Four weeks after the UK voted to leave the EU, channel partners claim to be cautiously upbeat – insisting it is business as usual – despite seeing some weakening in customer demand and suffering currency-related headaches.
In the immediate aftermath of the Brexit vote, many channel players and analysts were downcast and pessimistic about their prospects, amid concerns of big price hikes and a halt on big purchasing decisions across customer segments, specifically in the public sector.
Over the last four weeks, as CRN exclusively revealed, Dell and HP both put their UK prices up by around 10 per cent, following the pound falling to historic lows, and some partners reported customers putting the brakes on big-money deals amid significant uncertainty. Dell Financial Services told CRN this week that uncertainty in the economy – partly to do with Brexit – has seen a spike in demand from customers wanting finance options on their purchases.
Although the stability of a new prime minister has brought some comfort to businesses, today Markit Economics claims the UK economy has contracted at its steepest pace since early 2009, mainly because of Brexit.
According to exclusive CRN research released this week, 61 per cent of vendors said they would continue to invest in the UK as normal in coming years, despite uncertainty, and 45 per cent said the UK was still their top target in Europe for future growth.
Lawrence Jones (pictured), CEO of UKFast, told CRN that although Brexit has caused some significant headaches for the firm, he is still optimistic.
"There are things which make it tougher," he said. "We bought a couple of million pounds' worth of servers – luckily two weeks before Brexit. If I was buying them now, I'd be paying 18 per cent more.
"That has an impact, and so does software. We're one of the top SPLA companies in the country and we pay them [Microsoft] millions and millions of pounds to collect that for them in dollars every year. So that in itself is very painful because we have to convert that British pound into dollars. I don't know how that is going to play out... because we don't actually put a mark-up on the licences we sell for Microsoft. We'd be losing money on the licences we now sell. That's painful.
"But saying that, we're British, we are tough, we are used to finding ourselves in tough situations, ironically often ones we create ourselves.
"Innovation isn't going to stop. The first thing that happens when things get tough is that you get more entrepreneurial – you have to. I see this as an opportunity. If you've got people running around like headless chicken panicking, there will be others who sit back and take advantage of the situation and I hope we are one of them.
"There will be some deals I am less interested in and maybe don't have the courage to do because they are maybe a little bit too big for us now. The problem is when you borrow money: [interest rates] are incredibly low now, but it is cyclical and just because it is low now doesn't mean it will be [forever]. I am mindful that this climate now is just a moment in time. We've got to work hard, focus on building our businesses and keep investing in staff."
Concerns were raised in the immediate aftermath of the Brexit vote about business opportunities in the public sector, with one analyst claiming the UK's decision to leave will be a "shot in the head" for public IT projects.
Chris Proctor, chief executive of public sector provider OneServe, said customer reaction in government bodies has been "a real mix".
"It's been a challenging time for us because our financial year runs from July to June so at the point we are setting budgets, people are saying 'what do we do?'" he said.
"Luckily, we sell efficiency which is a good proposition [in light of Brexit]. We've seen a real mix and it is a reflection of how they voted. I've seen some people say 'that's it, I'm moving out of the country' and others saying it is going to be tough but we can get through it.
"It's not as if the channel is a dinosaur looking at a meteor coming to Earth. Nothing has ever happened in IT that has caused a complete wipeout."
"Some customers are saying they are stopping spending because they don't know if they will have government funding. [They think] 'if the government is going to have to fund Cornwall and Wales, what does that mean for us? Are we going to have cuts?' Others have said 'let's run now and push it all and get everything through'. When people like Mark Carney calm down a bit, and as the dust starts to settle... it looks like it is going to be OK.
"It's a fear of the unknown and now we are in it, it doesn't seem as bad. There is a bit more stability now we've got a new prime minister, and it's a bit more business as usual. We've not seen anything slip. We're working with local government at the moment and they've not said 'we're going to stop'. So that's positive."
Recruitment is another area many fear will be affected by Brexit, with uncertainty possibly preventing companies bringing in new staff, and fears that leaving the EU will cut the UK off from a big pool of talent.
Channel recruiter Zoe Chatley of Wallace Hind said things were actually worse in the run-up to Brexit, and have recovered rapidly since the outcome of the vote was known.
"Before the vote, I'd say companies were slowing down [on recruitment]," she said. "A lot said they were unsure about what they were going to do and things went on hold. But in the last two weeks, things have picked up again, which is normal for this time of year. But in the six weeks building up to it, everything was on hold and people didn't know what to do. There are still the odd ones that are unsure and have slowed the process down or put things on hold. But, touch wood, everything is OK."
The IT channel is used to change, with the fast-paced nature of technology meaning companies have to adapt quickly to stay ahead. A number of significant transitions, such as the move towards services, have occurred in recent years.
451 Research's European services director Rory Duncan said the impact of Brexit will be softer in the IT space because the channel is so used to change.
"The channel has gone from this prehistoric view [of being] tin shifters, to the case now that the more innovative channel companies are supplying complex services," he said. "It's less about shifting tin and more about being service integrators or aggregators. Therefore that puts the channel in a much stronger position than if this Brexit had happened at a time when they were physically shifting goods. It's not as if the channel is a dinosaur looking at a meteor coming to Earth. Nothing has ever happened in IT that has caused a complete wipeout."
He added that savvy channel partners could even cash in by offering Brexit-specific services to their customrs.
"There is a potential opportunity for [offering] Brexit preparedness [services]," he said. "Instead of looking at what kind of workloads you have, 'preparedness' would mean asking where is data stored, is any stored abroad, do you have any non-UK customers, what would their requirements be if you were outside the EU? What's your risk to exposure to non-EU or EU data protection and privacy legislation and so on."
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