Scotch missed?
The Scottish market has historically been underserved by the IT channel, but while it may not have the huge revenue potential of other regions, it should not be dismissed, writes Jack Gilbert
The stretch of northern Northumberland where the Romans constructed Hadrian's Wall to protect their once-mighty empire now stands with giant sections missing. Grass and plants sprout from the stones, and schoolchildren charge down the dilapidated structure which passes over moss-covered hills.
But although the wall does little today to separate England and Scotland, within the IT channel it is evident there is a clear divide between the north and south of the ancient structure. Partners have recently described the Scottish market as being "poorly served" and pointed to a distinct lack of resellers, distributors and vendors who have established offices in the territory. Some of the biggest players have facilities in Scotland, but for many the region is simply seen as an added extra not worth investing in heavily.
But in recent weeks certain distributors and resellers have announced their intention to expand into Scotland and are hopeful that this focus north of the wall will bring in sales in what has been labelled an "untapped market".
Northward bound
One UK channel firm to have made the leap north of the border is distributor Espion, which set up an Edinburgh base in 2013, and has since launched a number of technologies in Scotland, including its partnership with unified threat management vendor WatchGuard Technologies. Announced last month, the partnership is aimed specifically at "developing the Scottish market".
Jim Lehane, Espion director and head of distribution, said his firm has greatly benefitted from its northern expansion and is hopeful this new partnership can repeat some of its past success.
"We launched a number of technologies into the Scottish market that previously had never been sold there before and they are now doing up to $10m (£6.61m). That might not seem that impressive in the overall scheme of things, but from a zero start it has been really impressive for us," Lehane said.
The Scottish market represents a strong and relatively untouched market for the channel, particularly for more specialised players, he added.
"If I am a large distributor, to open an office and put resources in is expensive," he said. "What they are looking at is the revenues they are going to achieve out of that market and it might not have a big impact on their overall numbers. But for smaller, more specialised disties like us, the additional revenue is very important because it nearly gets up to what we are doing in other markets. So the investment for us is a little long term, but it also has a big impact."
"It's very important to be local and to see what's going on in the economy and within that industry and you can't do that from London"
He said that for many channel players, the Scottish market is often perceived as an extra which is not worth focusing on.
"Ireland and Scotland are both seen as an add-on bonus for the larger English market. The vendors would say their UK goal is £100m and they don't really care what they get out of Scotland or Ireland. They treat it as a nice-bonus territory into which they don't really put much effort."
According to Lehane, many channel players are happy serving the Scottish market from their offices in northern England, but this can lead to a lack of personal touch.
"Their excuse is we have an office in Manchester, and if we are needed in Scotland we will travel up. But it will take you at least another four hours to get from Manchester to Edinburgh or Glasgow. They might have good intentions for delivering a local service, but you need to have an office in Edinburgh or Glasgow.
"Scotland has an amazing and fast-growing economy, with lots going on, and in terms of the usual suspects they don't seem to be based there"
"We are always of the philosophy that people buy from good people, and buy from people they know. It's very important to be local and to see what's going on in the economy and within that industry and you can't do that from London," he said.
A local touch
One reseller that has made the commitment not to simply serve Scotland from London is Total Computers, which last month opened up a Glasgow office to cover what it described as the "poorly served Scottish market".
Kieran O'Connor, sales director at Total, said his firm looked at a number of locations in the UK, but in the end was swayed by the way Scotland offered such competitive pricing for setting up an office and hiring local staff.
"Scotland has an amazing and fast-growing economy, with lots going on, and in terms of the usual suspects they don't seem to be based there. We are very excited about the potential of what we can do in Scotland," he said.
This lack of the usual suspects is evident from a glance at CRN's Top VARs 2014, which has only two resellers headquartered in Scotland featured in the top 100 list. Some of the big players, including Misco and Trustmarque, have bases north of the border but it is clear that there is not an abundance of big guns concentrating on this market.
Gerry Talent, Total's sales team leader, said the general shortage of IT firms located in Scotland has meant that since the reseller moved to Glasgow it has already created a bit of a stir.
"There are not an awful lot of companies based here, and the fact we are now here has caused a little bit of excitement," he said.
"Since the office opened up three weeks ago, we have had people contacting us through LinkedIn and telephoning us, telling us they are really happy we have a base in Glasgow now."
When asked why there has historically been a shortage of IT firms in Scotland, Talent said it is perhaps because it is not a huge country and there is the perception that there is not a vast amount of business to be done here.
"For a company to really want to serve the Scottish people, there needs to be that bravery and determination to move up here."
He added that having the personal touch of a local office will hopefully give Total a clear advantage.
"People buy from people, and people want to deal with people. There needs to be that personal interaction which you can do over a telephone but it is just cemented when you have that sit-down, face-to-face conversation," Talent said.
"People can buy their IT equipment from lots of players, but you need to give them a reason to transact with you."
But of course there are exceptions to the rule that Scotland is not home to successful and expansive channel players. Headquartered in Aberdeen, Oracle Platinum reseller Inoapps has grown dramatically since it was founded in 2006, and now has offices in Houston, Texas and Kuala Lumpur as it looks to push past 500 global employees by the end of 2017.
Andy Bird, Inoapps' chief executive, said he felt the lack of focus from some of the UK's channel giants has led to a new breed of IT firm in Scotland.
"The big players, that are based around London and Manchester, tend to forget Scotland is there and the business opportunity [available] here. This has led to a home-grown breed of IT companies that have spread their wings internationally and I think Scotland has a good export of IT services."
A different culture
The IT industry north of the wall also has a different feel, Espion's Lehane added.
"There is a different sales culture in Scotland; it's very much an SME play with lots and lots of small companies," he said.
This extends to the IT firms themselves, with a recent report from accountancy firm Nixon Williams showing that between 2009 and 2014, the number of IT businesses in Scotland increased by 32.3 per cent, with its total number of tech start-ups over the period at 6,520.
"The partners themselves are very technically able in Scotland," Lehane said. "I think just like any good partner you have in any territory you need to support them, and with that you will get loyalty from them.
"Even if the deal is not as big as in other regions they are still important both financially and also with references. It's good to be a leader in the
smaller markets."