A few years ago, big was considered beautiful when it came to IT vendors and suppliers.
But today, a new school of thought - embodied by HPE's Meg Whitman - has emerged, namely that big is cumbersome and unwieldy. HPE's headcount, compared with when Whitman took the helm of HP in 2014, has plunged from 300,000 to 50,000.
According to this philosophy, technology has become so complex that no single vendor can hope to cover all the bases, or move fast enough to fulfil all customer needs. Vendors - and by extension channel partners - must be content with providing a piece of the jigsaw. The smaller and more fleet of foot, the better.
In this world, specialisation is the new watchword.
In this year's Top VARs end-user research, the full write-up (complete with graphs) of which can be viewed in the Top VARs PDF, we wanted to put this this theory to the test.
Are end users generally working with a wider variety of tech suppliers these days? And to what extent do they value specialisation as a trait in their IT suppliers against opposing factors such as breadth of offering?
Conducted in October 2017, the research questioned 258 IT decision makers on a range of topics including IT budgets, supplier strategy, emerging technology, and what help they are seeking from tech suppliers around GDPR.
The respondents worked for a diverse range of public and private sector organisations. The verticals with the highest representation were education (12 per cent) financial services (10 per cent), local government and professional services (nine per cent each), healthcare and telecoms (seven per cent each) and retail and media (six per cent each).
By size, 19 per cent worked for 10,000-plus-seat organisations, 37 per cent for organisations with 1,001 to 10,000 seats and 20 per cent for those with 251 to 1,000 seats. Some 17 per cent worked for SMEs with 25 to 250 heads and six per cent for micro-businesses with between one and 25 staff. Respondents were screened out of the survey if they were not an IT decision maker within their organisation.
We started off by asking our IT buyers about their tech budgets.
IT suppliers will be high-fiving at the spread of responses, with significantly more end users saying their budgets were up (48 per cent) than down (18 per cent) in their current fiscal year. Some 30 per cent said their war chest was level-pegging with last year. In even more positive news, these numbers are significantly up from when we asked the same question last year, when 41 per cent reported an uplift in their kitties.
The results are certainly consistent with analyst numbers showing a relative rebound in IT spending this year, with Gartner, for one, recently upping its 2017 growth forecast to 4.3 per cent.
In a first for this annual research, this year respondents were quizzed about which emerging technology areas their organisations had budgeted to invest in in their current financial years.
Out of the six options listed, hybrid cloud finished top, with 59 per cent of IT leaders having room for it in their budgets. This was closely followed by big data/data analytics on 53 per cent.
Artificial intelligence and the Internet of Things are two buzz phrases many people feel are suffering from over-hype. But it appears the hysteria is justified in both cases, with over a third of respondents having set aside budget for each.
Perhaps even more surprising is the fact that nearly a fifth of end users have budgeted for 3D-printing and augmented-reality projects. This will make comforting reading for resellers, particularly considering that two of the channel's traditional allies, HP and Microsoft, are pushing aggressively into these markets with their partners - HP via its Jet Fusion range and Microsoft with Hololens, respectively.
Resellers lose crown
In an intriguing development for the channel, IT hardware and software vendors came out top when respondents were asked from which breeds of IT supplier they buy. They commanded scores of 64 and 62 per cent respectively, ahead of IT product resellers on 60 per cent. When we asked the same question last year, it was IT product resellers who topped the pecking order, albeit only marginally.
This trio were by far the most popular IT supplier types, finishing well ahead of telecoms/mobile operators (54 per cent) cloud services/hosting providers (52 per cent), ISVs/app developers (49 per cent), IT managed services providers (45 per cent) and IT consultancies (44 per cent). Bringing up the rear were systems integrators (25 per cent) and big outsourcers (23 per cent).
Big no longer beautiful
Returning to the key theme of the research, we also asked respondents several questions about how many IT suppliers
they work with, and how they
A few years ago, big and broad was the order of the day for IT vendors and suppliers. End users were collapsing their supply chains with the goal of dealing with as few suppliers as possible, or so the argument went.
Since then, of course, two of the world's largest vendors, HP and Symantec, have voluntarily split in two, citing the need to become more dynamic and specialised. With the rise of hybrid cloud and the proliferation of security threats, the world of technology has arguably become more complex, which could make a jack-of-all-trades approach harder to pull off.
The issue of IT providers spreading themselves too thinly was highlighted in a recent CRN debate on what traits CIOs seek in their IT suppliers.
