17 Jul 2015
Channel bankruptcies may be less frequent than they were a few years ago, but when they do come along, they tend to be bigger.
Of course, no one can predict the identity of the next 2e2 or Comet.
But one credit insurer I spoke to this week had some concerns that certain parts of the market – including cloud – could be overheating and should be treated with slight caution.
I remember the boss of a large reseller telling me in the wake of 2e2's demise he thought the 'next 2e2' would be a buy-and-build operator in the cloud market. He was convinced some of these providers were getting neck deep in debt without sufficient sales to show for it.
Two years on, and those concerns have been echoed by Atradius, possibly the largest credit insurer in the UK channel with an IT book that has an aggregate value of £2.5bn.
While stressing it is open to increasing its penetration of the IT market, Atradius said it is keeping a "close eye" on cloud providers that have invested large sums upfront in their systems but are still waiting for volume sales to materialise.
"You need to have critical mass and to get enough customers to pay back the money for the equipment, which is really expensive upfront. And they've been a little bit slower on taking up these facilities, is the feedback we're getting," said Atradius' senior underwriter, Arwel Roberts.
UK corporate insolvencies are at an historically low level, with casualties in the IT sector also much less frequent than five years ago. Atradius said claims from within its electronics portfolio – which includes IT – have made up just three per cent of the total UK number in the first five months of 2015, despite representing 10 per cent of its total book.
But by and large, insolvencies are bigger and more destructive than they were five years ago, with 2e2 alone leaving behind £257m of debt, 90 per cent of which it never paid back. KMS Components and Comet also left creditors and insurers severely out of pocket, while Atradius admitted it will pay out an "eight-figure sum" in claims for Phones 4u, which went under last autumn.
Such was the scale of the KMS and Phones 4u insolvencies, Atradius' electronics portfolio made up a whopping 60 per cent of total claims last year.
This means the stakes involved in avoiding insolvencies in the channel are much higher than a few years ago, both for insurers and for suppliers that have extended credit without insurance.
The rise of cloud has been impressive. Some 30 per cent of spending on IT infrastructure has already gone the way of the cloud, according to IDC, and only a fool would deny this is the way the market is going, albeit steadily.
But as the recent price wars between Amazon, Google and Microsoft have shown, parts of the cloud market are a scale game, where it's easy for the costs involved to outstrip expenses. Cloud is a market where some companies' losses have been higher than their sales. The bet is that the early investment that goes in will be recouped, but inevitably not all will make the grade.
07 Jul 2015
"We are all finding our niche".
That was a comment made by SCC chief executive James Rigby in a recent interview with CRN, in reference to how all the big resellers have strove in recent years to evolve beyond their roots in hardware supply.
And it's an interesting comment coming from the boss of a company which in the past relied on being big, rather than niche, to bring home the bacon.
Even companies as large as SCC and Computacenter are being forced to carve out a speciality for themselves in the increasingly service-driven world.
SCC's is in datacentre and cloud services, a business it expects will generate £40m revenues next. Computacenter, meanwhile, is becoming a powerful force in outsourced desktop services, recently being named as the UK's second best IT outsourcing supplier in terms of customer satisfaction.
I like to think the buzz around cloud is 50 per cent generated by reality and 50 per cent hype. After all, cloud accounted for less than a third of the overall IT infrastructure market in Q1, according to IDC, while Gartner says the fluffy form of IT will not overtake on-premise to become the bulk of new IT spend until next year.
Rigby himself admitted that cloud has been over-hyped, and forms only part of the answer for most customers: SCC's role is to act hub tying together all their on-premise, private and public cloud needs in a single wrap.
But the fact Computacenter and SCC are now both generating over half of their gross profits from services shows the extent these two channel bellwethers have had to evolve to remain at the front of the pack.
If you don't know what your niche is - other than supplying hardware and software - your chances of survival are grim.
22 Jun 2015
Is it time that vendors ditched deal registration schemes, or at least modified their DNA so protection isn't just granted to the reseller who gets there first?
That's a question many in the industry are asking as the deal registration tactics employed by some of the bigger resellers become ever-more cynical and even plain dishonest.
In theory, deal registration is a peerless tool, protecting the investment of the reseller who does the pre-sales legwork and freezing out ambulance chasers, all the while increasing the vendor's visibility into their sales pipeline.
The problem is that some larger resellers now apparently have teams dedicated to registering anything that moves - sometimes even with multiple vendors - to lock out rivals. Indeed, the phrase "deal registering your granny" is fast working its way into common parlance.
Many believe the system is broken and needs reform, as we explored in this week's issue, with one onlooker suggesting that moving to a model which allocates protection based on partners' value contribution could be the way forward.
As the article points out, alongside back-end rebates, deal reg was picked out as the most vital component of vendor partner programmes for resellers taking part in recent Canalys research. Without it, pre-sales investment would be a mug's game many argue.
