors are investing in African data centres and they are not as reliant on local distribution channels to generate business.
“Ensure your chosen partner in this space has the revenue model best-suited for you as a reseller,” Engelbrecht says. “And, of course, for your customers.”
Gary Pickford, chief commercial officer at Tarsus Distribution, says that the pandemic could not have come at a worse time for South Africa.
“The Covid-19 pandemic arrived at a time when the South African economy was already on the edge and it has only added to the financial pressure,” Pickford says. “In this environment we are more aware than ever that alignment is required between internal strategy and external realities to overcome current business challenges. It’s something that every reseller needs to take note of.
“I estimate that South Africa has around 160 000 to 180 000 small-to-medium business (SMBs),” he continues. “A large proportion of these companies were severely economically impacted during 2020, a year in which digital inefficiencies were starkly highlighted.
“We feel that the role of both distributors and the reseller channel is not only to act as a conduit for ICT goods and services, but to assist SMBs in the bumpy journey to the new, digitally transformed business that they need to become.”
Pickford says that some companies shifted their digital transformation programs into high gear and accomplished in a few months what would normally have taken them years. For most SMBs though, this transformation will be a two-to-three-year journey that will take time and investment.
“We believe that along this journey, SMBs will turn to resellers for miracle solutions and that is going to be a challenge,” he says.
Pickford has six guidelines for resellers to realistically tackle the oncoming wave of digital transformation needed by SMBs:
*It will be important to gain access to CEOs, CFO’s and CIO’s and form partnerships through which resellers and their clients can set out the digital transformation journey together. It’s an alliance that will be supported by vendors who are seeking growth in the channel as corporate and government budgets are reigned in.
*With the massive disruption to supply chains, larger businesses are turning to third-party logistics as they focus on their core business and outsource everything else to remove indirect costs from the business. From a technology perspective, Pickford says, the Tarsus 3PL capability could add value here, particularly with the more dispersed work from home challenge corporates are facing, by providing a delivery mechanism for technology to be delivered directly to employees working at their home address.
*The need to print at home and at the office provides an opportunity to innovate and introduce new products and services in this sector. Businesses are keen to exit onerous evergreen print contracts and transform these into more agile print solutions that incorporate work-from-anywhere needs and dynamics.
*SMB’s may be at greater risk than usual. With the office environment having changed dramatically, and more employees working from home, CEOs are concerned about cybersecurity risks, a topic that was previously the sole concern of the IT manager. Expert consulting services and assistance with cybersecurity product selection will ease the feeling of security-paranoia that many CEOs experience.
*Computing is taking place on the edge, at or near the source of the data. With the work environment continuing to decentralise, it means the cloud is coming to you. As edge computing explodes in the SMB space, there are opportunities for positioning servers, processors, and data storage arrays as close as possible to those who can make best use of them.
*Solution selling will be one of the best ways salespeople can sell, with empathy. It means thinking beyond the immediate and helping SMBs overcome the challenges they are facing. “Resellers need to align with customers and ensure that the solution solves the customer problem,” Pickford says. “These are tough times and to ensure that we have sustainable businesses, we should deliver exactly what our customers are looking for and promised. Controversially, this will require a rethink about how to remunerate salespeople. Lengthier sales cycles will require different reward models that shift focus to rewarding the solution sell and not only the monthly revenue chase.
“When all is said and done, it’s about partnering for a sustainable future rather than competing on a request for a quote,” Pickford says.
Lorna Hardie, regional director Sub-Saharan Africa at VMware, echoes the sentiments of her distribution counterparts.
“It has been a challenging time for the channel,” Hardie says. “Some businesses were in a great position to continue to look after customers, albeit remotely, while others had to make some quick adjustments and re-invent their service delivery models.
“We have seen an upshot of sales collaboration systems being implemented by the channel and a shift to more streamlined project management tools and platforms. The nature in which customers are engaged has also shifted. It is tough to maintain personable relationships when you can’t physically meet with people, so we have seen marketing departments put under a lot of pressure to become more inventive with reaching out to people and shifting events online.
“A lot more product is also being ordered and procured digitally, and we are seeing a big drive among local distributors to push the concept of digital distribution,” she adds. “Conversely, channel players also have to certify themselves in expanding cloud technologies and SaaS-based applications quickly.”
Hardie says that the impact of digital transformation in all areas of business will influence the evolution of the channel in coming months.
“The desire to take advantage of digital order fulfilment will continue to drive the new-look channel,” she says. “Training and certification demands are also at an all-time high, particularly as resellers and partners look to get their teams up to speed with cloud-based apps and services.
“We are also seeing an increasing demand for self-service, self-healing and automated solutions that allow partners to assist clients remotely and take away the continually manual process of support. I foresee more demand for solutions like this in the future.
“Sales cycles have been adversely affected, as has budget planning, particularly as CIOs don’t want to be tied to long-term investments that strip away their ability to be agile. As a result, from vendors down, the whole channel will need to carefully adapt and evolve the way that deals are packaged for clients to derive immediate value from their investments.
“In the immediate term, many channel partners are working on securing their relationships with clients and determining where they can unpack added value,” Hardie says. “The client landscape has also evolved and matured over this last year – customers don’t want to be caught waiting for partners to catch up, hence partners need to become more of a trusted advisor and a future technology watcher than ever before.
“Only knowing how what you sell works is not an option – channel players need to become industry generalists who can offer an overall view of the market alongside being experts in what they sell. But that is more a medium- to long-term strategy and will help them diversify their portfolio going ahead and help their clients better futureproof their investments.”
So are there still opportunities in the market that resellers can take advantage of?
“Absolutely,” says Hardie. “The hybrid cloud is not without challenges and the integration component of these implementations remain a huge opportunity for the channel. In addition, there is the growing need for cohesion and consolidation of many point base solution SaaS-based applications and collaboration tools.
“Data is also a tremendous opportunity. The demand for big data is more significant than it has ever been and systems need to be in order before customers can truly delve into their data and gain the value from the insights they need.
“Security is equally a significant growth area,” she continues. “As the working world as we know it evolves, so do the security threats. As a result, the channel must stay one step ahead when it comes to delivering the right security solutions for the right security challenge.
“Resellers can take advantage of these by identifying how they can offer services around them, digging deeper into their vendor product stacks to find solutions to meet these challenges, upskilling their teams and then turn these into business opportunities.”
Hardie says that in the “New Normal”, agility and skills will become key for channel players.
“As much as we talk about agile systems to enable innovation, businesses need to be agile in their sales, marketing and services,” she says. “Channel players will need to look at more direct marketing campaigns to reach new customers, opening a direct conversation and opportunity to demonstrate their value.
“As mentioned previously, continual training is vital – as is ensuring that there is diversity in the skills they have on board. Open card communication with vendors and distributors will be key as better cohesion between parties ensures that if deals have hit a sticking point, there are more people involved to help meet the client’s requirements.
“Alignment to technologies that are able to meet very specific customer needs around hybrid cloud management, security and data management will be key to success,” Hardie says.