One of the IT leaders present said his major bugbear was paying suppliers to learn on his time.
"Technology is moving so fast, it can be difficult finding people who know what they're talking about and who are not using me
as a pilot," he said.
Another added: "One problematic thing we've come across is people trying to sell services they don't actually know themselves."
When we asked respondents in our survey what had happened to the number of IT suppliers they work with "in the last few years", the largest number of respondents (39 per cent) indicated that it had increased a little. Some eight per cent said it had increased greatly. While 29 per cent said it had stayed the same, only 17 per cent and 3.7 per cent, respectively, said the tally had decreased "a little" or "greatly".
This upward trend becomes even more apparent when comparing these results with the answers we received to the same question in 2016. Back then, the highest number of respondents (45 per cent) indicated the tally had stayed the same. Only 34 said the number had increased a little and four per cent that it had increased greatly.
The theory was also put to the test when we asked respondents how many suppliers they buy from.
Although more than half said they have relationships with three, four or between five and 10 suppliers, 31 per cent indicated that they buy from 11 or more suppliers. That compares with just 25 per cent when we asked the same question a year ago, and 24 per cent in 2015. End users are also less likely to work with a single supplier, or with two suppliers, than in previous years. Variety, it seems, is the spice of life these days.
For good measure, we also questioned respondents about how many IT suppliers they would want to work with in a perfect world. The vast bulk, 65 per cent, plumped for the nirvana of ‘a handful of suppliers, but not too many'. The number who selected ‘a wide array of specialised suppliers' stood at 14 per cent, up from 12 per cent two years ago. Conversely, the number preferring a single-supplier scenario fell from eight to seven per cent.
The question of specialisation was addressed even more directly when we asked respondents about how important a range of factors are when choosing their IT suppliers (see figure 9).
Price was only the third most important of the nine options listed, with a mean score of 3.8 out of five. Topping the pile were ‘honesty and integrity' (4.0) and ‘demonstrable track record of specialism in relevant area' (3.9).
‘Financial stability and scale' (3.7), ‘highly recommended by peers' (3.5 per cent) and ‘existing relationship' (3.5 per cent) also scored above average.
It is perhaps telling that ‘breadth of offering' (3.2) scored the second lowest out of all the options, ahead of only ‘based locally', which scored a lowly 2.9.
In your own words
We also asked the end users to briefly tell us in their own words about how they choose their IT suppliers, and some of the responses can be read on p34 of the report, a PDF of which can be found here.
With GDPR the undisputed topic du jour, we couldn't resist picking respondents' brains on the incoming data protection rules, which kick in on 25 May 2018, specifically in relation to what kind of help and guidance, if any, they are seeking from their IT suppliers.
Although there was a marked range of responses, several respondents made it clear they saw GDPR as being outside the remit of their tech suppliers. "GPDR is viewed as a business/governance issue in our organisation, rather than an IT issue," one said.
Another had this pearl of wisdom: "Contracts with specific suppliers will need to be rewritten to ensure they cover GDPR requirements if these suppliers process (or store) data for us."
A summary of the responses can be read on p38-39 of the PDF version of Top VARs, which you can find here.
The results of this year's Top VARs research will provide an equal blend of encouragement and concern for resellers.
In the minus column, resellers have lost their status as the most commonly used breed of IT supplier. That accolade is now held by hardware and software vendors, albeit by a narrow margin.
Resellers may also have to accept that they will often have only a limited role to play in end users' GDPR compliance plans. Judging from the comments, most end users see GDRP as a legal or business assurance issue largely outside the remit of their technology suppliers. However, a second category of end user can also be identified who is looking for resellers to step up and play a trusted adviser role in the run-up to May 2018. For resellers, it will be about sorting which of the two categories their customers fall into.
On the plus side, nearly half of all end users have seen an expansion in their IT budgets year on year, significantly up on last year.
Some of the buzzphrases resellers have embraced in recent years are clearly more than hype. Nearly six in 10 end users have set aside budget for hybrid cloud this year and over a third for IoT. Even augmented reality and 3D printing feature in the budget plans of nearly one in five end users apiece.
Generally speaking, end users are broadening the spectrum of IT suppliers they buy from - with nearly a third of respondents now working with 11 or more partners. In today's market - where the technology landscape is becoming more complex and multi-faceted - end users are as likely to buy on the specialisation suppliers can demonstrate as they are on price. Those that can demonstrate domain expertise in their chosen areas of specialisation, therefore, are sure to prosper.
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