Tips for a tough start to 2011
Have VARs backed the right horses in 2010 to leap next year's hurdles? Fleur Doidge reports
This has been another year of thrills and spills for the channel, requiring the proverbial fast getaway out of the barriers, and perhaps even some judicious use of the whip -- at the right moments, of course -- to get ahead of your rivals around the turn.
Supply problems, for example, reared their head early in the race, with the ongoing Cisco inventory problems hamstringing VARs around the world. [Supply shortages hit Cisco lead times, CRN p1, 1 Feb 2010]
Liam Mulhall, EMEA managing director at VAR training and enablement specialist Riverview Channel Services, says the 2010 going was certainly heavy at times, and he tips mobility to continue to shake things up.
"The real quantum shift here is we are seeing that consumer devices are really starting to drive the enterprise IT agenda as employees bring the devices to work, onto their networks, and need to solve the connectivity and security challenges," he says. [Dawn of the no-fad gadget, CRN p21, 15 Nov 2010]
This year, expect a tipping point for cloud strategy, Mulhall adds. "Otherwise, they risk being sidelined as their customers make the transition over the next couple of years."
He predicts the channel has a major role to play here around consulting and integration of the many offerings out there already. While many cloud providers have not yet embraced the channel, they will in the medium term - investment by vendors and in sales and technical skills will be critical.
"However, will new entrants with innovative business models like Jamcracker be the distribution partner or could a new generation of intermediaries such as Spotcloud spoil the opportunity?" Mulhall says.
John Toal, UK country manager at Avnet Technology Solutions, says 2010 was an uphill race as predicted, with spending cuts, exchange rate challenges and continued consolidation. However, with challenges come opportunities - Avnet acquired Bell, for example. [Avnet-Bell mega-deal raises integration questions, CRN p1, 6 Apr 2010]
"We've had to make some tough decisions throughout the process but our employees and partners have remained our priority. In addition we've continued to invest in programmes and services and consequently had a strong calendar Q3," he says.
And for 2011, Toal sees a number of areas with high growth potential - virtualisation (including Virtualised Desktop Infrastructure (VDI) as the total cost of desktops gets harder to hide), unified communications (UC), storage, application delivery, as well as cloud.
"We will be investing in resources, tools and services to help our partners take advantage of these opportunities in a cost-effective way," he said.
"Capacity planning, storage, networking and security are all going mainstream for virtualisation. Speed and ease of communications are also real growth areas."
Data deduplication and thin provisioning would join virtualisation as spurs to channel profits next year. New storage vendors are jockeying for position and that in itself creates new avenues for growth, Toal says.
"Users have to trust the services they use as data and information becomes more valuable but they will also expect a certain level of responsiveness," he adds.
Answers to business problems
The overriding theme, however, is one we have hard before -- that end users want answers to business problems. They don't just want to buy products and point technology, therefore solutions and services will remain key.
The winners will be those that achieve growth as the market continues shifting towards software and services, resulting in greater profit opportunity as well as early partner entrance into the sales cycle. Skills will be key. [Cisco tackles VAR skills deficit, CRN p13, 4 Oct 2010]
"Hardware is still a key element but it's about balancing your portfolio," says Toal.
Sarah Rowlands, UK partner manager for public sector business at content management app vendor OpenText, says 2010 has definitely been a challenging year for just about all businesses. Companies started to realise they could demand better value for money and also had to work harder to survive each quarter.
"However, 2010 had a unique way of reducing ‘the bulge' within business and streamlining and honing companies. 2010 was the year business went on a diet and generally felt all the fitter for it," Rowlands says.
"Next year, from our perspective, there will be three themes: information management strategies, consolidating siloed content and separate content management systems and including content in the cloud; semantic technology both in terms of search and personalisation on the web; and user-generated content, in terms of social media inside and outside the organisation and rich media to use to train and cope with ageing workforce, workforce consolidation or redundancies."
The winners, she says, will be those agile enough to take the reins and respond to the changing pace of the market, becoming more closely aligned to vertical market challenges. Broad solutions without domain expertise and specific functionality won't cut it next year. Distributors and resellers are reassessing each other's place in their line-up [Regret but little surprise at Nimans axe, CRN p13, 15 Nov 2010].