But it's also clear that it's a tool that's coming under increasing fire from both smaller resellers and from vendors, who want to ensure the most deserving partners, that have actually done the work and aren't just sitting there with a copy of the Yellow Pages, are protected.
You can have your say by voting in this week's poll.
With HP, Lenovo and Insight Enterprises all unveiling new logos over the past week, there's a fun new game that's sweeping through the channel – and it's called 'new logo bullsh*t bingo'.
As Apple or Coca Cola will testify, the benefits to be gained from creating an iconic brand are almost immeasurable. On the flip side, get it wrong (London 2012, anyone!) and you could be a laughing stock.
But as nice as their new liveries look, the trio mentioned above racked up more corporate clichés than a Brendan Rogers team talk as they attempted to explain the profound thinking behind their new designs.
Insight Enterprises said the four interconnected 'i's in its new livery "signify the meaningful connections Insight makes with its clients, partners, and teammates". The logo mark is open at the centre to "signify the possibilities that technology will play as businesses transform and innovate for the future," it added.
Lenovo, which enlisted Saatchi & Saatchi New York to help with its latest corporate facelift, said the fact its new emblem (pictured, right) is housed in a "containing shape" (ie a rectangle) "acts as a window into culture and the world that surrounds us".
Not to be outdone, HP boss Meg Whitman explained that the green rectangle hovering above the new logo for the vendor's soon-to-split HP Enterprise business "symbolises the window of opportunity for what we can build together".
I still think Ingram Micro won when it said the tilted 'g' in the new emblem it unveiled last year symbolises its "agility and transparency to customers". HOUSE!
Surely pompous doublespeak that serves to confuse or alienate customers is just the kind of thing the industry is trying to get away from?
If you ask me, any customer or partner reading these would be left feeling as queasy as we did.
30 Apr 2015
By Hannah Breeze
A heavy sense of irony hung over the first day of the Cisco Partner Summit in Montreal yesterday as the Wi-Fi network spectacularly failed, leaving the thousands of delegates disconnected at a conference about how being connected will change the world. Oops.
Throughout the conference, Cisco has banged the drum for Internet of Everything, in which any "thing" - from fridges, to cars, to animals - can be connected to the internet in order to collect data which can be analysed and used by businesses.
In the past, Cisco has connected baby elephants to the internet to save them from extinction, it has worked with oil firms to use its technology to find and extract oil more efficiently than ever before, but when it comes to getting a couple of thousand people's smartphones to the internet, it is apparently flummoxed.
I will add at this point that Wi-Fi is rarely great at other tech conferences, but most other vendors will at least create separate networks for press, vendor execs, partners and so on, so there is less strain on one big network. And also in Cisco's defence, the venue we are at in Montreal is not a Cisco building and to some extent they are at the mercy of the facilities available.
I am no techie - if "turn it off and on again" doesn't work, I am stuck - but how hard can it really be for a networking company, the market leader in the WLAN market, no less, to get some working internet at an event?
In the keynote yesterday morning - when the Wi-Fi appeared to be back up and running properly - Cisco exec Bruce Klein encouraged delegates to tweet on the hashtag after there were just 3,500 tweets on it yesterday. Maybe there would have been a few more had the network actually been up and running...
27 Mar 2015
Traditional B2B marketing is still alive and kicking but it needs to be well executed and supported by content from which the target audience will derive value. The secret is to combine both traditional and modern techniques. For example, drawing people in via search engine optimisation and well-written web content, tracking their visits using tools that show when they visited, what they searched for and the pages viewed, followed up by traditional email shots and telemarketing.
It all sounds easy but that's not necessarily the case. The ongoing management of data (in terms of cleanliness and profiling) can often prove challenging. Add to this the need to slice and dice data to profile targets and deliver information in a way that suits them best creates further complications, but there are good marketing automation tools out there which can help. One size does not fit all!
One of Avnet's most successful events last year used traditional B2B marketing methods. B2B marketers continue to rate in-person events as an effective tactic and they are seen by delegates as valuable networking and fact-finding opportunities. Targeting the right audience, informing them via email, post and social media, making it easy for individuals to register, keeping in regular contact right up to the day of the event and ensuring they are greeted personally and looked after throughout out the day typically pays dividends.
Social media has certainly added a new dimension to traditional communication and lead-generation activities; however, it is simply another tool in the marketing toolkit. As with all communication channels it requires good-quality content to build creditability and trust. Reports indicate that corporate buyers are happy to see company news from suppliers on social media, along with promotions and product development information, so the door is wide open for its increased use. The real beauty of social media is its ability to provide an instant measure of how messages are resonating with readers and the speed of feedback is a dramatic change from the early days of direct marketing and email marketing.
