ANS mulling 100 per cent services focus is a sign of the times
Comments made by ANS CEO Paul Shannon and others in recent Top VARs roundtable add to impression that services transition is accelerating, says Doug Woodburn
In the course of researching Top VARs 2016, I lost count of the number of firms that referenced their efforts to reinvent themselves as managed services or cloud players.
To pick out just a few, 72nd-placed CSI (£39m revenues) attributed a fall in revenues and profits to the investment it is making in its journey from reseller to MSP, including in becoming an IBM Watson and SAP Hana/S4 partner; HP and Sage reseller TSG (ranked 75th with £36m revenue) also blamed a fall in sales on the fact it was building recurring revenues; while market giant SCC (ranked fifth with £653m revenues) said it sacrificed £35m of low-margin product sales as it pushed deeper into services.
Those sentiments were also echoed in our recent Top VARs roundtable, whose panel was made up largely of MSPs that are on that journey towards services.
Let's be clear that the theme of moving from product reselling to services is decades old and that selling hardware and software will remain a key piece of the puzzle, as this recent article testifies.
But comments made during the roundtable certainly add to the feeling that this shift is accelerating thanks to the rise of AWS and as-a-service models.
Paul Shannon, CEO of ANS Group, a Cisco and NetApp partner on the panel, revealed his firm is considering going ‘100 per cent services'.
"We're at the point now where we are actively discussing what does a shift of our business look like if we are going to go 100 per cent services related [and] the kit is only there as a mechanism for getting customers into the cloud or onto a managed WAN or managed network?" Shannon said.
"We are even at a point where we are consulting among ourselves to work out how does that affect the P&L, how does it affect the business, how long does it take to come out the other side. We are changing the business so dramatically that we are seen as - and are - a 100 per cent services business."
John Pepper, CEO of managed services provider Managed 24/7, added: "Anyone who is just selling transactional items, you have to ask yourselves can you compete with the likes of an Amazon?
"There's very little value… [The channel has changed] more rapidly in the last two to three years than it has at any other point in time, and if you are a traditional VAR or traditional model of transactional, with no other services capability, to be honest, you probably won't be in business in three or four years' time."
Brexit also came up as a topic during the roundtable, with participants agreeing that the aftermath of last year's referendum has forced end users to reassess which projects they pursue.
"Decisions are slowed down but they are slowed down because people are actually pausing and seeing whether or not it is something of value," said Lorrin White, managing director of MSP Bamboo Technology.
"[Customers are asking] ‘is it an explicit requirement of the business?' So more than anything else, the implications for Brexit across the industry as a whole have just been ‘okay, yes, there's a bit of uncertainty, but it's another point at which we can have a check and review, and make sure we are making the right decisions for the right reasons'."
Shannon said the price fluctuations caused by the vote have heightened the need for relationship building between VARs and their supply chain.
"[Customers] have become less willing to just push a button and place an order quickly, which has meant - especially if you are buying from some of the larger suppliers like Cisco - that the price is only valid for a day," he said. "If you are making a price commitment to a customer on a Monday, and they don't decide to order it until a Friday, you are going to have to be pulling on suppliers to make sure you are protecting the customers as much as you possibly can."
Top VARs 2016 showed the collective sales of the top 100 UK resellers rising from £11.1bn to £12.72bn, roughly the GDP of Malta.
The revenue figures the report is based on were generally from 2015, but Mark Forster, operations director at Comms-care, said 2016 had been a solid year for the channel despite the Brexit fall out.
"We had a very successful last year," he said. "A lot of people started very doom and gloom with the impending Brexit vote. We've not seen that in our final performance, or the performance of our resellers. The partners that we saw perform particularly well were services oriented, or at least were starting to establish a strategy around services."