"The losers will be companies that let current market conditions wash over them without embracing better ways of working or listening to customer requirements with a ‘one size fits all' mentality," Rowlands says.
"Focus on what your company does best. Focus on your processes and cashflow. Take your people and partners with you and keep regular contact with customers," Rowlands says.
Scott Fletcher, chief executive officer at Manchester comms solution provider ANS Group, also confirms that this year has panned out much as expected.
"Business picked up. It was still hard to close business but there is plenty out there. So we do expect next year to be an excellent year," Fletcher says.
"The main themes for 2011 are going to continue to be the datacentre, along with public and private cloud technology. There will continue to be further consolidation of the channel as well. Winners will include Cisco, VMware, NetApp, EMC, MTI ... and ANS of course."
Pete Rawden, partner sales director at NetApp, says the year suffered from various handicaps, including a general election, and austerity following economic recession.
"We have seen consolidation via acquisition at both vendor and partner level. We also saw new product innovation and strengthening technical alliances," he says. "2011, however, will be the year of unified storage."
More data for less money and hardware
Rawden notes that the industry is moving towards storing more data for less money and hardware. "Money is everything and greener is better," Rawden adds.
Technological advances will help but infrastructure must be adaptable and future-ready. A system that can be added to rather than replaced is essential for any company.
"The losers of 2011 will be the partners and vendors that don't embrace change," Rawden says.
Richard Ellis, UC business director at integrator 2e2, seems happy with 2010: "We wanted to get back to growth and we did. The fear has come out of the market; people are able to make decisions again. If you've got the capability customers are looking for there is opportunity again."
The main issues for 2011 will be around integration - virtualisation, convergence and consolidation. "They are all just examples of moving from siloed to more integrated and the pace of this is picking up," Ellis says. "Focus on the best delivery model, and follow that."
Innovation and customer service will be key, with global suppliers that only target the lowest common denominator suffering - as well as providers that are too niche, Ellis adds.
Mark Roach, channel sales director at network provider Exponential-e, says cloud services have begun to be embraced more in the last six months. As expected, it has been about low capex and services flexibility, app by app.
"Licensing is moving into the cloud," Roach says. "Along the way we have witnessed many shake-ups and acquisitions which will probably continue until the dark cloud over the economy fades away."
Expenditure reduction will still be top of mind in 2011, and the channel has to keep up and deliver, Roach adds.
"Convergence will be less about voice and data which is now commonplace and more about the challenges of putting in-house applications alongside those delivered from the cloud," Roach concludes.
Loay Lawrence, commercial director at Vohkus,says he thinks we're going to see more consolidation in distribution in 2011.
"I think we're going to see the old adage 'get bigger, or get niche' again. Because if you look at the successful guys they tend to be either really, really big, or they are very, very focused."
Lawrence says there will be changes in the reseller landscape too, not least with transactional VARs becoming more web-focused in the race to stay competitive.
"And then you will have people who invest in their business accreditations, certifications and deliver a more complete solution," he says.
With cloud, tech providers will continue to dabble as the technology moves closer to the core of business strategy long-term but revenue will remain minuscule in 2011.
Adrian Sturdy, senior unified communications (UC) specialist at POSTcti, says convergence and collaboration is going to go on growing -- particularly as virtualisation continues to advance into every part of businesses' IT infrastructure.
"People are looking now to save money wherever they can," Sturdy says. "They will be looking at heat, power, cooling and everything in the server room, for example. So everybody will be looking at virtualisation."
In UC and telecoms, the move away from the PBX would also continue, with customers investigating more converged solutions. Smaller enterprises will begin to look at cloud, in the wake of players such as Microsoft, Google and Yahoo placing their bets. Sturdy pointed to the Cisco acquisition of Tandberg in 2010 as another sign of the market's move towards more converged, unified offerings.
Chris Davies, general manager at D-Link UK and Ireland, says this year has been a year of strong growth for its networking kit through the channel. "We have gone particularly well -- with 200 per cent growth over budget," he says. "Yet there has been some nervousness generally throughout the industry [this year]."
Davies also tips more consolidation throughout the industry, and increasing convergence to include more such technologies as CCTV on the network, in 2011.
And, yes, they're racing now. Place your bets for 2011.