Fujitsu cites digital transformation as key rationale for direct-to-channel shift
Vendor reveals 'bold ambition' of driving 90 per cent of its product sales through partners, up from current 50 per cent, saying its channel arm is best placed to fulfil demand for digital transformation
Digital transformation will quell end users' appetite to deal directly with big vendors, Fujitsu's UK product boss argued as he explained why the vendor is shifting more business towards the channel.
James Johnston told CRN that Fujitsu's channel organisation and resellers - rather than Fujitsu by itself - are best placed to fulfil the kind of shadow IT purchases that accompany a digital transformation mindset.
For this reason, Fujitsu has made its compensation scheme for direct sales reps more channel-centric, is "de-stacking" a raft of accounts from its direct team and handing them to partners, and is moving resources from its direct to indirect teams.
"I think we're going to see fewer and fewer organisations requiring direct fulfilment of product. They want solutions, and I want an ecosystem of partners that can augment our proposition," - James Johnston, Fujitsu
Johnston, who is head of UK&I product business for Fujitsu, said the ultimate goal is to boost the percentage of its UK product business that goes through the channel from 50 to 90 per cent of total sales.
"Because of digital transformation, we are now seeing more and more organisations purchasing shadow IT. We are seeing lots of examples where the business lines are investing in IT infrastructure in order to change their business models, and we see the channel organisation as being perfectly positioned to give that level of agility and also partner with software organisations as well," Johnston said.
"So we are seeing a great number of smaller deals now, as opposed to the big, multi-national outsourcing contracts of old. This is where we see the channel really helping us reinforce our market position.
"When I came in [in August 2016], I think we were doing about 50 per cent of business through the channel. My ambition is to get towards the 90 per cent threshold. That's a bold ambition. But as we see the change in landscape in the marketplace, I think we're going to see fewer and fewer organisations requiring direct fulfilment of product. They want solutions, and I want an ecosystem of partners that can augment our proposition."
De-stacking accounts
Fujitsu recently changed its compensation schemes across its end-user business to drive a strong desire for its direct-selling reps to work with resellers, Paul McLean, enterprise manager for indirect channels at Fujitsu, said.
The vendor is also the process of "de-stacking" a raft of accounts it currently fulfils directly and dishing them out to the channel, McLean added.
This will be done based on partners' vertical expertise, he indicated.
"It's really important that we are working with the partners that have the best capabilities and track record in the particular verticals that we work within in Fujitsu," McLean said.
Fuijtsu's UK channel team has grown from 25 to 33 staff this year, McLean said, adding that the channel business is also now aligned more closely with the technical account managers across Fujitsu's key accounts.
"We have some leadership scenarios, particularly with our PRIMEFLEX hyperconverged solution, and it's really important that we are driving stronger technical engagement in the channel," he said.
"In many of our competitors, we've seen some de-investment in the channel but I've seen a 30 per cent rise in my headcount who will be indirect-facing."
Storage growth
Although a question mark hangs over the future of Fujitsu's declining PC business - with Fujitsu president Tatsuya Tanaka indicating last week that talks over a possible deal with Lenovo are at an advanced stage - the vendor is seeing good growth in other areas of its portfolio, McLean said. Channel storage revenues doubled in the UK last year, with storage channel assembly growing 150 per cent, he indicated.
Some 600 deals have been registered under a new distribution-led deal registration scheme launched in January, with 30 per cent of those being new customers, McLean added.
"This quarter included a new £3m deal into a partner of ours, into a competitive account, which is our biggest enterprise win in the channel for the past 18 months," he said. "That really shows us we are getting that traction with our partners."
Fujitsu moved from five to four UK distributors last summer and is currently reviewing whether or not to remove another from the line-up, McLean confirmed.
"We are having ongoing conversations with our distribution partners," he said. "We've worked closely with them to ensure the four we have today are very much focused around the different markets, which enables them to retain margins to invest in Fujitsu. Our largest distributor has seen a strong increase in profitability from selling Fujitsu product, which was a major element in driving a consolidation in distribution."