Another essential ingredient to the marketing mix is the level of co-operation and alignment between sales and marketing. The best marketing campaigns in the world will not achieve the required results if sales and marketing are not singing from the same hymn sheet. Research again shows that over a three-year period, sales can improve by more than 20 per cent if there is sales and marketing engagement and a united team.
Whichever channels are being used, the fundamentals of marketing do not change. There is still a need for a well-thought-out marketing plan that clearly outlines the objectives, strategies, defined target audience, realistic budget and timeline. There are no shortcuts and it's all about execution.
Linda Patterson is marketing director at Avnet Technology Solutions UK
11 Mar 2015
The new crisis regarding creating a “backdoor” or a “golden key” to encrypted hard drives is a major threat to technology.
The National Security Agency (NSA) director, Mike Rogers, tried to calm doubts about the government’s plans to maintain built-in access to data held by US technology companies, by saying that creating these “backdoors” will not be harmful to privacy, would not fatally compromise encryption and would not ruin international markets for US technology products.
But there is a flaw in this plan of allowing intelligence agencies to decrypt data on someone’s phone or computer: if you create a vulnerability that can be exploited by the US government, where is the guarantee that other governments cannot access the same data through the same “backdoor”?
Other governments or third party organisations will be able to crack that vulnerability and destroy encryption all together. How will this affect the international markets?
Will customers still believe in encryption software and encrypted hard drives? Encryption is something imposed by law in certain areas and new laws to fine those companies that don’t keep their data encrypted are being enforced.
We at Origin Storage have been educating the market on the benefits of using encryption and have seen many companies lose market share and customers because they have not used encryption, thus getting their data stolen. Will this new approach in creating a “backdoor” to encryption impact the channel?
We certainly believe so!
Infecting the firmware is outrageous and uncovering this gap in security means that “thieves” will now start to look at new ways on how to access data. The biggest challenge we face is the reliance on encryption standards such as FIPS (USA standard) and CPA (UK standard) as major corporations make decisions on security policies which FIPS and CPA forms part of the criteria, if you have FIPS or CPA approval for your encryption product you are in, if you don’t you do not get shortlisted.
Our advice is to be careful how much reliance you put on such encryption standards. As a manufacturer of encryption solutions you have to hand over your source code in order to get FIPS and CPA approval. We wonder what happens to our source code when the NIST or GCHQ get their little paws on it?
There, I've put it out there. I know, I own an IT security company so you're expecting me to explain the security issues associated with putting your central heating online...nope.
Don't get me wrong, I could go into the very real security issues of controlling your cooker from the office. But my question is much more simple: do we really need the Internet of Things?
Manufacturers are keen to push their new designs to us. To be cool is king and having a touch-screen fridge freezer that's on the internet certainly ticks that box for some.
Hold on, why do I need a touch-screen internet-enabled fridge freezer?
-It will tell you it's operating temperature when you're at work.
-It tells you how many times the door has been opened.
So I can find out how many times I've opened my own fridge freezer door from work and discover that it's running at 3 degrees Celsius, like it has been every day since I turned it on.
-But it will tell you the temperature has risen and that maybe the compressor has failed.
That's great, but I'm at work. What am I going to do about it? I'm still going to end up with a defrosted freezer by the time someone has come out to repair it.
A novel idea might be to save the £200 difference (currently being quoted) between an internet-enabled fridge freezer and one that isn't and get some new food.
If my fridge could beam food straight into itself from the store, that might be different. But it can't; that Star Trek technology doesn't exist.
It might want to order the same replacement food from an online store, but I like variety and how does it know when I'm at home to take the delivery?
-But it's great to have central heating online, so you can turn your heating on before you come home.
That sounds wonderful. If I didn't have a timer I might use this.
But I do have a timer and even if I came home early within 10 minutes my house has warmed up anyway.
-But you could turn on your oven before you get home.
I don't like several thousand watt appliances running when I'm not at home and what happens if I get held up on the way home for an hour in a jam with no internet access?
Then there are the security issues associated with all these devices being connected online. If someone finds a buffer overflow vulnerability for my Hotpoint fridge freezer, a malicious hacker could get in and defrost my roast beef! That's just not acceptable!
Or perhaps a malicious hacker might order ten more joints of beef and then I wouldn't have room for my beer!
At Foursys we sell Sophos next generation firewalls with IPS and reverse proxy technology that can help secure appliances. It even supports country (IP) blocking, which might just have helped Sony.
However in the world of security, reducing your attack surface is always a good plan.
Do we really need to put our fridges and ovens online?
I know I'm sounding like an old man (before my time), but do you agree?
James Miller is managing director of Foursys
A blog that explores the views of some of the CRN editorial team as well as guest bloggers from the channel. Do get in touch with firstname.lastname@example.org if you are interested in being a CRN guest blogger for a week.